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Note to EIA: Major shale operator sending cash elsewhere
Note to EIA: Major shale operator sending cash elsewhere
John Hess, CEO of Hess Corporation, a large U.S.-based independent oil producer, recently told a Houston audience where he’s putting the company’s money these days: Offshore drilling.
That should strike those who know of Hess Corporation’s heavy involvement in the Bakken shale play (in North Dakota) as a bit strange. Hess says the company will “use cash flow from the Bakken to invest in longer-term offshore investments.”
Hess told his audience that “key U.S. shale fields are starting to plateau, calling shale ‘important but not the next Saudi Arabia.'” Setting aside whether Hess is actually getting investable cash from the Bakken, the constant refrain from the U.S. oil industry has been precisely that shale plays ARE the next Saudi Arabia.
Someone should send a note to the U.S. Energy Information Administration (EIA) that maybe it’s not all going to work out. If Hess is right about a peak in U.S. shale oil production soon, that peak will come about a decade earlier than the peak forecast by the EIA.
None of this will come as a surprise to geologist David Hughes whose most recent update on U.S. shale oil and natural gas production suggests that not only will Hess be proven generally correct, but that production will fall much farther than the EIA believes in the coming decades. Hughes continues to rate EIA estimates of ultimate recovery from America’s shale oil and natural gas fields as “extremely optimistic, and highly unlikely to be realized.”
U.S. shale oil production has been a major driver in the growth of world oil supplies. Last year the United States accounted for 98 percent of global growth in oil production. Since 2008 the number is 73 percent. It’s not hard to imagine that a slowdown in U.S. oil production growth or worse yet a decline in overall U.S. production would mean trouble for the entire world.
…click on the above link to read the rest of the article…
From Boom To Bust: Permian Shale Towns Face Exodus
From Boom To Bust: Permian Shale Towns Face Exodus
Perhaps it’s not evident to anyone who is not an oil-worker living in America’s biggest shale towns, but signs of the shale slowdown predicted by many analysts, and the EIA itself, are already surfacing in the form of vacant hotels, a dip in home prices, a noticeable reduction in overtime hours for oil workers, and a change in standards for hiring.
Texas’ Permian basin lost 400 jobs in the first 10 months of this year, according to the Dallas Morning News, and fracking contractor Superior Energy Services Inc. alone announced in late November that it had cut 112 jobs from its Permian Pumpco unit.
This is in stark contrast to the first 10 months of 2018, when the Permian added 16,700 jobs.
According to the Dallas Federal Reserve’s “Permian Basin Economic Indicators” from November 27 this year, oil production reached a new high in September, though the rig count slipped and drilling has dropped to its lowest level in nearly two years.
Not only are frack crews for well completions in the Permian down more than 20% this year, according to the Dallas Morning News, citing Primary Vision Inc., but oilfield services companies are firing people–from National Oilwell Varco to Halliburton and RPC.
The Greater Houston Partnership said in a December report that Houston is facing a situation that is “eerily similar to what it faced after the 1980s bust — an oversaturated real estate market, a bleak outlook for oil and gas, and the need for innovation to drive the economy forward”.
To that end, it’s putting its hope in other industries–not oil and gas–as it forecasts the disappearance of 4,000 oil jobs by the end of 2020.
…click on the above link to read the rest of the article…
The EIA Is Grossly Overestimating U.S. Shale
The EIA Is Grossly Overestimating U.S. Shale
The prevailing wisdom that sees explosive and long-term potential for U.S. shale may rest on some faulty and overly-optimistic assumptions, according to a new report.
Forecasts from the U.S. Energy Information Administration (EIA), along with those from its Paris-based counterpart, the International Energy Agency (IEA), are often cited as the gold standard for energy outlooks. Businesses and governments often refer to these forecasts for long-term investments and policy planning.
In that context, it is important to know if the figures are accurate, to the extent that anyone can accurately forecast precise figures decades into the future. A new report from the Post Carbon Institute asserts that the EIA’s reference case for production forecasts through 2050 “are extremely optimistic for the most part, and therefore highly unlikely to be realized.”
The U.S. has more than doubled oil production over the past decade, and at roughly 12.5 million barrels per day (mb/d), the U.S is the largest producer in the world. That is largely the result of a massive scaling-up of output in places like the Bakken, the Permian and the Eagle Ford. Conventional wisdom suggests the output will steadily rise for years to come.
It is worth reiterating that after an initial burst of production, shale wells decline rapidly, often 75 to 90 percent within just a few years. Growing output requires constant drilling. Also, the quality of shale reserves vary widely, with the “sweet spots” typically comprising only 20 percent or less of an overall shale play, J. David Hughes writes in the Post Carbon Institute report.
…click on the above link to read the rest of the article…
EIA’s Electric Power Monthly – September 2019 Edition with data for July
EIA’s Electric Power Monthly – September 2019 Edition with data for July
The EIA released the latest edition of their Electric Power Monthly on September 24th, with data for July 2019. The table above shows the percentage contribution of the main fuel sources to two decimal places for the last two months and the year 2019 to date.
The Table immediately above shows the absolute amounts of electricity generated in gigawatt-hours by the main sources for the last two months and the year to date. In July the absolute amount of electricity generated increased, as is usual for the month of July when compared to June for the period covered by the charts, January 2013 to date. Coal and Natural Gas between them, fueled 66.92% of US electricity generation in July. The contribution of zero carbon and carbon neutral sources declined from 37.86% in June to 32.25% in July.
The 12,055 GWh generated by Solar in July 2019 is a record, exceeding the previous record of 11,8549 GWh, set in the previous month, June 2019. It is possible that the output from solar in August could exceed the output in July as was the case in 2014 and 2015. While the percentage contribution from solar did not decline between the months of May and June it declined slightly in July 2019 as is customary when the total amount generated ramps up heading into the midsummer peak. The increase in production from solar has not continued to keep pace with the total increase in generation from June to July. However, as solar capacity continues to increase, in future years it can be expected that the contribution from solar will keep pace with the total and eventually increase going into the summer months.
The graph below shows the absolute monthly production from the various sources since January 2013, as well as the total amount generated (right axis).
…click on the above link to read the rest of the article…
USA and World Oil Production
USA and World Oil Production
The USA data below was taken primarily from the EIA’s Petroleum Supply Monthly while some were taken from the EIA’s Monthly Energy Review.
I have some bad news to report. The EIA no longer published World production data or Non-OPEC production data. This data had previously been published in the Monthly Energy Review.
The Monthly Energy Review’s data was one month behind the Petroleum Supply Monthly but now they jumped two months and are now one month ahead of the Petroleum Supply Monthly. They now publish the previous month’s numbers, June in this case, but now publish only US data. The Petroleum Supply Monthly is unchanged.
EDIT: The Petroleum Supply Monthly does publish some, incomplete, world data… through April or one month behind their USA data. I will use that with an explanation and comments next month.
The closest I can come to World oil production, through June, is the combined production of OPEC, Russia, the USA, and Canada. This is 70% of total World Production.
Here is the other 30% of World oil production. However, this data is only through March. Unfortunately, I can never update this chart because the EIA no longer publishes the data
This 30% of World oil production peaked in late 2015 and has declined an average of 450,000 barrels per day per year every year since.
Actually, in 2015 these countries averaged about 32% of World oil production but now averages about 29%.
I have no other source for World oil production. The IEA publishes quarterly projected data for the World and Non-OPEC. But this data is total liquids and only quarterly projections that bears little resemblance to actual C+C production.
…click on the above link to read the rest of the article…
Is US Shale Cannibalizing Itself?
Is US Shale Cannibalizing Itself?
U.S. oil production continues to grow, but the shale industry is in the midst of a deceleration as low oil prices and a financial squeeze slow the pace of drilling.
The U.S. added 246,000 bpd of fresh supply in April, the latest month for which data solid is available. That put to rest concerns that the industry was in the midst of contraction, after production fell in January and February (some of which was due to offshore maintenance). Even as the rig count continues to fall, production grinds higher.
The EIA expects output to grow by another 70,000 bpd in July, with the Permian alone adding 55,000 bpd.
But the rate of growth is slowing. In April, production was up 1.6 million barrels per day (mb/d) compared to the same month a year earlier. By any measure, that is a massive increase. But it is down sharply from the nearly 2.1 mb/d year-on-year increase seen in August 2018, which looks set to be the peak in terms of the pace of growth.
U.S. oil production is not in danger of outright decline, not for the foreseeable future. But growth is clearly slowing. The U.S. could add 1.3 mb/d of new supply this year, according to an average of forecasts from multiple analysts, compiled by Reuters. That figure would be down from 1.5 mb/d of additional supply that came online in 2018. Related: Another Beneficiary Of The OPEC Deal Emerges
Financial stress is spreading, and top industry executives in Texas are arguably at their gloomiest in years. Consolidation and bankruptcies could pick up pace in the next few months, a bankruptcy attorney told Reuters.
…click on the above link to read the rest of the article…
THE UNITED STATES A NET OIL EXPORTER?? The Dirty Little Secret
THE UNITED STATES A NET OIL EXPORTER?? The Dirty Little Secret
The United States became a net oil exporter for the first time in 75 years, or so they say. While the U.S. may indeed be exporting more petroleum than it imports from time to time, there’s a dirty little secret behind the data. And one of those secrets overlooked by some energy analysts and the press is that the U.S. still imports 7 million barrels per day of oil.
So, why would the United States continue to import 7 million barrels per day (mbd) of oil if it is indeed… a Net Oil Exporter?? Good question. And, the answer to that question is hidden in the details, or as they say, “The devil is in the details.”
According to the EIA, the U.S. Energy Information Agency, the U.S. first became a net oil exporter during the week of Nov 30th, 2018 by exporting 211,000 barrels per day more than it imported. Please understand the figures below also include petroleum products:
The graph shows the data as negative because it is presented as “net oil imports.” Thus, a negative number means the U.S. is exporting more than it imports. I have changed my figures in the chart to represent “net oil exports.” As we can see, the U.S. had an even higher amount of net oil exports this past week at 675,000 barrels per day. Regardless, the U.S. has been a net exporter for three weeks out of the past seven months. However, if we look into the details of this data, we will find out that the United States isn’t exporting this oil and petroleum because it “WANTS” to, but because it’s “FORCED” to. There’s a big difference.
NOTE: The charts in this article come directly from the U.S. Energy Information Agency website, with my added annotations.
…click on the above link to read the rest of the article…
EIA tight oil estimates
EIA tight oil estimates
The US Energy Information Administration publishes Tight Oil Production Estimates by Play each month (can be found at link above.) I noticed this month that the estimates seemed different than I remembered so I checked earlier estimates I had saved on my computer. The chart below compares estimates from Dec 2018 to April 2019 (where the last month of data in the estimate is Dec 2018, Feb 2019, March 2019, and April 2019).
As is clear from the chart the February and March estimates have each been revised lower over the past two updates. If this should continue, we might see relatively flat tight oil output for all of 2019.
I have revised my estimate for future US tight oil output to a 400+/-100 kb/d increase in monthly average tight oil output from December 2018 to December 2019.
EIA’s Electric Power Monthly – March 2019 Edition with data for January 2019
EIA’s Electric Power Monthly – March 2019 Edition with data for January 2019
The EIA released the latest edition of their Electric Power Monthly on March 26th, with data for January 2019. The table above shows the percentage contribution of the main fuel sources to two decimal places for the last two months and the year 2019 to date.
In January, the absolute amount of electricity generated rose back to levels not seen since the end of summer in September 2018, probably as a result of the need for longer hours of lighting during the longer nights coupled with the increased needs for heating in the middle of winter. Coal and Natural Gas between them, fueled 61.49% of US electricity generation in January, with the contributions from Nuclear and Conventional Hydroelectric declining. The contribution from Natural Gas was up at 33.25%, from 31.71% in December, with the amount generated rising from 106,978 GWh to 118,935 GWh. Generation fueled by coal increased from 96,825 GWh to 101,019 GWh resulting in the percentage contribution falling from 28.70% to 28.24%. The amount of electricity generated by Nuclear plants increased from 71,657 GWh to 73,701 GWh with the resulting contribution actually declining from 21.24% to 20.60% in January. The amount generated by Conventional Hydroelectric increased from 23,728 GWh in December to 24,544 GWh in January with resulting contribution decreasing to 6.86% as opposed to 7.03% in December. The amount generated by Wind increased from 21,154 GWh to 22,493 GWh with the resulting contribution rising very slightly from 6.27% to 6.29% in January. The estimated total solar output rose from 4.962 GWh to 5,859 GWh with the resulting contribution rising from 1.47% to 1.56%. The contribution of zero carbon or carbon neutral sources declined from 38.59% in December to 37.41% in January.
The graph below shows the absolute monthly production from the various sources as well as the total amount generated (right axis).
…click on the above link to read the rest of the article…
Oil Prices Spike On Shale Slowdown
Oil Prices Spike On Shale Slowdown
The collapse of oil prices late last year, along with pressure from shareholders, has led to a slowdown in the U.S. shale industry.
The EIA released new monthly data on March 29, which revealed a decline in output of about 90,000 bpd between December and January, evidence that shale drillers slammed on the breaks after oil prices fell off a cliff in the fourth quarter. The 90,000-bpd decline came after a rather meager 35,000-bpd increase the month before, which was the weakest increase in months.
But the U.S. shale industry is facing more headwinds than just a temporary dip in oil prices. Shareholders have run out of patience with unprofitable drilling, and are demanding returns, which is tightening the screws on less competitive companies and forcing spending cutbacks across the board. More worrying for the industry is a growing recognition of the “parent-child” well problem – the unexpected poor performance of subsequent wells drilled in close proximity to the original “parent” well.
These obstacles are beginning to pile up. Schlumberger and Halliburton, the two top oilfield services companies, have predicted that shale drillers will be forced to collectively cut spending by more than 10 percent this year.
The slowdown could put some bullish pressure on the oil market, already suffering from outages in Venezuela, Iran and coordinated cuts from OPEC+. While U.S. inventories rose unexpectedly last week, much of the increase can be chalked up to turmoil in the Houston Ship Channel following a major fire at a petrochemical facility.
Indeed, some analysts see significant stock declines in the next few weeks. “The most visible inventory levels in the world…will fall victim to a potent mix of Venezuelan supply disruptions, a Houston Ship Channel chemical spill, and an uptick in refining runs,” Barclays wrote in a note on March 29. The investment bank sees WTI rising to an average of $65 per barrel this year.
…click on the above link to read the rest of the article…
NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer
NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer
While Mexico suffered the bloodiest year of violent deaths in 2018, even bigger trouble may be ahead for the embattled country. For the first time in more than 50 years, Mexico has become a net importer of oil. This is undoubtedly bad news for the Mexican Government as it has relied upon its oil revenues to fund a large percentage of its public spending.
However, it wasn’t always this way. After the discovery of the huge Cantarell Oil Field in the Gulf of Mexico in 1976, Mexico’s oil production surged from 894,000 barrels per day to a peak of 3.8 million barrels per day (mbd) in 2004. That year, Mexico’s net oil exports exceeded 1.8 mbd.
Unfortunately, the downturn of Mexico’s oil production was mainly due to the peak and decline of the Cantarell Oil Field, which topped out at 2.1 mbd in 2004 and is now below 135,000 barrels per day:
With the rapid decline in Cantarell’s oil production, Mexico’s net oil exports also plummeted from 1.8 mbd in 2004 to only 314,000 barrels per day in 2017. However, the situation for Mexico’s net oil exports continued to deteriorate in 2018 as its domestic oil supply fell to a new low at the end of the year.
According to several sources, the BP 2018 Statistical Review, IEA’s OMR Reports, and the EIA’s data on World Oil Production, Mexico became a net oil importer in November 2018:
I find it strange that this has not yet been mentioned in the news as it is a very critical factor for the future of Mexico. Now, I would like to qualify that the data I am using is accurate. I found Mexico’s total petroleum production and consumption data from the EIA, the U.S. Energy Information Agency’s World Oil Production Browser, the IEA’s, the International Energy Agency OMR Reports, and BP’s 2018 Statistical Review.
…click on the above link to read the rest of the article…
The EIA’s Optimistic Outlook
The EIA’s Optimistic Outlook
Most of the data below is taken from from the EIA’s Short-Term Energy Outlook. The data through February, 2019 is the EIA’s best estimate of past production and all data from March 2019 through December 2020 is the EIA’s best estimate of future production. However in most cases February production is highly speculative so I drew the “projection” line between January and February.
Understand the above chart is Total Liquids, not C+C as I usually post. As you can see the EIA expects world petroleum liquids to keep climbing ever upwards.
This is the EIA’s data for OPEC all liquids with Production data from April 2019 through December 2020.
Notice the EIA expects OPEC production to keep declining through December 2020. Also they expect total liquids to decline slightly faster than crude only. This is interesting since neither condensate nor other liquids are subject to OPEC quotas.
About two years ago I made note that the EIA expected Non-OPEC to plateau but they expected OPEC to keep increasing into the future. Now they have completely reversed themselves as they expect all future growth, at least for the next two years, to come from Non-OPEC countries.
The below chart is from the EIA’a Monthly Energy review and is C+C through November 2018.
Virtually all crude oil increase since 2016 has come from three countries, USA, Russia and Canada. The spike upward (circled) in October and November 2018 was partially due to OPEC prepping for cuts. Every OPEC country made heroic efforts to increase productio during those two months in order to increase their quota. Quotas were set in December.
…click on the above link to read the rest of the article…
U.S. ‘’Oil Weapon’’ Could Change Geopolitics Forever
U.S. ‘’Oil Weapon’’ Could Change Geopolitics Forever
In a dynamic that shows just how far U.S. oil production has come in recent years, the U.S. Energy Information Administration (EIA) said on Monday that in the last two months of 2018, the U.S. Gulf Coast exported more crude oil than it imported.
Monthly net trade of crude oil in the Gulf Coast region (the difference between gross exports and gross imports) fell from a high in early 2007 of 6.6 million b/d of net imports to 0.4 million b/d of net exports in December 2018. As gross exports of crude oil from the Gulf Coast hit a record 2.3 million b/d, gross imports of crude oil to the Gulf Coast in December—at slightly less than 2.0 million b/d—were the lowest level since March 1986.
U.S. oil production hit a staggering 12.1 million b/d in February, while that amount has been projected to stay around that production mark in the mid-term then increase in the coming years. The U.S. is the new global oil production leader, followed by Russia and Saudi Arabia, while Saudi Arabia is still the world’s largest oil exporter – a factor that still gives Riyadh considerable leverage, particularly as it works with Russia, and other partners as part of the so-called OPEC+ group of producers. However, Saudi Arabia’s decades-long role of market swing producers has now been replaced by this coalition of producers, reducing Riyadh’s power both geopolitically and in global oil markets. In short, what Saudi Arabia could once do on its own, it has to do with several partners.
Meanwhile, U.S. crude oil production, particularly in the Gulf Coast region, is still increasing. In November 2018, U.S. Gulf Coast crude oil production set a new record of 7.7 million b/d, the IEA report added.
…click on the above link to read the rest of the article…
Census Bureau, Treasury, EIA Detail American Insolvency
Census Bureau, Treasury, EIA Detail American Insolvency
Since 2007, US births and net immigration have consistently and unexpectedly fallen sharply. Over the same span, US federal debt and unfunded liabilities have soared while federal tax receipts, as a percentage of the federal debt and unfunded liabilities, continue declining. Total US energy consumption also peaked in ’07 and continues declining in contradiction to those soaring asset valuations.
Simply put, this article details an American insolvency and the ongoing attempt to print and inflate away this reality. America has shown it isn’t afraid of (mis)using this digital printing press via collusion among the Federal Reserve, Treasury, and the Federal Government to disguise the simple truth that America is bankrupt and incapable of meeting its present and future obligations absent unlimited and unending monetization.
Demographic Development and Population Growth
According to the latest 2017 Census projection, the Census expects a near halving of population growth…or 50 million fewer Americans than it expected just 8 years earlier. But critically, nearly all the projected declines are among the under 45 year old population while the 65+ year old population growth is still on track to swell.
Given the record low birth rates in 2017 and 2018, which came in 700 thousand annually below the ’08 Census projections, plus diminishing immigration, netting at least a half million annually below ’08 Census projections, the 2020 Census is likely to significantly further downgrade the potential for US population growth. The impact for US economic growth, unfunded liabilities, and outgrowing personal, corporate, and federal debt is devastating.
What Happened?
From the mid 1990’s to 2007, a surge in immigration (both legal and illegal) and a rise in births resulted in significantly larger child bearing population and broad assumptions that America could outgrow its unfunded liabilities and debt issues.
…click on the above link to read the rest of the article…
EIA’s Electric Power Monthly – January 2019 Edition with data for November 2018
EIA’s Electric Power Monthly – January 2019 Edition with data for November 2018
The EIA released the latest edition of their Electric Power Monthly on January 25th, with data for November 2018. The table above shows the percentage contribution of the main fuel sources to two decimal places for the last two months and the year 2018 to date.
In November, the absolute amount of electricity generated declined sightly as mild fall temperatures gave way to colder winter temperatures with demand for air conditioning giving way to demand for heating. Coal and Natural Gas between them, fueled 61.99% of US electricity generation in November, with the contributions from Nuclear and Conventional Hydroelectric edging up. The contribution from Natural Gas was down at 33.18%, from 38.11% in October, with the amount generated falling from 124,027 GWh to 106,804 GWh. Generation fueled by coal increased from 87,452 GWh to 92,738 GWh resulting in the percentage contribution rising from 26.87% to 28.81%. The amount of electricity generated by Nuclear plants increased from 59,397 GWh to 63,948 GWh with the resulting contribution actually rising from 18.25% to 19.87% in November. The amount generated by Conventional Hydroelectric increased from 18,779 GWh in October to 22,174 GWh in November with resulting contribution increasing to 6.89% as opposed to 5.77% in October. The amount generated by Wind decreased from 19,507 GWh to 17,991 GWh with the resulting contribution falling from 5.99% to 5.59% in November. The estimated total solar output fell from 7,625 GWh to 5,859 GWh with the resulting contribution falling from 2.34% to 1.82%. The contribution of zero carbon or carbon neutral sources rose from 34.10% in October to 36.97% in November.
The graph below shows the absolute production from the various sources as well as the total amount generated (right axis).
…click on the above link to read the rest of the article…
