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Dean has shared his estimates for Texas Oil and Natural Gas output. Texas (TX) C+C output was revised lower by -10, -17, -22, -18, and -52 kb/d for Nov 2015 through March 2016 respectively. Output in April 2016 increased by 27 kb/d from the revised March 2016 estimate to 3511 kb/d. The EIA estimate for March 2016 is 3276 kb/d, and Dean’s revised estimate is 3484 kb/d, 208 kb/d more than the EIA estimate.

TXchart/

As several commenters in the past have questioned Dean’s estimates (which I am convinced are robust, especially through March 2016), I asked Dean the following questions:

“At one point you thought there may have been a structural change in the data. Is that no longer the case? …. Are you seeing any issues that I … would have missed?”

He answered:

“I just tested the correcting factors for stationarity with panel unit root tests and the null of a unit root is rejected for all tests considered.”

I did some research on stationarity and unit root tests and then asked:

“So the mean and variance of the correcting factors do not change with time or follow any trend?”

He said that was correct.

Essentially the statistics suggest that the mean and variance of the correction factors have remained stable over the past 24 months and over time they are likely to approach their “true” value. The Chart below shows how the TX C+C correction factors have changed from Sept 2014 to April 2016.

TXchart/

The chart below shows how the estimates of TX C+C have changed from May 2015 to April 2016. The dashed lines suggest the estimates with the minimum correction factors (Nov 2015) and the maximum correction factors (March 2016).

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

World Energy 2016-2050: Annual Report

June 23, 2016

World Energy 2016-2050: Annual Report

The purpose of this annual report is to provide an analytical framework evaluating the development of world energy supply and its impact on the global economy. The report projects the world supply of oil, natural gas, coal, nuclear, hydro, wind, solar, and other energies from 2016 to 2050. It also projects the overall world energy consumption, gross world economic product, and energy efficiency from 2016 to 2050 as well as carbon dioxide emissions from fossil fuels burning from 2016 to 2100.

The basic analytical tool is Hubbert Linearization, first proposed by American geologist M. King Hubbert (Hubbert 1982). Despite its limitations, Hubbert Linearization provides a useful tool helping to indicate the likely level of ultimately recoverable resources under the existing trends of technology, economics, and geopolitics. Other statistical methods and some official projections will also be used where they are relevant.

Past experience with Hubbert Linearization suggests that Hubbert Linearization exercise tends to underestimate the ultimately recoverable oil and natural gas resources. To mitigate this “pessimistic” bias, I use the US Energy Information Administration (EIA)’s official projection to project US oil and natural gas production from 2016 to 2040, which may prove to be too optimistic.

About two years ago, I posted “World Energy 2014-2050” at Peak Oil Barrel (Political Economist 2014). The posts can be found here:

World Energy 2014-2050 (Part 1)

World Energy 2014-2050 (Part 2)

World Energy 2014-2050 (Part 3)

The 2014 report drew the following conclusion:

It finds that world production of oil, natural gas, and coal may peak between 2016 and 2031. As the supply of fossil fuels declines and the renewable energies do not grow sufficiently rapidly, the world energy consumption is projected to peak in 2035 and the world economy is projected to enter into a prolonged depression after 2040. World carbon dioxide emissions from fossil fuels burning are projected to peak in 2027.

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

North Dakota down over 70,000 bpd in April

June 18, 2016

North Dakota down over 70,000 bpd in April

The Bakken and North Dakota production data is out. Big surprise. The Bakken was down 69,420 barrels per day in April while all North Dakota was down 70,414 bpd.

Bakken & ND Amplified

Largest drop ever in North Dakota production. The Bakken is now under one million barrels per day.

Bakken Change

This gives you some idea of the erratic nature of North Dakota production. But as you can see, the decline is accelerating.

Bakken DPR Compare

The EIA’s Drilling Productivity Report gives past Bakken production numbers, which includes the Montana portion, and future estimates for the next couple of months. The average difference between North Dakota production and total Bakken production has been about 27,500 bpd. However for April the difference is almost 63,000 barrels. So it looks like for once the DPR estimate is way too conservative. The DPR estimate is through July while the north Dakota data is only through April.

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

EIA World Crude Oil Production

June 4, 2016

EIA World Crude Oil Production

The EIA has apparently stopped publishing its International Energy Statistics. Instead they are now publishing an abbreviated version on their Total Energy web page titled: Tabel 11.1b World Crude Oil Production. Here they publish crude + condensate production numbers for Persian Gulf Nations, Selected Non-OPEC Countries, Total Non-OPEC and World. The “Selected Non-OPEC Producers are Canada, China, Egypt, Mexico, Norway, Russia, United Kingdom and the United States. They have just released their latest data through February 2016.

All the data below is in thousand barrels per day and through February 2016 unless otherwise noted.

World C+C

They have world C+C peaking, so far, in November 2015 at 80,630,000 bpd. February production was 79,653,000 bpd, or 977,000 bpd below the peak. World C+C production, they say, averaged 80,035,000 in 2015. Average for the first two months of 2016 was 79,933.000 or 102,000 bpd below the average for 2015.

So with world production continuing to decline, there is little doubt that 2016 production will be well below 2015 production.

Non-OPEC

They have Non-OPEC peaking in March 2015 at 46,504,000 bpd and down by 925,000 bpd in February to 45,579,000 bpd.

OPEC C+C

They also publish OPEC members data, Table 11.1a. OPEC C+C failed to breach its 2012 peak but did reach 34,562,000 bpd in July 2015 but by February 2016 it was down 488,000 bpd to 34,074,000 bpd.

Canada

This is the EIA’s version of Canadian production. It looks exactly like Canada’s National Energy Board data except the EIA’s data is about 150,000 bpd less than Canada’s NEB shows. Obviously Canada is counting something that the EIA is not. Look for Canada’s production to decline substantially in 2016. And those May wildfires will not help at all.

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

Texas Update May 2016 and Eagle Ford Output Estimat

May 29, 2016

Texas Update May 2016 and Eagle Ford Output Estimate

Dean has provided me with his latest update for Texas Oil and Natural Gas production. Texas C+C output has increased slightly over the first 3 months of 2016.

blogchart/

Texas C+C output was 3549 kb/d in March 2016, about 39 kb/d higher than February.

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Texas crude output was 3079 kb/d in March 2016, about 29 kb/d higher than February.

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Condensate output was 470 kb/d in March 2016, 11 kb/d higher than February.

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Natural gas output in Texas was 24,690 MMCF/d, 309 MMCF/d higher than February.

Using RRC data, I determined the percentage of Texas C+C output produced in the Eagle Ford Shale from April 2012 to March 2016. This percentage was than multiplied by Dean’s estimate for Texas C+C output to get an estimate of Eagle Ford C+C output from April 2012 to March 2016. The Chart below compares the RRC data for the Eagle Ford with my estimate using Dean’s Texas C+C estimate.

blogchart/

Eagle Ford output was about 1390 kb/d in March 2016, about 20 kb/d higher than February. The annual decline rate from Feb 2015 to March 2016 was about 220 kb/d or roughly 15% per year. Since November 2015 Eagle Ford output has declined very little. The red data points are used for the trend line in the chart below.

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

North Dakota Oil Production Declining But Slowly

May 14, 2016

North Dakota Oil Production Declining But Slowly

The North Dakota Oil Production Stats are out. North Dakota crude oil production was down just less than 10,000 barrels per day.

North Dakota BPD

Bakken crude oil production was down 7,743 bpd in March while all North Dakota production was down 9,846 barrels per day.

From the Director’s Cut:

Producing Wells
February 13,017
March 13,024 (preliminary) (all-time high was Oct 2015 13,190)
Permitting
February 70 drilling and 1 seismic
March 56 drilling and 4 seismic
April 66 drilling and 0 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price
February $18.07/barrel
March $26.62/barrel
April $26.87/barrel
Today $33.00/barrel (all-time high was $136.29 7/3/2008)

Rig Count
February 40
March 32
April 29
Today’s rig count is 27 (lowest since July 2005 when it was 27)(all-time high was 218 on 5/29/2012)

Comments:

The drilling rig count fell 8 from February to March, 3 from March to April, and 2 more from April to today. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions fell from 64(final) in February to 59(preliminary) in March. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017. There were no significant precipitation events, 4 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

Over 98% of drilling now targets the Bakken and Three Forks formations.

Estimated wells waiting on completion services is 920, up 13 from the end of February to the end of March. Estimated inactive well count is 1,523, up 84 from the end of February to the end of March.

Bakken Bpd 2

Looking at the longer term chart we can see that the increase in production beginning in around 2011 was very steep while the decline has been less dramatic.
Bakken Change

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

Peak Oil Is Back

April 25, 2016

Peak Oil Is Back

Where did all the oil go? The peak is back

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.

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

OPEC Update

April 21, 2016

OPEC Update

All charts are updated through March 2016

The latest OPEC Monthly Oil Market Report is out out. The charts are “Crude Only”production and do not reflect condensate production.

Also the charts, except for Libya, are not zero based. I chose to amplify the change rather than the total. OPEC is now 13 nations with the the addition of Indonesia.

All Data is in thousand barrels per day.

OPEC 13

OPEC production was up 15,000 barrels per day in March. But there has really been very little change since June of 2015.

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 big gainer in March was Iran while the biggest loser was the UAE. Notice that the UAE says their production recovered in March, from their big drop in February. But OPEC’s “Secondary Sources” says they did not, they fell another 100,000 barrels per day.

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

World Crude plus Condensate Decline Rate

April 7, 2016

World Crude plus Condensate Decline Rate

There is concern that World C+C may decline steeply after the peak, I believe those concerns are over blown. There is always the possibility that there could be a severe recession due to high debt levels, high oil prices or potentially due to both problems in combination. War and environmental damage due to overpopulation are also potential problems which may lead to a crisis.

If none of these problems arises in the near term (say for the next ten years), and demand for oil is high enough to keep annual average oil prices above $75/b from 2018 to 2025, then the average annual decline rate of oil (C+C) output will remain under 2%.

For simplicity in the analysis that follows, I assume the peak in C+C output is 2015 and that output will decline at a relatively steady rate from 2015 to 2025. This in unlikely to be the case in practice and the actual path of future world output is unknown, the intention is to determine a likely trend line for World C+C output. Using quarterly C+C output data from the EIA, I constructed the charts that follow.

Data is from the International Energy Statistics page at the EIA website.

The “Big 14” oil producers from 2002 to 2015 are (in order from largest to smallest): Russia, Saudi Arabia, United States, China, Iran, Mexico, Canada, UAE, Venezuela, Kuwait, Iraq, Nigeria, Norway, and Brazil. The Rest of the World (ROW) is all other oil producers besides the “Big 14”.
All charts below (except the natural log charts) are in kb/d.

declinepost/

The Big 14 increased C+C output by about 8 Mb/d from 2010 to 2015.

declinepost/

For the ROW C+C output decreased by about 3 Mb/d from 2010 to 2015.

declinepost/

To consider decline rates we look at the linear trend of the natural log of output. For the ROW the average annual decline rate was 2.69% from 2010 to 2015.

declinepost/

The C+C output of the Big 14 increased at an average annual rate of 2.71% from 2010 to 2015.

declinepost/

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

Texas Oil and Gas Production March 2016

March 24, 2016

Texas Oil and Gas Production March 2016

Most of the charts that follow were produced by Dean Fantazzini and are in barrels of output per day for oil, condensate, and oil plus condensate except where noted. In my opinion Dean’s estimates for Texas output for the most recent 24 months are the best that I have seen. I appreciate him sharing his outstanding work with us.

TXchart/

In the chart above corrected output is 3477 kb/d for TX C+C in Jan 2016, an increase of 73 kb/d from Dec 2015. Note that from May 2015 to Dec 2015 the most recent month’s estimate has been about 28 kb/d too high on average, so actual Jan 2016 output might be about 3450 kb/d.

TXchart/

The chart above compares Dean’s corrected C+C estimate with both the EIA estimate and RRC data which is incomplete for the most recent 24 months. The “RRC error %” is Dean’s “corrected” divided by RRC data minus one times 100 and is read from the right axis.

TXchart/

Texas oil output was 3014 kb/d in Jan 2016 based on Dean’s corrected estimate, an increase of 73.5 kb/d from Dec 2015.

TXchart/

The corrected Texas condensate output was 463 kb/d in Jan 2016, a decrease of 1 kb/d from Dec 2015.

TXchart/

The chart above is in thousands of cubic feet per day. The Jan 2016 corrected estimate is 2381 million cubic feet per day, a decrease of 176 million cubic feet per day from Dec 2015.

TXchart/

The chart above shows how Dean’s estimates have changed over time from April 2015 to Jan 2016. Notice especially the big change in the estimates from April to June 2015, after that the estimates seem to converge nicely from June 2015 through Jan 2016. My guess is that the data processing in Texas has been improving dramatically over the past 7 months.

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

An Empirical Model For Oil Prices and Some Implications

March 21, 2016

An Empirical Model For Oil Prices and Some Implications

Introduction

This work is preliminary. It is a preview of part of a paper I am writing with Aude Illig. There are three main reasons I am making this post. The first is as a public service. There are many people reading this blog who are directly affected by oil prices and who have to make decisions based on future oil prices. Having a model to understand the dynamics of oil prices is of use to them. The second reason is that some people reading this blog model oil extraction. These models either omit price considerations or make assumptions on them. Our model is a large improvement on these assumptions so it should improve their extraction models. The final reason is that I consider the quality of the comments on this blog to be high. I believe that the feedback I get from this post will improve the quality of the final paper. Indeed, Dennis Coyne has already provided valuable feedback after previewing the post. This study has been a humbling experience. Get ready to throw out everything you thought you knew about oil prices.

The model does not by any means explain all oil price variation. What is remarkable is that with only one data set, it explains so much. Many factors may affect the price of oil. This model provides a base to which other variables can be added to find what explains oil prices.

I was asked to write a chapter titled “Strategies for an Economy Facing Energy Constraints” for a book last year which I wrote with my daughter. I do not think the book will be published but the chapter may be of interest to some. I have posted the pdf file on line and will refer to it often [2].

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

OPEC Declines in February Despite Huge Iran Increase

March 16, 2016

OPEC Declines in February Despite Huge Iran Increase

All charts are through February 2016

The OPEC Monthly Oil Market Report just came out. The charts are “Crude Only”production and do not reflect condensate production.

Also the charts, except for Libya, are not zero based. I chose to amplify the change rather than the total. OPEC is now 13 nations with the the addition of Indonesia.

All Data is in thousand barrels per day.

OPEC 13

OPEC production was down 174,800 barrels per day in February

Secondary Sources

Algeria

Algeria peaked in November 2007 and has been in a steady decline since that point.

Angola

Angola has been holding steady since peaking in 2008 and 2010.

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

Coal Shock Model

March 13, 2016

Coal Shock Model

blog1603/

The eventual peak in World fossil fuel output is a potentially serious problem for human civilization. Many people have studied this problem, including Jean Laherrere, Steve Mohr, Paul Pukite (aka Webhubbletelescope), and David Rutledge.

I have found Steve Mohr’s work the most comprehensive as he covered coal, oil, and natural gas from both the supply and demand perspective in his PhD Thesis. Jean Laherrere has studied the problem extensively with his focus primarily on oil and natural gas, but with some exploration of the coal resource as well. David Rutledge has studied the coal resource using linearization techniques on the production data (which he calls logit and probit).

Paul Pukite introduced the Shock Model with dispersive discovery which he has used primarily to look at how oil and natural gas resources are developed and extracted over time. In the past I have attempted to apply Paul Pukite’s Shock Model (in a simplified form) to the discovery data found in Jean Laherrere’s work for both oil and natural gas, using the analysis of Steve Mohr as a guide for the URR of my low and high scenarios along with the insight gleaned from Hubbert Linearization.

In the current post I will apply the Shock model to the coal resource, again trying to build on the work of Mohr, Rutledge, Laherrere, and Pukite.

A summary of URR estimates for World coal are below:

blog1603/

The “Laherrere+Rutledge” estimate uses the Rutledge best estimate for the low case and Laherrere’s low and medium cases for the medium and high cases. Laherrere also has a high case of 750 Gtoe for the World coal URR, which seems too optimistic in my opinion. The “high” estimate of Steve Mohr has been reduced from his “Case 3” estimate of 670 Gtoe by 40 Gtoe because I have assumed lignite and black coal resources are lower than his high estimate.

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

International Rig Count Still Falling

March 7, 2016

International Rig Count Still Falling

The Baker Hughes International Rig Count is out.

The rig count data in all charts below is through February 2016.

BH Total Intl.

The Baker Hughes International Rig Count does not include the US, Canada, any of the FSU countries or inland China. It does include offshore China. That rig count peaked in July 2014 at 1,382 rigs and in February stood at 1,018, down 364 rigs from the peak.

BH Total World

The Baker Hughes total world rig count does include US and Canada but not the FSU or inland China. That total oil & gas rig count stood at 1761 in February, down 52% since December of 2014.

BH US Monthly

The US monthly total rig count stood at 532 in February, down 72% from November 2014.

BH Canada

The Canadian total rig count usually peaks in February. It did not in 2015 but stood at 211 this February which will likely be the peak for 2016. That count is down from 626 rigs in February 2014, down over 66%. That was the last pre-price crash February peak.

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

Oil Price And Its Effect On Production

February 26, 2016

Oil Price And Its Effect On Production

The JODI Oil World Database came out a few days ago. The data is through December 2015. The JODI C+C production numbers differs somewhat from the EIA numbers. The JODI OPEC numbers are crude. Also there are a few very small producers that do not report to JODI so their numbers will be slightly less than the EIA. But otherwise they are pretty accurate.

Also, JODI, for some reason, does not count all of Canada’s oil sands production. So for Canada I use Canada’s National Energy Board numbers instead.

The JODI C+C numbers, for Non-OPEC, will average about 2.4 million barrels per day less than the EIA. This is largely due to some countries not reporting to JODI. But these countries only have small changes in their overall production so would have little effect on any of my charts or calculations.

JODI World C+C

According to JODI, world crude oil production peaked, so far, in July and has declined by 339,000 barrels per day.

JODI Non-OPEC

The recent price collapse has had a greater effect on Non-OPEC production than OPEC production. Non-OPEC production peaked, so far, in December 2014 and in December 2015 stood at 650,000 bpd below that peak.

JODI Russia

No discussion of Non-OPEC production would be complete without Russia, Non-OPEC’s largest producer. I would never claim, just by looking at the chart, that Russia is peaking, or has peaked. But there have been reports coming out of Russia for over two years now that Russia is peaking. Some of those reports like this one Global and Russian Energy Outlook to 2040 have been reported on this blog. I think the charts lend strong credence to those reports.

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

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