Home » Posts tagged 'SRSrocco report' (Page 6)
Tag Archives: SRSrocco report
THE MASSIVE 46 STORY TALL STRUCTURE: The Penasquito Mine Tailings Dam
THE MASSIVE 46 STORY TALL STRUCTURE: The Penasquito Mine Tailings Dam
The colossal Penasquito Mine’s tailings dam will reach a stunning height of a 46 story skyscraper over the next decade. That is, if the mine reopens and is allowed to continue business as usual. Newmont-Goldcorp suspended operations at Mexico’s second largest silver mine on April 29th, due to a blockade stemming from issues with the local community in regards to water supply concerns and problems with a trucking contractor.
Last year, the Penasquito Mine produced 272,000 oz of gold and over 18 million oz of silver. However, it plans on producing over 5 million oz of gold and 400+ million oz of silver over the next decade.
After I published my article, MORE TROUBLE IN MEXICO: Second Largest Silver Mine Suspended Operations, I did some research on Penasquito’s tailings dam, and when I saw a photo of the dam, I was literally shocked by its massive size. I never really gave it much thought about where all the waste ended up after the processing of ore was finished. It’s a typical problem we all deal with today, OUT OF SIGHT, OUT OF MIND.
Let me start by saying that the tailings dam is so large; it surpasses the size of the Penasquito open-pit mine itself. For clarification, the tailings dam (or ponds) are used to store the processed waste slurry after the metals have been extracted. Here is a layout of the Penasquito Mining Operation:
(image courtesy of Goldcorp 2018 Tailings & Mine Waste Conference PDF report)
As you can see, the tailings dam is 4 kilometers long compared to the Penasquito open-pit mine, which is about half its size. However, this layout doesn’t give the epic scale of the tailings dam justice. According to the images in Goldcorp’s 2018 Tailings & Mine Waste Conference PDF, and data from the company’s Feb 2019 Penasquito Mine Tour Presentation, the tailings dam is currently 85 meters tall, or nearly 280 feet in height:
…click on the above link to read the rest of the article…
THE END OF THE OIL GIANTS: And What It Means
THE END OF THE OIL GIANTS: And What It Means
Recently, Saudi Aramco, the world largest oil exporter, has acknowledged that Ghawar, the world largest oil field, is in decline. The news went mostly unnoticed except in the specialised media. OK, so the Saudi have a bit of bother, so what? In fact, this piece of news is extremely important. Previously the oil world had been led to believe that Ghawar was producing over 5 Million barrels/day (Mb/d).[1] As part of its fund-raising, Aramco has disclosed that it is in fact down to 3.8Mb/d.
THE END OF THE OIL GIANTS: And What It Means
GUEST POST: By Dr. Louis Arnoux
The meaning of this news snippet takes a bit of explaining. What the specialised media did not emphasise is what follows:
When giant oil fields go into decline, they usually decline abruptly. Ghawar’s decline is ominous. It was discovered in 1948 and until recently represented about 50% of the oil crude production of the Kingdom of Saudi Arabia (KSA). Ghawar is representative of some 100 to 200 giant oil fields. Most of them are old. The most recently discovered giants are of a diminutive size compared with those old giants.[2]
Giants represent about 1% of the total number of oil fields and yet produce over 60% of conventional oil crude.[3]Very few real giants have been discovered in recent years. The geology of the planet is now known well enough and prospects for new significant giant oil discoveries are known to be low. In recent decades, discoveries of smaller oil fields have not been able to compensate for the eventual loss of the giants. Figure 1 illustrates the matter. It shows the net flux of addition to reserves per year (additional volumes less volumes used).
…click on the above link to read the rest of the article…
Global Economic Growth In Serious Trouble When U.S. Shale Oil Peaks & Declines
Global Economic Growth In Serious Trouble When U.S. Shale Oil Peaks & Declines
The global economy would be in serious trouble if it weren’t for the rapid growth of U.S. shale oil production. Since the 2008 financial crisis, U.S. shale oil production has increased by more than 6 million barrels per day. Without these additional barrels of oil, the massive money printing and asset purchases by the central banks would not have been as successful in propping up the economy and markets.
We must remember this simple fact; energy drives the markets, not finance. Finance steers the market. So, for the economy to expand, there must be oil production growth. However, it would be unwise for the market-economy to rely upon the U.S. shale industry as the leading driver of global oil production growth for the foreseeable future.
Why? Well, there are several reasons, but let’s first look at how much the increase in U.S. shale oil production has accounted for the rise in global oil supply since 2008. Of the 9.6 million barrels per day (mbd) of global oil production growth 2008-2017, the United States supplied two-thirds or 6.3 mbd of the total:
Interestingly, global oil production minus the United States and Canada didn’t increase in 2009, 2010 or 2011. There was a small bump up in 2012 and finally by 2105-2017 did global oil production minus the U.S. and Canada increase by 1.7 mbd. Now, let me repeat that. If we add up ALL THE OTHER COUNTRIES in the world producing oil, the net increase from 2008 to 2017 was only 1.7 mbd. Thus, of the total 9.6 mbd of global oil production growth 2008-2017, the U.S. (6.3 mbd) and Canada (1.6 mbd) accounted for 82% of the total.
…click on the above link to read the rest of the article…
MORE TROUBLE IN MEXICO: Second Largest Silver Mine Suspended Operations
MORE TROUBLE IN MEXICO: Second Largest Silver Mine Suspended Operations
In just a little more than a week after the mighty Newmont-Goldcorp merger was finalized, the company suspended operations of its largest gold-silver mine in Mexico. The Penasquito Mine, which produced more than a 500,000 ounces of gold and 25 million ounces of silver in a single year, has been dealing with a blockade of its operations since March 27th.
The blockade was started due to issues with the local community in regards to water supply concerns and problems with a trucking contractor. However, the protests by the local community over water rights have been going on ever since the Penasquito Mine started operations in 2010.
According to the article, Goldcorp using excessive water at Peñasquito mine – critics, research by McGill Research Group, reported that the Penasquito Mine was using three times the amount of water than it originally agreed upon. Furthermore, the large open-pit gold-silver mine, located in the state of Zacatecas, was also consuming three times the amount of water supplied to the entire City of Zacatecas (population 129,000).
To get an idea the amount of water being consumed by the Penasquito Mine, I looked at the data from Goldcorp’s most recent Sustainability Report. In 2017, the Penasquito Mine withdrew a staggering 7.9 billion gallons of water to supply its operations for the year. Of that total amount, 93% came from groundwater. That is one hell of a lot of water.
It will be interesting to see how long it takes for the suspension to end. However, with the election of the new President AMLO of Mexico, Andrés Manuel López Obrador, large foreign mining companies in Mexico may find it increasingly challenging to GET THEIR WAY as they have in the past with the help of pro-mining leaders.
Regardless, the Penasquito Mine produced the second highest amount of silver in Mexico last year:
…click on the above link to read the rest of the article…
LOUSY SHALE ECONOMICS: Financial Troubles Continue At ExxonMobil
LOUSY SHALE ECONOMICS: Financial Troubles Continue At ExxonMobil
After reporting lower than expected earnings, ExxonMobil’s stock price sold off on Friday. The company blamed poor performance on reduced production volumes and a weaker oil price. However, the real culprit will turn out to be Exxon’s big move into the Great U.S. Shale Oil Ponzi Scheme.
As I mentioned in my recent article, EXXONMOBIL U.S. OIL & GAS FINANCIAL TRAIN-WRECK: Producing Shale Is Destroying Its Bottom Line, the company will continue to spend a great deal of capital with little financial reward. So, it wasn’t a surprise to see Exxon’s Q1 2019 earnings decline by $3.6 billion compared to the previous quarter… even though U.S. oil production had increased.
While weaker earnings were experienced across all of the company’s sectors, upstream (oil & gas wells), downstream (refining and marketing products) and chemical, the big RED FLAG was in the U.S. oil and gas sector. According to Exxon’s Q1 2019 Earnings Release, the company invested $2.5 billion in CAPEX (capital expenditures) on its U.S. oil and gas wells, to earn a paltry $96 million in earnings:
Now, compare the miserable U.S. upstream earnings to Exxon’s International upstream earnings of $2.78 billion on $2.8 billion of capital expenditures. ExxonMobil will likely invest close to $10 billion in CAPEX on just its U.S. upstream sector (spent over $5 billion of CAPEX past two quarters) this year, and if oil prices fall, it will impact their earnings quite negatively.
This next chart shows how much money Exxon is investing in its U.S. oil and gas sector each quarter:
We can see that Exxon ramped up capital expenditures in its U.S. oil and gas properties (mostly shale) significantly since the beginning of 2018. Over the past year, the company has spent $8.8 billion to increase production by 77,000 barrels per day.
…click on the above link to read the rest of the article…
SHALE STOCK LOSES 99% OF ITS VALUE: Investor Warning For The Future Of The Industry?
SHALE STOCK LOSES 99% OF ITS VALUE: Investor Warning For The Future Of The Industry?
If you think the carnage taking place in the shale oil companies is nearly over, you couldn’t be more wrong. I believe the bloodbath in the shale oil stocks has only just begun. Once we see the majority of shale stocks trading on the pink sheets as penny stocks will we finally close the book on the Greatest Energy Ponzi Scheme in history.
I first wrote about the “Disconnect” between the major oil companies share prices versus the shale stocks in my article, THE BLOODBATH IN U.S. SHALE STOCKS CONTINUES: Worst Is Yet To Come. In that article, I showed how several of the major oil companies’ stock prices had corrected back close to their highs set in October 2018. However, the shale stocks never really recovered and are still considerably lower than their peaks set last year.
Here is the chart from that article linked above:
Even though many of the shale stocks shown in this chart have seen their prices move higher since I posted it in the middle of March, they are still well off their highs. For example, Whiting Petroleum peaked at $55 in October and is currently trading at $27. Thus, it is still 50% off its peak last year. Furthermore, Oasis trading at $6.60 is still 53% off its high of $14.
However, there are some outliers like Pioneer. Pioneer hit $190 back in October 2018 and was only trading at $140 in mid-March. So, it was still well off its October peak. Although over the past month, Pioneer is now trading at $175, so it’s not too far from its previous high. While Pioneer’s share price is behaving much better than Whiting, Continental, Oasis, and Callon, I believe there is a huge “PERMIAN PREMIUM” being paid by investors who have more money than sense.
…click on the above link to read the rest of the article…
THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports
THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports
The Middle East is heading for a crisis in its oil industry. Unfortunately, the market doesn’t realize there is any danger on the horizon because it mainly focuses on how much oil the Middle East is producing rather than its exports. You see, it doesn’t really matter how much oil a country produces but rather the amount of its net oil exports.
A perfect example of this is Mexico. As I mentioned in a recent article, NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer, Mexico is now a net importer of oil for the first time in more than 50 years. Furthermore, the IEA – International Energy Agency, published in their newest OMR Report that Mexico is forecasted to lose another 170,000 barrels per day of oil production in 2019. Thus, this is terrible news for the United States southern neighbor as it will have to import even more oil to satisfy its domestic consumption.
Now, when we think of the Middle East, we are mostly concerned with its oil production. However, the Middle Eastern countries, just like Mexico, have been increasing their domestic consumption, quite considerably, over the past 40+ years. How much… well, let’s take a look. Since 2000, total Middle East domestic oil consumption jumped from 5.1 million barrels per day (mbd) to 9.3 mbd in 2017:
As we can see, while Middle East oil production increased by 7.9 mbd from 2000 to 2017, domestic consumption expanded by 4.2 mbd. This means that more than 50% of the Middle East’s production growth during this period was absorbed by domestic use. The next chart shows how the changes in the regions oil production and consumption impacted net oil exports.
…click on the above link to read the rest of the article…
The Massive Increase Of Central Bank Paper Assets Warns Of Financial Danger Ahead
The Massive Increase Of Central Bank Paper Assets Warns Of Financial Danger Ahead
By purchasing increasingly worthless paper assets, we can thank the central banks for propping up the global economy for the past decade. Since the 2008 financial crisis, the top central bank’s have acquired $13 trillion worth of assets on their balance sheets. While the central banks label these balance sheet items as “Assets,” they are nothing more than glorified Paper IOU’s.
And these trillions of dollars worth of paper IOU’s can only get their value from the burning of energy… a critical factor overlooked by mainstream financial analysts. Without growing global oil production, most of these “supposed” assets would see their values plummet. Unfortunately, the world is heading towards a collapse of global oil production due to the Falling EROI – Energy Returned On Investment and the Thermodynamics of oil depletion.
Yes, the disintegration of the global oil industry is now speeding up. Here are a few headlines that should provide some clues on how the situation is rapidly deteriorating:
Wall Street Loses Faith In Shale
Saudi Aramco’s Ghawar field produces 1.2mbpd less than expected
NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer
Fracked Shale Oil Wells Drying Up Faster than Predicted, Wall Street Journal Finds
THE BLOODBATH IN U.S. SHALE STOCKS CONTINUES: Worst Is Yet To Come
US Shale Companies Facing “Catastrophic Failure” over Ballooning Debt
EXXONMOBIL U.S. OIL & GAS FINANCIAL TRAIN-WRECK: Producing Shale Is Destroying Its Bottom Line
As you can see, most of the articles are on the U.S. Shale Industry. We must remember, the majority of the increase in global oil production over the past decade (80+%) is due to ramping up of the U.S. shale oil and Canadian oil sands operations. U.S. shale oil production has surged by more than 7 million barrels per day (mbd) since 2008:
…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…
IT’S OFFICIAL; U.S. Silver Production The Lowest In More Than 70 Years
IT’S OFFICIAL; U.S. Silver Production The Lowest In More Than 70 Years
With the latest release by the USGS, silver production in the U.S. is now the lowest in more than 70 years. We have to go all the way back until the year after World War II ended to see U.S. silver production less than it was in 2018. While many reasons can be attributed to the decline, the main factors are falling ore grades and mine economics.
Unfortunately, there just aren’t too many economic silver deposits in the United States, especially with the high level of environmental and governmental regulations. Instead of dealing with all the bureaucracy, companies are looking to Mexico and South America to open new silver projects.
Regardless, U.S. silver production declined by more than 100 metric tons last year, or 10% in 2018, mainly due to the ongoing closure of the Lucky Friday Mine in Idaho. The Lucky Friday Mine has been shut down ever since the United Steelworkers went on strike on March 13, 2017. However, the dropoff in silver mine supply can’t all be blamed on the Lucky Friday Mine. Domestic silver production has been trending lower for the past two decades:
In 2000, the U.S. produced 63.7 million oz (1,980 metric tons) of silver compared to just 29.7 million oz (923 metric tons) last year. Thus, U.S. silver production has fallen by more than 50% in less than two decades. Silver production in the U.S. ramped up significantly during the 1990s due to the McCoy-Cove Silver Mine in Nevada. At its peak, the McCoy-Cove Mine supplied 20% of the total U.S. silver production:
I don’t have a chart of U.S. silver mine supply over the past 100 years, but I checked the USGS data, and in 1946, the country produced only 713 metric tons (mt) of silver.
…click on the above link to read the rest of the article…
THE BLOODBATH IN U.S. SHALE STOCKS CONTINUES: Worst Is Yet To Come
THE BLOODBATH IN U.S. SHALE STOCKS CONTINUES: Worst Is Yet To Come
Have you noticed the absolute carnage taking place in the U.S. shale oil stocks? It seems as if Wall Street and investors are finally growing weary of an industry that hasn’t made money in the past decade. Unfortunately, it took a longer than I expected, but the shale stocks have significantly underperformed the price action by the major oil companies. Now, when I say, “underperformed,” wait until you see the numbers.
Of course, the bloodbath taking place in U.S. shale stocks shouldn’t be a surprise as the WARNING SIGNS have been many. For example, this article back in February, Wall Street Loses Faith In Shale, stated the following:
To Wall Street, the shale industry has lost a lot of its allure. A decade’s worth of promises have failed to materialize, and Big Finance is cutting some of its ties with smaller shale drillers who have not delivered.
The Wall Street Journal reports that the shale industry only saw $22 billion in new bond and equity deals, down by more than half from 2016 levels, which was a much worse time for the market.
The steep decline in new debt and equity issuance is a sign that major investors are no longer rushing to finance unprofitable shale drilling. It’s worth noting that this is a new development. For years Wall Street financed unprofitable drilling, holding out on the promise that rapid production growth would eventually pay off.
So, it seems as if investors are no longer willing to finance the U.S. Shale Oil Industry Black Hole. And why should they? One of the largest shale players in the Permian, Pioneer Resources, suffered its eighth consecutive year of negative free cash flow. In 2018, Pioneer spent $541 million more on capital expenditures than it made from cash from operations and if we add up all the eight years, it’s a grand total of $6.8 billion in negative free cash flow.
…click on the above link to read the rest of the article…
The Bakken Hit A New Record In 2018, But It’s A Bad Sign For The Industry
The Bakken Hit A New Record In 2018, But It’s A Bad Sign For The Industry
The insanity continues in the United States second largest shale oil field as the fundamental economics go from bad to worse. While it is true that the shale industry doesn’t look as dire as it did back in 2016 when oil prices fell off a cliff, I can assure you the worst is yet to come. Unfortunately, the market is blind to the biggest Ponzi Scheme in history, because wisdom and reason have disappeared from the energy industry years ago.
How can I say that? Well, I heard it from several oilmen that worked in the conventional oil industry… an industry that made good money, paid its bills, and didn’t go much into debt. They told me that the only way shale oil could work is if the company went public so it could raise money from some poor unworthy slobs they didn’t know in order to fund an uneconomic business model. These oilmen told me none of them would be crazy or stupid enough to go into the shale oil business. As veteran oil analyst Art Berman stated, “Why on earth would anyone want to invest in shale to at best, breakeven?”
So, the shale oil saga continues as the blind lead the blind. I know this because I have been fortunate enough to speak with someone in the shale industry and I continue to receive updates on just how bad the situation is unfolding. Sounds crazy, but there are a few very smart and clever people that know the disaster taking place in the shale industry, but not many.
…click on the above link to read the rest of the article…
Insane Stock Market Rally Due To Massive Global Monetary Liquidity
Insane Stock Market Rally Due To Massive Global Monetary Liquidity
If you’re puzzled by the magnitude of the stock market correction since late December, you can thank the central banks for the rally. Yes, that’s correct… after the Dow Jones suffered the worst Christmas Eve trading day ever, the massive central bank monetary liquidity helped push the index up 20% from its low over the next two months.
Of course, the markets were due for a reversal as nothing goes down in a straight line, but to see the sort of buying in the face of negative economic news and lack-luster earnings means that the inevitable CRASH will be even bigger when it finally arrives.
Now, according to the article, Back To Fundamentals, Daniel Lacalle stated the following in regards to the markets:
In 2018 we saw the first drop in global liquidity in more than a decade, and that generated significant losses in financial markets. Since the end of December stock markets have rebounded strongly because the data, although poor, is not as bad as feared, and mainly because the Federal Reserve changed its tone on the number of rate hikes, the ECB announced that it would be much more accommodative and the Central Bank of China introduced the largest injection of liquidity in five years.
In fact, between December 26 and February 15 we have seen the largest injection of liquidity in the markets of the last two years, bringing the global money supply to record levels.
The two key points stated above were that a drop in global liquidity in 2018 generated significant losses in the financial markets and the largest injection of global liquidity from December 26 to February 15th brought the money supply to a record level and pushed global stock markets back higher. This can be clearly seen in Lacalle’s charts:
…click on the above link to read the rest of the article…
EXXONMOBIL U.S. OIL & GAS FINANCIAL TRAIN-WRECK: Producing Shale Is Destroying Its Bottom Line
EXXONMOBIL U.S. OIL & GAS FINANCIAL TRAIN-WRECK: Producing Shale Is Destroying Its Bottom Line
The United States largest oil company, ExxonMobil, is facing a financial train-wreck in its domestic oil and gas sector. And, the majority of the blame can be attributed to Exxon’s move into shale. After Exxon acquired XTO Energy in 2009, a U.S. shale oil and gas producer, it has seriously begun to ramp up shale oil production in the Permian.
ExxonMobil plans on expanding Permian shale oil production to 600,000 barrels a day (bd) by 2025, up from the 115,000 bd as of October (thanks to the data from Shaleprofile.com). If you look at the chart below, Exxon’s Permian shale oil production shot up from less than 50,000 bd at the beginning of 2018, to over 115,000 bd in October:
Exxon is now the largest player in the Permian, according to the article, Exxon Becomes Top Permian Driller to Combat Falling Oil Output:
Exxon Mobil Corp. has overtaken rivals to become the most active driller in the Permian Basin, showing the urgency with which the world’s biggest oil company by market value is pursuing U.S. shale.
Exxon’s escalation in the Permian is essentially a bet that it can drill wells so cheaply that they’ll be profitable despite crude’s tumble since early October. The company says its shale wells can make double-digit returns with oil at just $35 a barrel.
Exxon moved into the Permian to stem a decade of falling domestic U.S. oil production. However, its statement that it will enjoy double-digit gains at a $35 oil price in the Permian may be more “delusional thinking” rather than company pragmatic optimism. I spent some time looking over Exxon’s financial statements, and I have to say I was quite shocked by their utterly dismal 2018 U.S. oil and gas financials.
…click on the above link to read the rest of the article…
