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Preface. Peak oil is here! The global production of crude oil happened in November of 2018 (EIA 2020), and has declined for four years, enough time to officially declare global peak oil production. Conventional crude oil production leveled off in 2005, and peaked in 2008 at 69.5 million barrels per day (mb/d) according to Europe’s International Energy Agency (IEA 2018 p45). The U.S. Energy Information Agency shows global peak crude oil production in 2018 at 82.9 mb/d because they included unconventional tight oil, oil sands, and deep-sea oil. Below is a chart created by Tad Patzek from EIA data:

Nor will we ever reach “peak oil demand” because heavy-duty transportation (trucks, locomotives, ships), manufacturing, the 500,000 products made out of petroleum, and natural gas fertilizer that keeps 4 billion of us are utterly dependent on fossil fuels. Even the electric grid depends on fossil fuels to provide two-thirds of the energy, and nearly all of the energy to construct ReBuildables (they are NOT renewable). This is explained in great detail in my latest book “Life After Fossil Fuels: A Reality Check on Alternative Energy” and previous book” When Trucks Stop Running: Energy and the Future of Transportation”

The IEA forecast a supply crunch by 2025 in their rosy and very unrealistic New Policies scenario, which assumes greater efficiencies and alternative fuels and electric cars are adopted (Figure 1). By 2025, with 81% of global oil declining at up to 8% percent a year (Fustier 2016, IEA 2018), 34 mb/d of new output will be needed, and 54 mb/d if facilities aren’t maintained. That is more than three times Saudi Arabian production. The 15 mb/d of predicted U.S. shale isn’t likely — indeed, the IEA shows it declining in the mid-2020s (IEA 2018 Table 3.1).

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

Annual Reserve Revisions Part IV: Shale Producers

June 29, 2021

Annual Reserve Revisions Part IV: Shale Producers

EIA Liquids Reserve Estimates

This follows on from Part I, which looked at EIA reserves and revision estimates for US as a whole and the GoM, and concentrates on the on-shore tight oil and (below)gas producing regions.

The EIA issues revision data by whole states or state districts rather than by basin, so some of the reserves and production, but a small proportion, will be from conventional reservoirs. It does give total reserves for each shale basin but not the changes, and I didn’t go to the trouble of pro-rating everything against that. Its data only goes through 2019; the 2020 update will be out in December or January.

The regions for each basins used are Permian – Texas Districts 7C, 8 and 8A and East New Mexico; Bakken – North Dakota and Montana; Eagle Ford – Texas Districts 1, 2, 3 and 4 Onshore; Niobara – Colorado; Marcelus – Pennsylvania and West Virginia; Utica – Ohio; Haynesville – Louisiana South Onshore and Texas District 6; Barnett – Texas Districts 5, 7B and 9; Woodford – Oklahoma ; Fayetteville – Arkansas.

Remaining reserves are for crude, condensate and NGL, which is easier to include here given the way EIA presents its data. Totalled for all the basins these may have peaked in 2019, they were levelling off from 2018 and will certainly fall significantly in 2020.

Production was aggressively increasing in 2019, coming mainly from the Permian, but will fall in 2020, and given shale dynamics, a concurrent peak with reserves is not unlikely.

Cumulative adjustments and revisions turned negative in 2019 and I expect will show a major decline for 2020, which may well not be fully recovered even if prices rise significantly. To me this indicates that estimates for recovery factors were over-estimated originally and are gradually being corrected…

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

U.S. Energy Production Saw Steepest Drop On Record In 2020

May 13, 2021

U.S. Energy Production Saw Steepest Drop On Record In 2020

Due to economic responses to the pandemic, U.S. energy production dropped by 5 percent last year, marking the steepest annual decline on record, the U.S. Energy Information Administration (EIA) said on Thursday.

Last year, energy production in the United States fell to just below 96 quadrillion British thermal units (quads), a 5-percent decline from the record production in 2019, according to EIA’s Monthly Energy Review. The decline in absolute terms was the largest annual decrease in U.S. energy production on record, and this decline was primarily due to the pandemic, which slashed demand for energy.

The EIA calculates and compares different types of energy reported in different physical units such as barrels or cubic feet by converting sources of energy to common units of heat, called British thermal units (Btu).

Due to plunging drilling activity amid low oil prices, U.S. crude oil production fell by nearly 1 million barrels per day (bpd) last year, registering the largest annual decline in history, the EIA said earlier this year.

In 2020, U.S. crude oil production averaged 11.3 million bpd, dropping by 935,000 bpd—or 8 percent—compared to the record-high annual average of 12.2 million bpd in 2019.

Less than two months after American crude oil production reached a peak of 12.8 million bpd in January 2020, oil prices collapsed in March, leading to production shut-ins over the following months, and to the lowest average monthly production for 2020 in May, when U.S. output was just 10 million bpd, according to EIA’s estimates.

U.S. coal production also booked its largest annual decline on record last year, falling by 25 percent to less than 11 quads, the EIA said today.

Natural gas production also dropped in 2020, by 0.6 quads, or by 2 percent.

U.S. renewable energy production, however, rose by 2 percent to a record-high 11.8 quads in 2020, due to higher electricity generation from wind and solar, the EIA said.

Has oil peaked?

October 10, 2020

Has oil peaked?

Last month, the world’s 4^th largest oil company—BP—predicted that the world will never again consume as much petroleum as it did last year. So, have we finally hit peak oil? And if so, what does that mean for our economy and our world?

There was fierce controversy in the first decade of this century over claims by petroleum geologists and energy commentators that peak oil was imminent (I was a figure in that debate, writing several books on the topic). Most of those early claims were based on analysis of oil depletion and consequent supply constraints. BP, however, is talking about a peak in oil demand—which, according to its forecast, could fall by more than 10 percent this decade and as much as 50 percent over the next 20 years if the world takes strong action to limit climate change.

Source: PeakOilBarrel.com; production in thousands of barrels per day.

Numbers from the US Energy Information Administration’s Monthly Review tell us that world oil production (not counting biofuels and natural gas liquids) actually hit its zenith, so far at least, in November 2018, nearly reaching 84.5 million barrels per day. After that, production rates stalled, then plummeted in response to collapsing demand during the coronavirus pandemic. The current production level stands at about 76 mb/d.

Many early peak oil analysts predicted that the maximum rate of oil production would be achieved in the 2005-to-2010 timeframe, after which supplies would decline minimally at first, then more rapidly, causing prices to skyrocket and the economy to crash.

Those forecasters were partly right and partly wrong. Conventional oil production did plateau starting in 2005, and oil prices soared in 2007, helping trigger the Great Recession.

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

U.S. Oil Drilling Grinds To A Halt At Key Shale Hotspots

April 16, 2020

U.S. Oil Drilling Grinds To A Halt At Key Shale Hotspots

Shale rig

Oil and gas production in the United States has peaked and is already in decline.

The latest data from the EIA’s Drilling Productivity Report sees widespread production declines across all major shale basins in the country. The Permian is set to lose 76,000 bpd between April and May, with declines also evident in the Eagle Ford (-35,000 bpd), the Bakken (-28,000 bpd), the Anadarko (-21,000 bpd) and the Niobrara (-20,000 bpd).

Natural gas production is also in decline, a reality that occurred prior to the global pandemic but is set to accelerate. The Appalachian basin (Marcellus and Utica shales) are expected to lose 326 million cubic feet per day (mcf/d) in May, a loss of 1 percent of supply. In percentage terms, the Anadarko basin in Oklahoma is expected to see an even larger drop off – 216 mcf/d in May, or a 3 percent decline in production.

The sudden declines in production illustrates the fatal flaw in the shale business model. Once drilling slows down, production can immediately go negative due to steep decline rates. Shale E&Ps have to keep running fast on the drilling treadmill in order to keep production aloft. But the meltdown in prices has forced the industry to idle 179 rigs since mid-March.

With drilling grinding to a halt, output has slumped as “legacy” production declines take hold. That is, without new wells coming online to offset the declines from existing wells, overall production falls.

In specific terms, the Permian, for example, will lose 356,000 bpd from “legacy” wells in May, more than overwhelming the 280,000 bpd in new output from new wells. On a net basis, the Permian is set to lose 76,000 bpd in May.

That legacy decline rate has deepened with each passing year, requiring more aggressive drilling each month to keep production on an upward trend. But the treadmill has finally caught up to the industry.

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

The EIA Is Grossly Overestimating U.S. Shale

November 13, 2019

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 – March 2019 Edition with data for January 2019

April 6, 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

April 2, 2019

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…

EIA’s Electric Power Monthly – January 2019 Edition with data for November 2018

February 7, 2019

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…

EIA’s Electric Power Monthly – December 2018 Edition with data for October

December 31, 2018

EIA’s Electric Power Monthly – December 2018 Edition with data for October

chart/

The EIA released the latest edition of their Electric Power Monthly on December 26th, with data for October 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 to date.

In October, as usual for this time of the year, the absolute amount of electricity generated continued to decline with the mid summer demand for air conditioning falling away further. Coal and Natural Gas between them, fueled 64.98% of US electricity generation in October, with the contributions from most other major sources edging up slightly. The contribution from Natural Gas was down at 38.11%, from 40.01% in September, with the amount generated falling from 142,745 GWh to 124,027 GWh. Generation fueled by coal declined from 96,743 Gwh to 87,452 GWh resulting in the percentage contribution falling from 27.12% to 26.87%. The amount of electricity generated by Nuclear plants decreased from 64,725 GWh to 59,397 GWh with the resulting contribution actually rising very slightly from 18.14% to 18.25% in October. The amount generated by conventional hydroelectric increased from 18,663 GWh in September to 18,779 GWh in October with resulting contribution increasing to 5.77% as opposed to 5.23% in September. The amount generated by wind increased from 16,022 GWh to 19,507 GWh with the resulting contribution rising from 4.49% to 5.99% in September. The estimated total solar output fell from 9,153 GWh to 7,625 GWh with the resulting contribution falling from 2.57% to 2.34%. The contribution of zero carbon or carbon neutral sources rose from 32.01% in September to 34.10% in October.

The graph below shows the absolute production from the various sources as well as the total amount generated (right axis).

chart/

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

No, The U.S. Is Not A Net Exporter Of Crude Oil

December 14, 2018

No, The U.S. Is Not A Net Exporter Of Crude Oil

Last week Bloomberg created quite a stir with this story: The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years. I have seen a number of follow-up stories that praised the significance of this development, but others laughed it off as misleading or incorrect.

There is some truth to both viewpoints. Yes, the headline is somewhat misleading and requires some context. But there continues to be a trend in the direction of energy independence for the U.S. So, today I want to break down the numbers so readers can understand the truth about U.S. petroleum production, consumption, and exports.

Domestic Crude Production Has Surged

The Bloomberg story is based on data from the Energy Information Administration (EIA). Each week the EIA publishes detailed statistics on U.S. oil production, consumption, exports, and inventories in a report called the Weekly Petroleum Status Report. So, let’s go straight to the source.

For the week ending 11/30/18, the EIA reported that the U.S. produced 11.7 million barrels per day (BPD) of crude oil. That represents a 2 million BPD increase from the year-ago number. This number is generally accepted even by those who believe the Bloomberg headline was misleading.

Further down in the report, the category of Products Supplied is listed at 20.5 million BPD. This is approximate U.S. crude oil consumption for the week. Thus, as some skeptics of the story suggested, the bottom line is that the U.S. is burning more than 20 million BPD while producing less than 12 million BPD. Thus, the conclusion for some was that the U.S. isn’t close to being energy independent.

Other Supply

But there is important context between these numbers. First, the 20.5 million BPD is a fairly accurate representation of U.S. consumption, but there is a large U.S. production number that isn’t included in the crude oil production numbers.

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

Is Gasoline Demand Really Slipping?

December 8, 2018

Is Gasoline Demand Really Slipping?

Genscape’s Weekly Gasoline Demand Report data shows relatively flat growth in weekly year-on-year demand for September through November. On the other hand, the U.S. Energy Information Administration (EIA) Weekly Products Supplied data has shown year-on-year declines over the same period despite lower gasoline prices.

Our data shows U.S. total motor gasoline spot prices averaged $1.56/gal on November 28, down almost $0.70/gal from the high of $2.25/gal on October 2, pushing prices to the lowest level since June 30, 2017. Gasoline demand generally increases during prolonged periods of low prices, casting doubt on the demand declines.

What’s Going On?

Genscape analyzed this discrepancy and found the root cause lies in the methodology differences between our data and the EIA. While our data is based on actual gasoline liftings from rack locations headed to gas stations/consumption points, EIA Product Supplied data, both weekly and monthly, is a calculation of implied demand for refined products. The EIA uses a combination of survey components, production, inputs, stock change, ethanol adjustment, imports, and exports in a formula to estimate demand.

This disparity between the two numbers appears to be related to the recent decrease in gasoline imports and increase in gasoline export levels, two factors that the EIA includes in its formula to calculate Products Supplied. By adding imports and subtracting exports, this shift change in recent import/export patterns has had a depressive effect on the Weekly EIA Products Supplied level, showing declining year-on-year demand during a time of sharply falling prices at the pump. The basis for the Genscape Weekly Gasoline Demand Report is total U.S. rack liftings, sourced from our Supply Side data. These rack liftings represent the movements of gasoline from secondary (rack) terminals to retail stations.

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

Oil Falls On Crude Inventory Build

November 28, 2018

Oil Falls On Crude Inventory Build

Crude oil prices slipped further down today after the Energy Information Administration reported crude oil inventories for the week to November 23 had added 3.6 million barrels. That’s compared with a build of 4.9 million barrels a week earlier.

The EIA figures came after yesterday the American Petroleum Institute reported an estimated inventory increase of 3.453 million barrels, which failed to affect prices in any significant way.

EIA also said gasoline inventories last week had declined by 800,000 barrels and distillate fuel inventories had added 2.6 million barrels. A week earlier, the authority estimated a decline of 1.3 million barrels in gasoline and a 100,000-barrel decline in distillate fuel inventories.

Meanwhile, production is hitting new highs and this will continue, according to most estimates, unless oil prices continue declining at a fast pace. The likelihood of this happening is relatively low, however. OPEC is meeting next week in Vienna to discuss a new round of production cuts and most analysts expect the cuts to be agreed with Russia also joining in again.

However, Morgan Stanley, for one, sees a 33-percent chance of the cartel failing or refusing to agree a production cut, in which case prices will definitely slump more, pressured by bleak economic outlooks and concerns about a crude oil oversupply. The argument against a production cut is simple enough: market share. It’s no wonder some OPEC members have already spoken against a cut, notably Libya, which said it expected to be granted an exemption from any cuts.

Besides the OPEC meeting, oil market observers would be watching the G20 meeting, where Russia may or may not give a clear indication whether it will join any cut agreements. Just like last time, Moscow would be a crucial ally for the cartel if it decides to join the cuts or a deal-breaker if it decides to sit these out.

U.S. Oil Production Is Set To Soar Past 12 Million Bpd

November 8, 2018

U.S. Oil Production Is Set To Soar Past 12 Million Bpd

Rising shale production is putting the United States on track to hit the 12 million bpd oil production mark sooner than previously forecast, the Energy Information Administration (EIA) said in its November Short-Term Energy Outlook (STEO).

Next year’s U.S. crude oil output is now expected to average 12.1 million bpd, up from a forecast of 11.8 million bpd just a month ago in the October STEO.

U.S. crude oil production reached a new monthly record of 11.3 million bpd in August 2018, exceeding 11 million bpd for the first time. Production in August was 290,000 bpd higher than expected in the October STEO, and it was this higher level that raised the baseline for the EIA’s forecast for production in 2019.

Comparing the forecasts in the latest STEO with the October estimates, the EIA now sees U.S. crude oil production hitting the 12-million-bpd mark in the second quarter of 2019 rather than the fourth quarter.

The EIA raised its 2018 production forecast by 1.5 percent compared to the October STEO, to 10.9 million bpd, and the 2019 forecast by 2.6 percent from 11.76 million bpd to 12.06 million bpd.

While the EIA lifted its projections for U.S. oil production, it revised down its forecasts for oil prices in 2019. In the November outlook, it forecasts Brent Crude prices of $72 per barrel in 2019 on average, which is $3 a barrel lower than previously forecast. The EIA sees WTI Crudeprices to average $65/b next year, down by $5/b from the previous estimate.

“The lower crude oil price forecasts are partly the result of higher expected crude oil production in the United States in the second half of 2018 and in 2019, which is expected to contribute to growth in global oil inventory and put downward pressure on crude oil prices,” the EIA said.

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

Peak Shale: Is the US Fracking Industry Already in Decline?

November 7, 2018

Peak Shale: Is the US Fracking Industry Already in Decline?

Fracking well sites from the air, in Jonah, Wyoming

But the industry shouldn’t get complacent, warned Robert Clarke of energy industry research and consulting group Wood Mackenzie. Cracks already are starting to emerge in the optimistic forecasts of how much these shale formations can produce, which is a bad sign for turning around the industry’s struggling finances.

“It was only the best rigs, with the most experienced crews, drilling the best rock at the lowest service costs,” which were doing well in 2016, said Clarke at the 2018 Energy Information Administration (EIA) annual conference in June. “If you are a producer, it’s very dangerous to think that that is the new norm.”

But producers seemed to think it was the new normal and plowed ahead, going all in on fracking in the Permain Basin, currently seen as the best shale play in the country.

Granted, the results have been impressive from a production standpoint. The EIA expects “Permian regional production to average 3.3 million [barrels per day] in 2018 and 3.9 million [barrels per day] in 2019.” Those numbers may reach 5.4 million barrels a day by 2023, according to oil industry consultants IHS Markit.

While the Permian’s oil production has been prolific, it hasn’t translated into profits. “Why Aren’t Permian Oil Producers Profitable?” asked a headline on industry publication Oilprice.com this past May.

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

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