Category: Peak Oil

Apparently, the possibility that some innovations might be introduced, if they aren’t already in an undefined but probably—or at least likely—manner in certain instances where there could be some potentially good news provided that certain other events fall into place exactly as some are hoping for at some point, but in a good way (just not consistent with facts or reality, but why quibble), then by golly we might possibly see oil prices drop, which, coupled with the distinct possibility that certain savings could be achieved immediately after magic happens, could result in something good—perhaps. (Of course, lower oil prices would lead to lower profits and lower investment funds available and thus end a lot of exploration and production, but hey! Prices will be lower.) We won’t have anything to buy, but it will be cheaper…. That’s the essential point offered in a recent addition to the endless parade […]

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“Wait a minute,” you must be saying. “Haven’t we been hearing from the oil industry and from government and international agencies that worldwide oil production has been increasing in the last several years?” The answer, of course, is yes. But, the deeper question is whether this assertion is actually correct. Here is a key fact that casts doubt on the official reporting: When the industry and the government talk about the price of oil sold on world markets and traded on futures exchanges, they mean one thing. But, when they talk about the total production of oil, they actually mean something quite different–namely, a much broader category that includes all kinds of things that are simply not oil  and that could never be sold on the world market as oil. I’ve written about this issue of the true definition of oil before.  But Texas oilman Jeffrey Brown has been […]

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Rigzone Staff 4/16/2014URL: One of the criticisms levied against hydraulic fracturing, particularly during recent periods of drought, is the amount of water used in the process. However, energy companies are seeking to reduce water use during hydraulic fracturing, even as research shows more water is used in other activities. The numbers put things into perspective. The amount of water used to frack a well varies, but most reporting entities put the figure in a range of about 3 to 6 million gallons of water. In Pennsylvania, the average amount of water per well is about 4.4 million gallons, according to State Impact Pennsylvania, a reporting project of National Public Radio (NPR). Using a range of 3-5 million gallons of water per well in the Marcellus Shale, the State College Borough Water Authority calculated that about 12-20 million gallons of water were used in the formation each day. In Texas, the […]

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We live in a society where it is impossible to live a functional lifestyle and not consume products made from petro-chemicals every single day — electronics, fabrics, painkillers, food additives, cosmetics, fabrics, cleaning supplies, building materials, the list goes on. More than ever, it is precisely because it is incredibly difficult to survive outside of our wasteful, exploitative and fossil fuel-obsessed system that we need environmentalists and other activists — yes, even if they own a cellphone and wear cheaply manufactured clothing — advocating for alternative means of production and modes of consumption. (links in original) [1] Waiting for industry officials or their paid media mouthpieces—or political leaders with votes to gather—to deliver the truthful but sobering set of facts about our future energy supply will guarantee a long wait. Too many self-serving and short-term interests to be tended to make it unlikely we’ll get the honest and full […]

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By Competition often breeds excellence. Nowhere else does this cliché hold more true than in the shale boom that’s currently underway. In North Dakota, we see drillers are consistently improving their operational efficiencies with practically every new well drilled. Independent companies like Continental Resources have lowered their average well costs in the Bakken by almost 20%. Their success is far from an anomaly, and it has become a standard for every other operator. What’s more is that this isn’t restricted to just North Dakota. Today, competition has helped the oil bonanza spread like wildfire across the lower 48 states as new drilling technology unfolds. Unfortunately, that simply isn’t the case for everyone. Boom to Bust for Big Oil Take a look at the other side of the spectrum. Alaska has arguably been the most sensational disappointment in the U.S. oil industry since the 1980s, and the blame rests squarely […]

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Competition often breeds excellence. Nowhere else does this cliché hold more true than in the shale boom that’s currently underway. In North Dakota, we see drillers are consistently improving their operational efficiencies with practically every new well drilled. Independent companies like Continental Resources have lowered their average well costs in the Bakken by almost 20%. Their success is far from an anomaly, and it has become a standard for every other operator. What’s more is that this isn’t restricted to just North Dakota. Today, competition has helped the oil bonanza spread like wildfire across the lower 48 states as new drilling technology unfolds. Unfortunately, that simply isn’t the case for everyone. Boom to Bust for Big Oil Take a look at the other side of the spectrum. Alaska has arguably been the most sensational disappointment in the U.S. oil industry since the 1980s, and the blame rests squarely on […]

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"Wait a minute," you must be saying. "Haven’t we been hearing from the oil industry and from government and international agencies that worldwide oil production has been increasing in the last several years?" The answer, of course, is yes. But, the deeper question is whether this assertion is actually correct. Here is a key fact that casts doubt on the official reporting: When the industry and the government talk about the price of oil sold on world markets and traded on futures exchanges, they mean one thing. But, when they talk about the total production of oil, they actually mean something quite different–namely, a much broader category that includes all kinds of things that are simply not oil and that could never be sold on the world market as oil. I’ve written about this issue of the true definition of oil before. But Texas oilman Jeffrey Brown has been […]

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Saved Save Article My Saved Items « » 2014-04-10T05:30:00Z Commentary: The Greens’ Peak-Oil Limits-to-Growth Apocalypse that wasn’t By RON KNECHT Elko Daily Free Press A few years ago, some experts predicted the world was about to reach a peak in global oil and gas production to be followed soon by marked decline. It would cause “war, famine, pestilence and death” — the biblical Four Horsemen of the Apocalypse. Another version: “war, starvation, economic recession, possibly even the extinction of homo sapiens.” Or, peak oil and gas “represents a mortal threat to the U.S. economy” and we “could plunge into a new Dark Age … in an overheated world.” This one lamented that it might well exacerbate “global warming” and thus it called for higher energy taxes and increased limits on coal alternatives. Besides the extravagant rhetoric typical of environmentalists, the Politically Correct and other statist liberals, even when these […]

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Peak Oil is You Gail Tverberg shares some of the most insightful observations about the connection between economic growth and energy. In an article posted at her website several weeks, she raised issues which are too often shunted aside in the primary debate of  “not enough” versus “all we need” fossil fuel supplies in the years to come. They’re too important to continuously skip past. I’d like to focus on just a couple of the (as usual) excellent points she raised. We do not have an alternate fuel supply that will allow the economy to continue to grow, regardless of fossil fuel consumption. The published reserves include large amounts of oil in the ground that are not of the very cheap to extract type. Extracting such oil will be impossible if oil prices are very low, or if credit availability is lacking. It is tempting for observers to look […]

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Folks here know that I like to post charts created from oil production data. But there has been a dearth of data lately. But not to worry, the data should start coming fast and furious later this week.  However in the meantime I decided post a little about what the EIA expects in the future. They published the below comments and chart April 7, 2014. Bold mine. Petroleum & Other Liquids In the Annual Energy Outlook 2014 (AEO2014) Reference case, crude oil* production rises from 6.5 million barrels per day (MMbbl/d) in 2012 to 9.6 MMbbl/d before 2020, a production level not seen since 1970. Tight oil production growth accounts for 81% of this increase, and sees its share of national crude oil production grow from 35% in 2012 to 50% in 2019. In the High Oil and Gas case, U.S. crude oil production reaches 11.3 MMbbl/d in 2019 and reaches 13.3 […]

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Just 80% of global private consumption is snapped up by 20% of the world population living in the richest countries, which is “left overs” for 80% of the population (5.6 billion people), residing in poorer countries and in the process of development, with only 20% of world production. Only the U.S., with 4.5% of the world population consumes 40% of all available resources. Large-scale consumption is synonymous with degradation of natural ecosystems; more physical production is the result, clear and evident, more pollution, more waste (disposal) and less preserved environment, compromising greatly in the quality of life for all. Not coincidentally, etymologically the word “consume” means “exhausted”. While the richest exaggerate consumption, the poorest suffer the consequences of close environmental imbalance. Over the past 30 years, global consumption of goods grew at an annual average of 2.3%; in some East Asian countries this rate exceeds the threshold of 6%. […]

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Alternative energy depends heavily on engineered equipment and infrastructure for capture or conversion. However, the full supply chain for alternative energy, from raw materials to manufacturing, is still very dependent on fossil fuel energy. [In the end, how can you get rid of fossil fuels when you need them to construct alternative energy resources?]…. The discussion is further complicated by political biases, ignorance of basic science, and a lack of appreciation of the magnitude of the problem facing societies accustomed to inexpensive fossil energy as the era of abundance concludes. [1] I’ve consistently and repeatedly urged a greater awareness of the challenges diminishing supplies of oil and gas will impose upon all is. Political affiliations and stamp-your-feet-and-hold-your-breath resistance to the realities of finite, ever-harder to find and extract fossil fuel resources won’t help anyone. Coupled with that awareness (dependent in no small part on a lot more honesty and […]

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The real question for the United States is not about optimal trade policy or economic theory, but whether we want to extract the last drops of our oil endowment as quickly as possible by enabling the debt-fueled land rush that has brought us a gratifying, but temporary, bump in production, or whether we want to make it last as long as possible, knowing that two or three decades from now the world will be absolutely desperate for the stuff, with scarce exports and unimaginably high prices. [1] So what will it be? But before the question can be answered meaningfully, information about what’s at stake; where we stand now; what the future energy supplies prospects hold; together with an assortment of related but just as important considerations need to be fully disclosed. And there’s the rub. There are two strong camps with just as strong opinions about energy supplies […]

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In August 2012, I interviewed James Schlesinger over the phone as part of research for my upcoming book, The Oracle of Oil , the first biography of maverick geologist M. King Hubbert. Schlesinger and Hubbert shared a deep interest and concern in the issue of peak oil —specifically, the question of when world oil production might reach an all-time high, and then begin to decline, marking a turning point between an era of plenty to an era of scarcity. During Schlesinger’s time in office as the United States’ first Secretary of Energy—a post President Jimmy Carter created specifically for Schlesinger —he’d spoken about this issue of peak oil. He saw that such a peak of world oil production would have profound effects on the U.S. and the world. (Before becoming Secretary of Energy, Schlesinger had held various positions in the Nixon and Ford Administrations, including Director of Central Intelligence […]

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In a new book, former oil geologist and government adviser on renewable energy , Dr. Jeremy Leggett, identifies five "global systemic risks directly connected to energy" which, he says, together "threaten capital markets and hence the global economy" in a way that could trigger a global crash sometime between 2015 and 2020. According to Leggett, a wide range of experts and insiders "from diverse sectors spanning academia, industry, the military and the oil industry itself, including until recently the International Energy Agency or, at least, key individuals or factions therein" are expecting an oil crunch "within a few years," most likely "within a window from 2015 to 2020." Interconnected risks Despite its serious tone, The Energy of Nations: Risk Blindness and the Road to Renaissance , published by the reputable academic publisher Routledge , makes a compelling and ultimately hopeful case for the prospects of transitioning to a clean […]

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In a new book, former oil geologist and government adviser on renewable energy , Dr. Jeremy Leggett, identifies five "global systemic risks directly connected to energy" which, he says, together "threaten capital markets and hence the global economy" in a way that could trigger a global crash sometime between 2015 and 2020. According to Leggett, a wide range of experts and insiders "from diverse sectors spanning academia, industry, the military and the oil industry itself, including until recently the International Energy Agency or, at least, key individuals or factions therein" are expecting an oil crunch "within a few years," most likely "within a window from 2015 to 2020." Interconnected risks Despite its serious tone, The Energy of Nations: Risk Blindness and the Road to Renaissance , published by the reputable academic publisher Routledge , makes a compelling and ultimately hopeful case for the prospects of transitioning to a clean […]

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Unnoticed by the mainstream media, US shale oil covers up a recent decline of crude oil production of 1.5 mb/d  in the rest of world (using data up to Oct 2013). This means that without US shale oil the world would be in a deep oil crisis similar to the decline phase 2006/07  when oil prices went up. The decline comes from many countries but is also caused by fights over oil and oil-related issues in Iran, Libya and other countries which can be seen on TV every day. Fig 1: World’s incremental crude oil production Oct 2013 Incremental production for each country is calculated as the difference between total production and the minimum production between Jan 2001 and Oct 2013. The sum of minima is the base production. Countries which had substantial changes in production appear as large areas in the graph. Russia supplied – quite reliably – […]

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Freshly fracked wells sent U.S. oil production soaring 39 percent since 2011. That’s the steepest climb in history, and if production continues apace, the U.S. would become the world’s biggest source of oil by 2015, according to the U.S. Energy Information  Administration. Rapid well declines threaten to spoil that promise. The average flow from a shale gas well drops by about 50 percent to 75 percent in the first year, and up to 78 percent for oil, said Pete Stark, senior research director at IHS Inc. ‘The decline rate is a potential show stopper after a while,’ said Stark, a geologist with almost six decades in the oil patch. ‘You just can’t keep up with it.’ [1] That’s an interesting comment, given that the company Mr. Stark works for is more commonly known for its sunny optimism about our future fossil fuel supply. FRACKING ISN’T FREE OR EASY The […]

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I was going over the IEA’s World Energy Outlook 2013 and noticed a few things you might find interesting. Exactly what is their opinion on Peak Oil? Here, cut and pasted from the report. Got that? The URR is great enough to delay any peak until after 2035. Here is one of their graphs that indicate how much they think is left, coal, gas and oil. Okay 54 years of proven reserves. That puts the peak out to well past mid century. Likely well past 2100 if you count those remaining recoverable resources. And just who has all this oil? 2.2 trillion barrels of conventional crude oil resources. However only 1.7 trillion barrels of that has a 90% probability of being recoverable. Of this the Middle East has the lions share, 971 billion barrels of resources with a 90% probability of recovering 813 billion barrels of that.   The […]

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The thin blue line at the top right is Laherrère’s prediction of the grand totals, differing considerably from the others. He explains: “The confidential technical data on [mean values of proven + probable reserves] is only available from expensive and very large scout databases. . . . There is a huge difference between the political/financial proved reserves [so-called], and the confidential technical [proven + probable] reserves. . . . Most economists . . . rely only on the proved reserves coming from [the Oil and Gas Journal, the US Energy Information Administration], BP and OPEC data, which are wrong; they have no access to the confidential technical data.” The difference between his figures and the various government figures is enormous. It reminds me of the 1950s, when M.K. Hubbert and others were saying one thing, and the government was saying quite the opposite. A few years ago I met […]

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While global financial markets are still levitating somewhere between the stratosphere and the Kingdom of Asgard, by 60°24′31″ North and 172°43′12″ West, in the middle of nowhere, an isolated island of 137.857 sq-mi holds the key of three major economic developments and risks: November 2013, Lawrence Summers raised the question whether the “secular stagnation” and the impossibility for the US and other major economies to grow without the help of recurring bubbles was not doomed to become the “new normal”. March 2014, the Conference Board released a study (figure 1) showing the falling trend in global total factor productivity, i.e. in the share of output not explained by the “accumulation of factors” (more on this economic jargon below). March 2014 again, the NASA published a research paper answering to “widespread concerns that current trends in resource-used are unsustainable, but possibilities of overshoot/collapse remain controversial”. This study tells us that, […]

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While global financial markets are still levitating somewhere between the stratosphere and the Kingdom of Asgard, by 60°24′31″ North and 172°43′12″ West, in the middle of nowhere, an isolated island of 137.857 sq-mi holds the key of three major economic developments and risks: November 2013, Lawrence Summers raised the question whether the “secular stagnation” and the impossibility for the US and other major economies to grow without the help of recurring bubbles was not doomed to become the “new normal”. March 2014, the Conference Board released a study (figure 1) showing the falling trend in global total factor productivity, i.e. in the share of output not explained by the “accumulation of factors” (more on this economic jargon below). March 2014 again, the NASA published a research paper answering to “widespread concerns that current trends in resource-used are unsustainable, but possibilities of overshoot/collapse remain controversial”. This study tells us that, […]

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This page Texas Oil and Gas Production  was last updated on February 18. However the data on this page has been updated. And the January production has been updated also: Oil and Gas Production Data Query  then check “Lease”, “Both”, Statewide and then punch in the appropriate dates. Then when the next page comes up click on “Monthly Totals”. This brings up the updated monthly totals for Crude, Casinghead Gas, Gas Well Gas and Condensate. There were revisions going back to July 2010 but only 2013 had any major revisions though there were some 2012 revisions also as the chart below shows. <img alt="Texas Revisions" src="http://peakoilbarrel.com/wp-content/uploads/2014/03/Texas-Revisions1.png" width="655" height="437"/> The earlier revisions were smaller and there were some of […]

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Last week, Chevron (CVX-NYSE), the second largest oil company, held its annual analyst meeting at which time the company’s management laid out its plans for the next five years, including projections for capital spending and oil and gas production growth. The meeting followed on a presentation at the IHS CERA Week conference in Houston by Chevron CEO John Watson in which he proclaimed that today’s $100 a barrel oil is the equivalent of the past’s $20 a barrel oil. By that he meant that the oil industry must now figure its budget outlooks based on the need for oil prices to stay around the $100 a barrel level in order for the company to generate the necessary cash flow to support spending plans and for projects to offer future returns to […]

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Last week, Chevron (CVX-NYSE), the second largest oil company, held its annual analyst meeting at which time the company’s management laid out its plans for the next five years, including projections for capital spending and oil and gas production growth. The meeting followed on a presentation at the IHS CERA Week conference in Houston by Chevron CEO John Watson in which he proclaimed that today’s $100 a barrel oil is the equivalent of the past’s $20 a barrel oil. By that he meant that the oil industry must now figure its budget outlooks based on the need for oil prices to stay around the $100 a barrel level in order for the company to generate the necessary cash flow to support spending plans and for projects to offer future returns to […]

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 As an old oil hand, I was seriously disturbed five years ago when it was almost impossible to develop a payback time for shale oil production.  Since then it has continued to go missing as massive amounts of cash was spent on the industry.  This suggests that we now know.  It is never at the present pricing regime. This could not be worse news.  It means that our vulnerability to supply disruption is rocketing while elasticity is dropping.  US shale oil has merely postponed our day of reckoning by a few years while the decline in conventional oil production actually accelerates. Right now we are swapping dollars in the oil industry at best and the ship is clearly leaking. The only good coming out of all this is that massive amounts of money are coming home to be spent drilling more wells.  Obviously this allows repatriation of US currency […]

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In 1972, the Club of Rome attempted to shock stakeholders, politicians and policy makers with its Limits to Growth study forecast of All Liquids Peak Oil:  117-Mbd in 1995.  They attempted to promote awareness natural resources are finite, but in jeopardy with growing global population.  This was underscored in 1974 with M K Hubbert’s similar prediction:  111-Mbd in 1995 (excluding NGL, deep sea, polar, Orinoco & tar sands). Because OPEC manipulation truncated both these predictions, Colin Campbell attempted to update the long-term prospects for All Liquids .  The Irish geologist stunned many when in 1989 he declared present All Liquids flow (65.5-Mbd) would never again re-attain its 1979 pre-crisis Peak of 67-Mbd ( ) .  Well, he was very wrong (88-Mbd today).  This episode made it quite clear the uncertainty & price volatility caused by such pessimistic reports (even by well-intentioned professionals) required formal addressing by the […]

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In an interview with ASPO USA in January 2014 Ex-Saudi Aramco geologist Dr. Sadad-Al-Husseini predicted oil price spikes of $140 by 2016/17. This post shows some graphs explaining why this could happen. Husseini:  My base oil price forecast in 2012 dollars still ranges between $105 and $120/barrel Brent with a volatility floor of $ 95/barrel and more probable upward spiking to $140/barrel within 2016/2017. Husseini did not elaborate how he arrived at that time frame but this question and answer give us a hint:   ASPO:  “In the larger context, how has your view of future world oil production supply evolved over the last four or five years? As a benchmark, I reference your slides from the 2009 Oil & Money Conference slides”   Husseini:  “The realities of the 2009 O&M forecast of a limited plateau of oil supplies have been pretty much vindicated since then. The oil plateau […]

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In an interview with ASPO USA in January 2014 Ex-Saudi Aramco geologist Dr. Sadad-Al-Husseini predicted oil price spikes of $140 by 2016/17. This post shows some graphs explaining why this could happen. Husseini:  My base oil price forecast in 2012 dollars still ranges between $105 and $120/barrel Brent with a volatility floor of $ 95/barrel and more probable upward spiking to $140/barrel within 2016/2017. Husseini did not elaborate how he arrived at that time frame but this question and answer give us a hint:   ASPO:  “In the larger context, how has your view of future world oil production supply evolved over the last four or five years? As a benchmark, I reference your slides from the 2009 Oil & Money Conference slides”   Husseini:  “The realities of the 2009 O&M forecast of a limited plateau of oil supplies have been pretty much vindicated since then. The oil plateau […]

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How much faith can we put in our ability to decipher all the numbers out there telling us the US is closing in on its cornering of the global oil market? There’s another side to the story of the relentless US shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it’s all that’s left. There are some good things happening behind the fairy tale numbers, though—it’s just a matter of deciphering them from a sober perspective.   In a second exclusive interview with James Stafford of  Oilprice.com , energy expert Arthur Berman discusses:   Why US gas supply growth rests solely on Marcellus When Bakken and Eagle Ford will peak The eyebrow-raising predictions for the Permian Basin Why outrageous claims should have […]

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Everyone knows that when a potential employer makes a job offer, the salary or wage he or she proposes isn’t what you’ll be taking home. What you’ll take home is your net pay. The number the employer offers you is your gross pay, and that’s just what it says on your pay stub. It’s not quite a perfect analogy with net energy versus gross energy. But it’s an everyday analogy that most people can understand. Net pay is what you have to pay your bills today. And, net energy is what society has in order to conduct its business (and its fun) on any given day. Net energy is what’s left after the energy sectors of the economy–oil and gas, coal, nuclear, hydroelectric, renewable energy industries, and farming which provides food for human and animal energy and crops for biofuels–expend the energy they must to extract energy from the […]

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How much faith can we put in our ability to decipher all the numbers out there telling us the United States is closing in on its cornering of the global oil market? There’s another side to the story of the relentless U.S. shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it’s all that’s left. There are some good things happening behind the fairy tale numbers, though—it’s just a matter of deciphering them from a sober perspective. In a exclusive interview with James Stafford of Oilprice.com , energy expert Arthur Berman discusses:   Why US gas supply growth rests solely on Marcellus When Bakken and Eagle Ford will peak The eyebrow-raising predictions for the Permian Basin Why outrageous claims should have […]

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Page added on March 10, 2014 At the risk of starting a cat fight where truth may too quickly become a casualty, why don’t we more forcefully challenge those who deny peak oil (and global warming) and who do so for reasons that generally ignore reality in favor of narrowly-defined interests? Those motivations will ultimately do nothing but promote more eventual harm by denying the truths to those who clearly need them the most…. Of course, we run the risk of getting bogged down in he said/she-said arguments that quickly devolve into the lowest forms of ‘debate’, but why let those types of offerings go unchallenged? They feed on themselves, and it is tiresome and time-consuming to have to rebut all the nonsense. But if we don’t, uninformed readers and listeners have no reason to at least consider the possibility that there may indeed be other facts out there […]

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Three things you shouldn’t miss this week Global riot epidemic due to demise of cheap fossil fuels  – From South America to South Asia, a new age of unrest unfolds as industrial civilisation transitions to post-carbon reality.   UK oil and gas production in terminal decline?  Offshore production by field:  http://crudeoilpeak.info/uk-peak   The Energy Transition Tipping Point is Here  – The economic foundations for fossil fuel investment collapse as the business case for renewables builds.   Diplomatic efforts are underway to diffuse tensions between Russia and the West following the overthrow of Ukrainian President Yanukovych. Should tensions escalate, one risk is the disruption of gas supplies from Russia to Europe via the Ukraine.   A standoff between Russia and Ukraine following the Orange Revolution saw gas supplies disrupted in both January 2006 and early 2009. Europe is now better placed to […]

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The Sydney Morning Herald published the following article 2 days after Qantas CEO Alan Joyce announced a 1 st half year loss of $252 million and job cuts of 5,000. Mayday: how Qantas went from national icon to corporate tragedy Qantas is a company of tribes at war with itself, and anyone who questions its strategy. It also is suffering from a case of the Boy Who Cried Wolf after so many years of warning that it was close to collapse unless the government bowed to its wishes. At one time, a phrase was coined by Dixon known as “constant-shock syndrome”. http://www.smh.com.au/business/aviation/mayday-how-qantas-went-from-national-icon-to-corporate-tragedy-20140228-33rax.html The SMH article describes how Chairman Leigh Clifford selected Alan Joyce as successor for CEO Geoff Dixon in May 2008. That was the month when oil prices were skyrocketing towards $130 a barrel as a result of extra demand from China for the Olympic Games. After 2 […]

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PARIS, March 6 (UPI) — The International Energy Agency said it is keeping close watch over natural gas transits through Ukraine to Europe, but hasn’t observed a physical disruption. Russian Prime Minister Dmitry Medvedev this week warned Ukraine may face consequences because of its outstanding debt obligations to Russian energy company Gazprom. Europe gets about a quarter of its natural gas from Russia, though the majority of that runs through the Soviet-era pipeline network in Ukraine. Gazprom in 2009 cut natural gas supplies through Ukraine because of debt issues, though IEA said in a briefing Wednesday there has been "no physical disruption in supplies of crude oil or natural gas transiting Ukraine to Europe." The European community in response to the 2009 debt row started looking to diversify its energy market. IEA said gas transit through Ukraine to Europe increased 4.3 percent from 2012 to 2.9 trillion cubic feet, […]

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Page added on March 6, 2014 Russia’s invasion of the Crimea is a tipping point event that will further spur the North American oil boom.  The European Union (EU) and United Statesin 2008 threatened toslap economic sanctions on Russia for invading Georgia.  But after a while the criticism faded and sanctions threats were quietly dropped, because the EU is almost entirely reliant on Russia for energy supplies. A similar situation is unfolding today as the EU and U.S. are again making false threats they will to stop exports of Russian oil and gas as punishment for invading the Ukraine.  But due to the latest humiliation by the Russians, a consensus is emerging that will demand the United States and its North American partners “drill baby, drill” for national security. Twenty years ago on January 1st the United States, Mexico, and Canada implemented the North American Free Trade Agreement. The […]

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For years, meaning until the arrival of U.S. shale production, much ink was spilled on the concept of “peak oil” — the argument that the world was fast approaching an absolute maximum of crude oil that can be produced on a  daily basis. Shale production has put the kabosh on that for the time being, but there’s another “peak” to argue about, and it’s peak demand. Oil consumption in Western Europe, Japan and the United States has  been declining since about 2005. Have we hit “peak demand?” Not hardly, at least not worldwide, agreed three panelists at the ongoing IHS/CERAWeek energy conference in Houston. Demand from Asia and the developing world will more than offset declines in OECD nations, said the panelists, all refiners. Bill Klesse, CEO of San Antonio-based Valero Energy, said world crude oil demand can be expected to grow about 1 million barrels per year through 2025. […]

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Quiz: What will cause world oil supply to fall? Too little oil in the ground Oil prices are too low for oil producers Oil prices are too high for oil consumers leading to recession, debt defaults, and ultimately a cut back in credit availability and very low oil prices Oil exporters are subject to civil unrest and overthrow of governments, due to low prices and/or depleting reserves Lack of money (and physical resources that might be purchased with this money) to pull oil out of the ground. Pollution related issues–too much smog in China; too many problems with fracking; too many problems with CO2. The financial current system fails, and can only be replaced by one that allows much less debt. Oil prices remain too low under such a system. In my view, any answer other that the first one is likely to be at least partially right. Ultimately, […]

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World stock markets may be over-valuing companies with fossil fuel assets that may be unburnable, UK lawmakers warned Thursday. The UK’s Environmental Audit Committee released a report warning that over-priced fossil fuel assets pose a systemic risk to global markets. "The UK government and Bank of England must not be complacent about the risks of carbon exposure in the world economy," said committee chair and member of parliament Joan Walley. "Financial stability could be threatened if shares in fossil fuel companies turn out to be over-valued because the bulk of their oil, coal and gas reserves cannot be burnt without further destabilizing the climate," she said. "The record-breaking extreme weather events causing chaos across the globe should be a wake-up call," said Walley. "The transition to a low carbon economy will be much more painful if we wait until there is a climate crisis […]

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An observation worth noting … and pondering, from Mark Lewis (links in original): Oil market commentators increasingly dismiss the very idea of supply-side constraints on the oil market, pointing to the recent surge in light-tight oil production from US shale deposits and the existence of vast shale formations elsewhere in the world…. But does this peak demand theory bear scrutiny? [F]rom data for 2013 released by the EIA recently, it is now clear that US demand not only increased last year, but accelerated rapidly over the course of the year. All of [the data reported by the author] implies that the reduction in US oil demand over 2008-12 was not so much structural as due mainly to the weakness of the US economy following the global financial crisis, and the tightness of the local oil market until recently. As the economy has started […]

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For years, meaning until the arrival of U.S. shale production, much ink was spilled on the concept of "peak oil" — the argument that the world was fast approaching an absolute maximum of crude oil that can be produced on a  daily basis. Shale production has put the kabosh on that for the time being, but there’s another "peak" to argue about, and it’s peak demand. Oil consumption in Western Europe, Japan and the United States has  been declining since about 2005. Have we hit "peak demand?" Not hardly, at least not worldwide, agreed three panelists at the ongoing IHS/CERAWeek energy conference in Houston. Demand from Asia and the developing world will more than offset declines in OECD nations, said the panelists, all refiners. Bill Klesse, CEO of San Antonio-based Valero Energy, said world crude oil demand can be expected to grow about 1 million barrels per year through 2025. […]

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Steve Kopits, in his recent presentation at Columbia University , ridiculed the IEA’s often used term a “ Call on OPEC “. That is, the IEA looks at the world oil supply and if they see a supply shortage looming on the horizon they then issue a “Call on OPEC” to supply x number of extra barrels and fill that gap. But the next time the IEA issues such a call can OPEC deliver? Or, is OPEC already producing every barrel they possibly can. One thing for sure, there are eight OPEC countries that are definitely producing every barrel they possibly can, those countries are Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela. The chart below is the combined production of those 8 nations. All charts in this post are “Crude Only” in kb/d with the last data point Jan. 2014. There can be no doubt […]

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