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US oil production data & Global warming trends

“US crude oil production reached 11.3 million barrels per day (b/d) in August 2018, up from 10.9 million b/d in July. This is the firded the Russian Ministry of Energy’s estimated August production of 11.2 million b/d, making the United States the leading crude oil producer in the world.”
US EIA monthly report

“We thought that we got away with not a lot of warming in both the ocean and the atmosphere for the amount of CO2 that we emitted. But we were wrong. The planet warmed more than we thought. It was hidden from us just because we didn’t sample it right. But it was there. It was in the ocean already.”
Laure Resplandy, Princeton University research team leader

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Peak Oil Review – 5 Nov 2018

The plunge in oil prices, which began in early October, continued last week with New York oil futures closing Friday at $63.14, down about $14 a barrel in the past month. London futures have followed a similar pattern falling from $86 to $72.83 on Friday. During September the threat of the renewed US sanctions on Iranian exports forced world prices into the high $80s with many predicting that we would soon see $100 oil again. During the past month, however, market sentiment changed as it appeared the sanctions might not be as effective as some hoped, the global oil production increase, higher prices and the brewing US-China trade war threaten demand in the coming years.

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The mirage of the US oil & gas industry

“To outward appearances, the US oil and gas industry is in the midst of a decade-long boom. [However] America’s fracking boom has been a world-class [financial] bust …. Even after two and a half years of rising oil prices and growing expectations for improved financial results, a review of 33 publicly traded oil and gas fracking companies shows the companies posting $3.9 billion in negative free cash flows through June.”

Report from Institute for Energy Economics and Financial Analysis, and the Sightline Institute

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Peak Oil Review – 29 Oct 2018

Oil prices fell by nearly 3 percent last week to settle at $77.62 in London and $67.59 in New York. This was the third weekly decline in a row that has taken prices down by about $10 a barrel since early October. As has been the case for several months, prices fall on reports of excess supply or the possibility of lower demand and increase on concerns about what the Iran sanctions due to begin next week will do to supplies.

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The state of US oil producers in particular in the Permian Basin

“The well-established market consensus that the Permian [basin] can continue to provide 1.5 million barrels per day of annual production growth for the foreseeable future is starting to be called into question.”
Paal Kibsgaard, CEO of Schlumberger

“Two-thirds of US oil producers failed to live within their means in the second quarter, even as oil prices have risen almost 40% over the past year to more than $70 per barrel. Fifty major US oil companies reported they collectively spent $2 billion more than they took in.”
FactSet’s analysis of free cash flow

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Peak Oil Review – 22 Oct 2018

Crude oil prices have been volatile thus far in October, hitting a four-year high to start the month before falling nearly $8 a barrel in the two weeks. At the close on Friday, New York futures were at $69.12 and London at $79.78. Market sentiments have changed this month with more traders worrying about the economic problems facing China than how effective the US sanctions on Iranian exports will be.

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Peak Oil Review – 15 Oct 2018

Oil futures fell by over $4 a barrel on Wednesday and Thursday but then stabilized on Friday to close at $71 in New York and $80 in London. Behind the selloff were a sharp drop in the equity markets, profit-taking in the wake of a $14 a barrel price increase since mid-August, and concerns that the Sino/US trade war may reduce global demand for oil. EIA, IEA, and OPEC revised their forecasts downward for the size of next year’s demand increase. The International Monetary Fund cut its forecast for global growth to 3.7 percent for 2018 and 2019, down from a previous estimate of 3.9 percent, and the EIA reported that US crude stocks increased by 6 million barrels the week before last.

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The Trump administration and its climate change policy

“The amazing thing [the Trump administration] is saying is human activities are going to lead to a rise in [atmospheric carbon] that is disastrous for the environment and society [a 7-degree Fahrenheit increase from pre-industrial levels]. And then they are saying they are not going to do anything about it.”

Michael MacCracken, senior scientist at US Global Change Research Program (1993 – 2002)

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Peak Oil Review – 8 Oct 2018

Oil prices continued to climb last week, with London futures hitting $86.74 a barrel on Wednesday, $10 higher than they were a month ago. Later in the week, profit taking and announcements from the Saudis and Russia that they were going to increase production drove prices lower. Whether the Saudis, Russia, and their close allies can increase production by enough to cover the decline in Iranian exports remains contentious. At week’s end, oil prices had settled to $74.34 in New York and $84.16 in London for a $10 a barrel difference.

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LNG industry’s renewed interest in investment

“The sanctioning of LNG Canada would mark a potential turning point in the LNG market, signaling the industry’s appetite to invest has returned. Even new large-scale greenfield projects are back on the agenda, after a dearth of project financial investment decisions over the last few years.”

Saul Kavonic, Credit Suisse Group AG’s director of Asia energy research

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Peak Oil Review – 1 Oct 2018

Oil prices continue to increase primarily on concerns that the sanctions on Iran and the collapse of Venezuelan production will lead to shortages in the coming year. Last week London futures, which are more vulnerable to the Iranian situation, climbed by about $2 a barrel to close at $82.78. London futures are on track for a fifth quarterly advance, a streak not seen since the first half of 2008. Iranian exports of crude and condensates have declined by 800,000 b/d from April to September, according to the Institute of International Finance. Analysts expect a reduction of anywhere between 500,000 and 1.5 million b/d in Iranian supply due to the sanctions, with most expecting Saudi Arabia to take the lead in filling any supply gaps.

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The state of global oil production

”Assuming that the balancing act between declining and growing [oil producing] countries continues (from Mexico through to Canada) the whole system will peak when the US shale oil peaks (in the Permian) as a result of geology or other factors and/or lack of finance in the next credit crunch, and when Iraq peaks due to social unrest or other military confrontation in the oil-producing Basra region. There are added risks from continuing disruptions in Nigeria and Libya, steeper declines in Venezuela and the impact of sanctions on Iran.”

Matt Mushalik, Australian engineer and oil industry analyst

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Peak Oil Review – 24 Sept 2018

Oil prices continued to show strength last week but closed in London up by less than a dollar for the week at $78.80. Brent now has closed above $78 a barrel six times since mid-May and has touched $80 a barrel once or twice but failed to close above $80 since mid-2014. As is now routine, traders are split between the increasingly effective US sanctions on Iran and the prospects of a lengthy trade war between the US and China. Last week was complicated by the issue of whether the OPEC+ consortium would officially raise production or leave individual production levels cloudy as they have been since June.

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Trump administration’s position on the reduced need for conserving energy

[The Trump administration stated there is a “reduced the urgency of the US to conserve energy.”] I strongly disagree with this argument. It isn’t certain that the US will become a net exporter of petroleum and petroleum products, but in any case, that’s not a reason to forego conservation. There are economic reasons, national security reasons, and environmental reasons for conserving oil.”

Robert Rapier, energy industry commentator

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Peak Oil Review – 17 Sept 2018

Oil prices climbed for the first three days last week with Brent climbing above $80 a barrel on Wednesday before falling back to close at $78.09 on Friday. An unexpected drop in the US crude stocks of 5.3 million barrels and a warning from the IEA that the global oil market was tightening and that higher prices are coming were behind the spike. However, concerns that the Sino/American trade war is showing no sign of getting better took over and sent prices lower. During the week, the price spread between Brent and WTI climbed above the $10 a barrel mark and closed the week at $9. The size of the price spread should continue the export demand for WTI in the coming weeks sending US crude supplies even lower.

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The significance of the price of oil

“[T]he fortunes of energy companies are highly dependent on a single, highly-salient, well-understood, widely-available, plausibly exogenous factor – the price of oil….This is a market where firm value hinges to a large degree on observable luck, so the fact that we observe little filtering of luck from [the size of] executive pay is particularly striking.”

Lucas W. Davis and Catherine Hausman, the Energy Institute in Haas

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Peak Oil Review – 10 Sept 2018

Oil prices fell by another $1-2 a barrel last week to settle at $67.75 in New York and $76.83 in London as the struggle between lower demand occasioned by the Sino-American trade war balanced against falling Iranian exports. Last week saw a storm in the Gulf of Mexico which did less damage than expected and a 4.3 million barrel drop in US crude inventories which brought them to the lowest since 2015. However, prices were driven lower as US gasoline stocks rose by 1.8 million barrels and distillate stockpiles by 3.1 million barrels, suggesting that the summer driving season has come to an end.

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The role of renewable energy resources in California’s electricity generation

“The [California] legislature finds and declares that the Public Utilities Commission, State Energy Resources Conservation and Development Commission, and State Air Resources Board should plan for 100 percent of total retail sales of electricity in California to come from eligible renewable energy resources and zero-carbon resources by December 31, 2045.”

Senate Bill 100 reads

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Peak Oil Review – 4 Sept 2018

Oil prices had two down and three up days last week closing out Friday a dollar or so higher with NY futures at $69.80 and London at $77.64. The struggle between the soon-to-be-implemented Iran sanctions and the threat to demand posed by the trade war continues as the primary factor driving prices. An unexpectedly large drop in the US crude inventory of 2.6 million barrels last week and a four-unit increase in the US oil rig count last week contributed to the volatility of the market.

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Mexico’s oil production

[In Mexico] “Production peaked in 2004/2005 at just over 3.5 million b/d, so the overall decline is approaching 50%…Only three years since 1999 have had reserve replacement ratios greater than 100%. Many years’ numbers have actually been negative, some of them significantly so, and the estimated ultimate recovery has been revised slightly downwards overall.”

George Kaplan, oil industry analyst

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Peak Oil Review – 27 Aug 2018

The oil price surge which began two weeks ago continued last week with prices rising by $4-5 a barrel to settle on Friday at $68.72 in New York and $75.82 in London. The markets are still conflicted as to whether a reduction in demand occasioned by the trade war or a drop in supply stemming from the Iranian sanctions, the Venezuelan collapse, and the slowing growth of US shale oil production will dominate the immediate future. Last week we learned that China may continue buying US crude, but will swap or sell the oil to third countries so that crude imports to China would not come directly from the US. Third party crude would not be subject to any tariffs imposed on US crude or give the appearance that Beijing is backing down in the trade confrontation with Washington. Any crude that comes from the US would reduce China’s dependence on the volatile Middle East.

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Peak Oil Review – 20 Aug 2018

Crude prices were up Thursday and Friday of last week but still closed with a seventh consecutive weekly loss for WTI — the longest losing streak since 2015. Fears that the multiple escalating trade wars will lead to a drop in global demand are trumping the warnings that the lack of sufficient investment and the beginning of problems with US shale oil output could lead to production shortfalls in the months ahead.

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Potential ban on drilling in many parts of Colorado

“A ballot measure requiring greater setbacks could have a dramatic effect on drilling in Colorado. In Weld County, Colorado, where much of the drilling in Colorado’s DJ Basin takes place, the greater setback distances would put roughly 78 percent of the surface land off limits to drilling. ‘That is effectively a ban on the industry,” Dan Haley, president of the Colorado Oil & Gas Association, told Bloomberg in a July interview. “You’d basically have no new wells drilled in Colorado.’”

Nick Cunningham, Oilprice.com

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