Helping America Navigate a New Energy Reality

Tom Whipple

About Tom

Tom Whipple is the editor of ASPO-USA’s two flagship publications, Peak Oil News and Peak Oil Review. Tom is a former senior analyst for the Central Intelligence Agency (CIA). Since retiring from the CIA, Tom has become a well-known researcher and writer on energy and oil issues. Tom writes a weekly column on peak oil for the Falls Church News, a daily newspaper based in northern Virginia. Tom holds degrees from Rice University and the London School of Economics.

Letter from 22 Democratic US senators to Interior Secretary Ryan Zinke regarding US offshore drilling

By on 15 Jan 2018 in quotes with 0 Comments

“Just like Florida, our states are unique with vibrant coastal economies. Providing all of our states with the same exemption from dangerous offshore oil and gas drilling would ensure that vital industries from tourism to recreation to fishing are not needlessly placed in harm’s way.”

Letter from 22 Democratic US senators to Interior Secretary Ryan Zinke, after Florida was granted an exemption from the opening of 90% of US federal offshore areas for drilling

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Peak Oil Review – 15 Jan 2018

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Peak Oil Review – 15 Jan 2018

New York oil futures closed up 4.7 percent last week despite a ten-rig increase in the number of active US oil rigs.  London and New York futures closed with biggest weekly gains since October. On Thursday Brent crude briefly traded above $70 a barrel for the first time since 2014, before closing out the week at $69.78. New York futures closed the week at $64.30, some $5.50 below London. As has been the case for several weeks, shrinking crude inventories, high rates of OPEC/Russian compliance with the production freeze and what is seen as strong demand continued to drive prices higher last week.

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BMI research report on Indonesian LNG sector

By on 8 Jan 2018 in quotes with 0 Comments

“[Indonesia:] Once the world’s largest exporter of LNG, the country is anticipated to start importing LNG for the first time from 2021, as declining production fails to keep pace with demand.”

BMI research report

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Peak Oil Review – 8 Jan 2018

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Peak Oil Review – 8 Jan 2018

The first week of the new year saw much activity related to the energy markets. Oil prices continued to climb with NY futures closing at $62.01 on Thursday, the highest close since December 2014. The continuing fall in world crude stocks — US stockpiles were down by 7.4 million barrels last week—and a healthy global economy continues to push prices higher.  London futures are now at $67.66 a barrel and are closing in on $70.

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CEO of oil trading firm Vitol on the outlook of US oil production

By on 1 Jan 2018 in quotes with 0 Comments

“I think the question, a little bit in the longer term is – is this [2018] the last big rise in US production?… If you look at the economics on most of the big Permian players, not many of them make a lot of money.”

Ian Taylor, CEO at oil trading firm Vitol

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Peak Oil Review – 1 Jan 2018

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Peak Oil Review – 1 Jan 2018

US futures closed out 2017 above $60 a barrel for the first time since mid-2015. In the first half of the year, the OPEC/Russian production cut seemed to have little effect, but as the year wore on global crude inventories dropped.  By the third quarter, higher demand and lower inventories led to a price rally which left New York futures 12 percent higher for the year and London 17 percent higher. Prices are up by about 30 percent since OPEC and the Russians agreed to cut production in late 2016. For the record, US futures closed out the year at $60.42 and London at $66.62. Problems with UK, Libyan, and Nigerian production have pushed the spread between London and New York futures to more than $6 a barrel in recent weeks.

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Senior Analyst at Rystad Energy on Global Oil Discoveries

By on 26 Dec 2017 in quotes with 0 Comments

“We haven’t seen anything like this since the 1940s. The discovered volumes [of oil worldwide] averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012 and 100% in 2006. [Additionally] Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed.”

Sonia Mladá Passos, Senior Analyst at Rystad Energy

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Peak Oil Review – 26 Dec 2017

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Peak Oil Review – 26 Dec 2017

Last week started with a combination of the North Sea pipeline outage and a strike by Nigerian oil workers pushing prices up. In the background is the steady decline in world oil stocks that has convinced many that the oil glut will soon be over, and the steady increase in US shale oil production which has a few predicting that another price plunge is coming soon. The Nigerian oil strike was quickly settled, and by week’s end it seems that the North Sea pipeline outage will be at least partially repaired by early January.  Prices moved up slowly after closing Monday at $58.35 in New York and $65.04 in London.

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Forbes on the Benefits of Biofuels made from Corn

By on 18 Dec 2017 in quotes with 0 Comments

“OK, can we please stop pretending biofuel made from corn is helping the planet and the environment? The United Nations Intergovernmental Panel on Climate Change (IPCC) released two of its Working Group reports at the end of last month, and their short discussion of biofuels has ignited a fierce debate as to whether they’re of any environmental benefit at all.” 

James Conca, Forbes

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Peak Oil Review – 18 Dec 2017

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Peak Oil Review – 18 Dec 2017

Oil prices currently seem on course to finish out 2017 with a second annual gain after the decision by OPEC to extend its production freeze through 2018. Last week Brent briefly climbed above $65 a barrel for the first time since 2015 due to the closure of the pipeline that brings some 455,000 b/d ashore from the North Sea fields. Moreover, several major financial institutions have raised their oil price forecast for the coming year.  While the year ahead looks bullish to some, there is major disagreement between OPEC and the International Energy Agency over where oil prices are going in the coming year. OPEC, bullish as usual, says that production curbs by the cartel and its allies will eliminate the oil glut that has kept oil prices low for the last three years. The IEA, however, does not expect the oil glut, which contracted by about two-thirds in 2017, will continue to shrink due to a rapid increase in US shale oil production. There are pros and cons on both sides of this disagreement so that it is difficult to see just how the situation nets out.

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Peak Oil Review – 11 Dec 2017

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Peak Oil Review – 11 Dec 2017

In the wake of the OPEC decision to extend the production freeze, the oil markets were relatively quiet last week. Prices fell early in the week after the EIA reported a 6.78-million-barrel increase in the US gasoline inventory, but climbed later in the week on reports of near-record Chinese oil imports for November of more than 9 million b/d and concerns about the embassy-in-Jerusalem situation. At week’s end US crude settled at $57.36 and London nearly $6 higher at $63.40. For the immediate future, there are concerns about the US oil rig count which continues to climb slowly. The EIA reported last week that US production expanded to 9.71 million b/d, the highest since EIA began compiling weekly data in 1983. There are, of course, concerns that the EIA’s weekly production estimates are inflated and will be revised when better information becomes available. Other factors moving the markets last week were a good US jobs report, signs of modest growth in the EU economy, and the threat of a strike in Nigeria.

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MIT report on EIA’s assumptions and models regarding US oil production as reported by Bloomberg

By on 4 Dec 2017 in quotes with 0 Comments

“The EIA’s [assumes] that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the MIT research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract. ‘The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,’ said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors. ‘This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.’ The problem with the EIA’s numbers, the researchers say, is that they give drillers too much credit for coming up with ways to improve fracking.”

From a Bloomberg News story (12/2)

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Peak Oil Review – 4 Dec 2017

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Peak Oil Review – 4 Dec 2017

The long-discussed decision by OPEC and its collaborators on whether to extend their production freeze to the end of 2018 came last week and to nobody’s surprise was unanimous. After three months of hype, hints, rumors, and speculation, and a nearly $10 a barrel increase in oil prices, the matter is settled for another year. When the oil markets concluded there would be no immediate sell-off in reaction to the three-month price increases, oil futures started rising again. On Friday afternoon, increasing political turmoil surrounding the Trump administration and its relations with Russia roiled the market leaving New York futures at $58.35 and London at $64.10.

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A communique from 15,000 scientists from 184 countries assessing the world’s latest responses to various environmental threats

By on 20 Nov 2017 in quotes with 0 Comments

“Humanity has failed to make sufficient progress in generally solving foreseen environmental challenges, and alarmingly, most of them are getting far worse. Soon it will be too late to shift course away from our failing trajectory.”

A communique from 15,000 scientists from 184 countries assessing the world’s latest responses to various environmental threats (11/14)

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Peak Oil Review – 20 Nov 2017

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Oil prices fell for most of last week, but then rebounded to close at $56.55 in NY ($62.73 in London) on Friday. This was only a dollar or so a barrel below the recent high set the week before last. As usual, there were numerous factors impacting oil prices. OPEC reported a small drop in October production due to lower output from Iraq, Nigeria, and Iran. OPEC also said it expects global demand for oil to grow by 1.5 million b/d this year and again in 2018. The IEA is not so sure that demand will be so strong, noting that crude prices have risen by roughly 20 percent since early September and now the “market balance in 2018 does not look as tight as some would like and there is not, in fact, a ‘new normal’.”

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The Future of Self driving Vehicles

By on 13 Nov 2017 in quotes with 1 Comment

“There isn’t a viable alternative to fossil fuels on the horizon. We’re not buying into the long-term demand destruction for oil.”

 Alasdair McKinnon, portfolio manager at Scottish Investment Trust

“Vehicles of the future will no longer be driven by humans because in 15 to 20 years — at the latest — human-driven vehicles will be legislated off the highways. The tipping point will come when 20 to 30 percent of vehicles are fully autonomous. Countries will look at the accident statistics and figure out that human drivers are causing 99.9 percent of the accidents.”

Bob Lutz, former executive with major auto company

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Peak Oil Review – 13 Nov 2017

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Peak Oil Review – 13 Nov 2017

Oil prices leveled off last week with New York futures closing at $56.74, up more than $20 a barrel since June.  Brent closed about $7 higher at $63.52. As has become normal these days, multiple factors impacted the oil prices last week pulling the markets in both directions. While the arrest of over 200 important princes, ministers and industrial leaders in Saudi Arabia on charges of corruption early in the week roiled the markets for a few days, by the end of the week the markets were largely ignoring what could morph into a major Middle East crisis or even hostilities.

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Portfolio Manager for Century Management on the Future of US Shale Oil

By on 6 Nov 2017 in quotes with 0 Comments

“There’s a complacency that shale is going to continue to produce at the kind of volumes that we had in the past…If the world keeps believing we’ve got surplus oil as far as the eye can see—which I don’t believe—then the reality is going to smack everybody in the face. And it will be hard to catch up.”

Jim Brilliant, portfolio manager for Century Management

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Peak Oil Review – 6 Nov 2017

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Peak Oil Review – 6 Nov 2017

The price surge, which began in mid-September, continued last week with NY futures closing Friday at $55.64 and London at $62.07. The $6.50 spread is leading to ever higher US exports which are now above 2 million b/d. Crude prices are at their highest level in over two years. Behind the price surge has been the steady stream of hints from the Saudis and the Russians that they are ready to back an extension of the production freeze through 2018 at the November 30th meeting. Some are asking whether the major oil exporters will be willing to continue a production freeze if prices move much higher. There now is a solid perception among traders that the global crude stocks are declining and that demand is rising. This in addition to the OPEC hype is contributing to the price surge.

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Batteries & Offshore Oil Drilling in Gulf of Mexico

By on 30 Oct 2017 in quotes with 0 Comments

“There’s going to be a lot of excitement around batteries in the next five years. And I would say that the country will get blanketed with [battery] projects.”

Spencer Hanes, Duke Energy business development managing director

“In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and a pillar of President Trump’s plan to make the United States energy dominant.”

Ryan Zinke, US Secretary of the Interior, after announcing a record 77 million acres for lease in the Gulf of Mexico

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Peak Oil Review – 30 Oct 2017

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Peak Oil Review – 30 Oct 2017

London futures closed above $60 a barrel last week for the first time since 2015. New York futures are now about $6 a barrel lower than London, increasing the incentive for foreign refiners to buy and export more US oil.  The main impetus for the price surge on Friday was comments by Saudi Crown Prince bin Salman that he backs an extension of the OPEC production freeze until the end of next year. Coupled with the Prince’s statement were upbeat OPEC pronouncements about the increasing demand for its oil and the dubious proposition that compliance with the production cut was now at 120 percent of the agreed numbers. Beyond the hype, however, are real concerns that the Iraqi, Iranian, and Venezuelan situations could deteriorate and lead to lower exports.

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Analyst at FBR Capital Markets on the Future of Deepwater Oil

By on 23 Oct 2017 in quotes with 0 Comments

“Deepwater is going to be playing a much-reduced role on the global oil-supply stage relative to what the industry expected as recently as three years ago.”

Thomas Curran, an analyst at FBR Capital Markets in New York.

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Peak Oil Review – 23 Oct 2017

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Peak Oil Review – 23 Oct 2017

Oil prices were little changed last week with New York futures trading around $52 a barrel and London around $57. Numerous factors continue to affect oil prices: Baghdad’s seizure of the Kirkuk oil fields and the consequent reduction in exports; a stronger US dollar brought on by the prospect of a tax cut; a falling US oil-rig count; a large drop in US crude inventories due to the recent hurricanes and unprecedented exports; the brightening prospects for a nine-month extension of the OPEC production freeze; and finally a warning that the China’s economy may not be doing as well as many believe. When all these forces pulling in various directions were netted out, there was little change.

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Chief Executive at Vitol on the Prospects of US Oil Production

By on 16 Oct 2017 in quotes with 0 Comments

“I think the question, a little bit in the longer term is – is this the last big rise in US production?… If you look at the economics on most of the big Permian players, not many of them make a lot of money.”

Ian Taylor, chief executive at Vitol, which trades more than 7 percent of global oil.

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Peak Oil Review – 16 Oct 2017

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Peak Oil Review – 16 Oct 2017

Prices climbed last week with Brent up almost 3 percent to $57.17 a barrel and WTI up over 4 percent to close the week at $51.45. The major developments affecting prices was an unexpected jump in Chinese oil exports of 1 million b/d in September to 9 million and the announcement that the President would not certify Iranian compliance to the nuclear accord. Statements by OPEC and Russian officials concerning a possible extension of the production freeze and the growing concerns that there will be hostilities in the aftermath of the Kurdish independence vote also supported prices.

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