Energy Security

[Rick M]

Where is Misifus when we need him?

I'd like to know why the forecast for ND/Bakken shale oil has suddenly turned so pessimistic.
Given the importance of shale oil to the recent reversal of declining US oil production, this is a fairly significant question.

[Ken White]

IIRC, he wrote a couple of weeks ago that he had to go back to the field / area where he was working and would be back to post in a few weeks...

ADDED:

Yep; he posted this last week:

Actually I have only been here the last few days because I have been off. Will back to work soon and then y'all can be merry again without me At least until the next break

[Rick M]

Thanks, Ken

We'll just have to wait until he returns and see if he can shed some light on what's going on in ND.

Meanwhile, there is some compelling video evidence from ND which supports many of the animal & human health concerns which have recently been raised in PA.
If readers can tolerate the first 40 seconds of noisy music, the rest of the video is worth watching. Sick cattle, congested cats, human rashes, weird white stuff on walls & floors... surely something is not right:
http://www.youtube.com/user/BakkenWa.../9/850VKyFnxIk

I find it hard to believe that so many rural citizens in various states have simply made all this stuff up.

[ganulv]

I shove everything into carry-on because I don’t trust that outfit with my luggage, but the author of this piece says, “Maybe.”

[Fuchs]

The electrical grid is a classic example of a natural monopoly and should not be run by for-profit companies anyway.

I doubt that bureaucrats and their hirelings are a competent choice for overseeing infrastructure, though.

[Rick M]

This is a very important issue, one which I know little about.

For those who wish to explore the matter in detail, I would offer this recent (and very thorough) MIT study, 280 pgs:

http://web.mit.edu/mitei/research/st...ull_Report.pdf

[Misifus]

...We'll just have to wait until he returns and see if he can shed some light on what's going on in ND...

Huh? You guys can't have a conversation without me? Why not? Y'all don't even like me

Try the below thread from Armchair General. I have not posted over there, nor have I read the IER report. But the thread indicates that the report from IER is a myth buster for Peak Oil types and other wackos. The thread is also very entertaining

http://www.armchairgeneral.com/forum...d.php?t=117369

Not sure I will be discussing energy matters here at SWC, nor Mexico drug trafficking matters, nor my experiences in Africa for much longer. My free time is running short. Also, the posts here at SWC seem to be mostly from the mods with heavy background traffic as well, etc. Y'all need more participants and less inbreeding. Nevertheless, thanks.

[Rick M]

Welcome back, Misifus

I was hoping that you could shed some light on ND's sudden pessimism re. future shale oil production.

I did have a look at your ACG link. You are correct, it is entertaining.
-rm

[Rick M]

French oil analyst Olivier Rech worked at the IEA between 2007-09. He was involved in their landmark 2008 World Energy Outlook which examined oil-field depletion rates (and then stated the need to find and bring on-stream flows equal to six times that of Saudi Arabia between 2007 and 2030).

This concise interview was published last week in French, and the English translation was posted yesterday:
http://petrole.blog.lemonde.fr/2011/...energy-agency/

Best wishes for 2012 to you all.

- rick

[Rick M]

Britain's leading organization of planners recently published a report on Peak Oil (Nov. 2011, 59 pgs).

The central message of their report is that the peaking of global oil production is a pervasive issue whose effects could be profound, yet it remains almost entirely overlooked by civic officials in the UK, including by planners themselves.

The review provides further details:
http://www.energybulletin.net/storie...olicy-nov-2011

[Rick M]

On Wednesday Chatham House released a study on the Saudi's "hidden energy crisis" which indicates that surging domestic demand may start to constrict the Kingdom's export capabilities in about ten years' time, after which exports could plummet:
http://www.chathamhouse.org/publicat...rs/view/180825

Please note Fig. 1 on page 2 which shows increasing domestic demand eating into Saudi export capacity around 2021, followed by plummeting export capacity. This scenario is consistent with warnings issued by Jeffrey Brown, Jadwa Investment's report last year (from within Saudi Arabia), and an earlier study by Chatham House in 2008.

Wednesday's warning ought to have been front-page news around the world, but of course it wasn't.

[Dayuhan]

I haven't read this report, but it's getting a good deal of press...

http://www.zawya.com/story.cfm/sidZA...emailmarketing

Key excerpts...

The United States is set to become the largest oil liquids producer in the world overtaking Russia and Saudi Arabia before the decade is over, says Citibank in a new report.

"North America has been the fastest growing oil and natural gas producing area of the world for the past half-decade," says Ed Morse, managing director of Managing Director and the Head of Global Commodities Research at Citigroup Global Markets, in a report.

"The US alone could add 6.6 million bpd to bring liquids from 9 million bpd at end-2011 to over 15.6 million bpd in 2020-22. In total, North America as a whole could add over 11 million bpd of liquids from over 15 million bpd in 2010 to almost 27 million bpd by 2020-22." notes Morse.

Saudi Arabia has recently noted that it may hold back on its production target of 15 million bpd from its current 12.5 million capacity, notably due to the rise in U.S. shale oil.

Total OPEC crude oil production averaged 315,000 bpd in February, according to IEA data, led by a three-decade peak in Saudi output and a sharp recovery in Libyan production.

"Output of 31.42 mb/d was the highest level since mid‐2008," said the IEA in its latest report. "The 'call on OPEC crude and stock change' for 2012 is raised by 0.2 mb/d for 2Q12 and 3Q12, to average of 30.1 mb/d, due to lower forecast non‐OPEC supplies."

[Ulenspiegel]

The basic issue is that the amount of crude that is available for western countries is decreasing with amost 3% per year, the main causes are

1) global production of crude is stagnating

2) domestic consumption of producers is increasing

2) India and China import despite increasing prices a larger percentage of the produced crude.

Since 2005 we have an avarage increase of crude price of 12% per year.

The question for western countries is whether we can compensate for the 3% with higher energy efficiency and substitution of crude with natural gas or do we hit the wall first.

Arguments like "The US alone could add 6.6 million bpd to bring liquids from 9 million bpd at end-2011 to over 15.6 million bpd in 2020-22. In total, North America as a whole could add over 11 million bpd of liquids from over 15 million bpd in 2010 to almost 27 million bpd by 2020-22." assume that there is enough prodcution capacity for the conversion of natural gas into liquids.

IIRC these production capacities do not exist and I have not found a serious study which claims that can be done in time.

Some good discussions are on the Econbrowser:

http://www.econbrowser.com/

[Dayuhan]

US consumption has also declined recently; whether that will last in a recovery remains to be seen. What interested me was the projection of higher output from N America and from OPEC, which directly contradicts the widespread assumption that what once has "peaked" must thereafter go into continuous decline.

Of course I haven't read the report (and won't, if I have to pay for it), so I can't comment on the underlying assumptions.

[Ulenspiegel]

US consumption has also declined recently; whether that will last in a recovery remains to be seen. What interested me was the projection of higher output from N America and from OPEC, which directly contradicts the widespread assumption that what once has "peaked" must thereafter go into continuous decline.

Of course I haven't read the report (and won't, if I have to pay for it), so I can't comment on the underlying assumptions.

Here one relevant discussion:

http://www.econbrowser.com/archives/....html#comments

There is no real increase, small plus in NAmerica and Opec is compensated by losses of other producers.

For me the question is, can we substitute and save for a longer span of time at the same rate as the available volume of crude, i.e. global production minus demand of China and India, decreases, this was 3% p.a. since 2005.

[Rick M]

This analysis was recently posted at The Oil Drum:
http://www.theoildrum.com/node/9079#more

[Rick M]

This review (with link to the Dec. 2011 thesis) was posted this morning:
http://www.energybulletin.net/storie...obal-balance-p

[AmericanPride]

There is some market analysis against peak oil and persistent high gas prices. Essentially, we are experiecing a global oil price bubble (and it isn't the first). Also, this article suggests that increased US oil production is not necessarily the most effective strategy for escaping foreign oil dependence or high oil prices.

[Ulenspiegel]

There is some market analysis against peak oil and persistent high gas prices. Essentially, we are experiecing a global oil price bubble (and it isn't the first). Also, this article suggests that increased US oil production is not necessarily the most effective strategy for escaping foreign oil dependence or high oil prices.

We have a stagnating global production since 2005, OTOH the demand of India and China, which buy more despite increasing prices, increased, the domestic consumption in most producing countries increased.

How do you really expect a falling price? This is only possible if you substitute or save crude at a rate of more than 3% p.a.
That would be a lot and requires huge effords (industrial programmes), which I do not see in the USA.

Here a new contribution on the econbrowser:

http://www.econbrowser.com/archives/...ing_irans.html

[Firn]

Energy intensity is a neat indicator, putting energy consumption into the relation of the GDP.

Needless to say that many factors go into both variables, especially the transfer of energy intensive industries has had recently an important impact. Overall demand and supply interact through the price and the curves have been surprisingly elastic over the long term. Cheap ressources are of course of great benefit to the economy however key and finite ones should not come to cheaply to give enough early incentives to increase the overall efficiency and the development of alternatives.

In the mid term the high price increases the attractivness of investment into the sector.