Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on March 21, 2015
U.S Production to Last Generations
Whether you blame technology, politics, softening demand or a mix of all three, the recent oil price plunge is testament to the dynamic nature of energy markets and the huge risks that emerge in a period of profound volatility. The most important question for energy market participants however, is how they can minimise our exposure?
Technology in the form of hydraulic fracturing (fracking) and horizontal drilling has arguably made America the world’s pre-eminent oil producer, pulling up to 4m barrels a day from sources that were once called “unconventional”. So much oil is sloshing around that Congress has taken its first tentative steps toward removal of the crude export ban by allowing exports of certain condensates. Full-on exports of crude oil or natural gas haven’t happened yet, but exports of liquefied natural gas (LNG) will start this year. Increased trade in LNG will create a more global gas market, undermining Russia’s pipeline monopoly in Europe.
Softening demand for oil, especially from China, Japan and the euro area is another factor — along with unexpected resilience in supply from countries in the midst of conflict like Libya and Iraq.
Following OPEC’s decision to not decrease supply, the imbalance between oversupply and under-demand has driven crude to sub $50 a barrel. While consumers may see these developments as superficially positive, so much rapid unforeseeable change, always creates worry in the markets. There is justifiable concern about how volatility will impact the flow of goods across supply chains, weaken certain shale investments and irritate commodity prices.
Companies transacting in crude oil, liquid natural gas and refined products are just beginning to understand how the current period of transformation will affect how they source, supply and move assets. Some of the variables are known and ongoing, but the last six months have shown that there are always ‘unknown unknowns’ which can dramatically re-shape the market.
According to Citi’s “Energy 2020 Out of America” report, U.S. production surpluses are expected to continue for at least two generations, despite declining crude prices. The impact of such a fundamental change to world oil production and consumption will continue to be felt for decades.
By contrast, EU imports of primary energy way exceed exports because of the shortfall between production and consumption. This continues to cause dependency on countries outside the EU.
There seems to be no end to the amount of oil and gas embedded in the Earth’s crust and no end to humanity’s ingenuity in finding ways to extract it. The whole concept of “peak oil” may well disappear. “Peak technology”, meanwhile, also looks to be a long way off. By investing today in robust trading and risk management software, energy market participants can navigate market turmoil with confidence and a healthy dose of automation.
17 Comments on "U.S Production to Last Generations"
green_achers on Sat, 21st Mar 2015 3:43 pm
Har har. Well, I guess that settles that. The magnates have spoken…
rockman on Sat, 21st Mar 2015 4:04 pm
“According to Citi’s “Energy 2020 Out of America” report, U.S. production surpluses are expected to continue for at least two generations, despite declining crude prices.”.
Continued surpluses??? From a country that is a net oil, NG and LNG importer??? It’s almost as if there’s a contest to see who can write the most asinine commentary. LOL.
Plantagenet on Sat, 21st Mar 2015 4:15 pm
US oil production from tight shale can go on for a decade or two, but the current oil glut is going to end as soon as the decline in rig count brings down US production. Over the next few years the peak in conventional oil will result in lower and lower production from OPEC countries, probably pushing global oil prices considerably higher.
GregT on Sat, 21st Mar 2015 4:35 pm
What a complete load of bunk.
Dredd on Sat, 21st Mar 2015 5:11 pm
God loves Oil-Qaeda for poisoning the world according to Oil-Qaeda.
Question is, Sinator Inhofe, which God is it? (Global Warming / Climate Change Will Generate Dangerous Religion ).
Steve Challis on Sat, 21st Mar 2015 6:08 pm
Fortunately this is nonsense.
If the world could rally continue increase oil usage with its current enormous and increasing emissions of carbon dioxide for another two generations the effects on the climate would be disastrous.
I write science fiction for children and young adults, but none of my books contain rubbish as bad as this article.
Bob Owens on Sat, 21st Mar 2015 6:09 pm
It is impossible to give this article any credence at all. He projects unlimited oil ahead for 2 generations! I can’t project anything much out to 2 years! (Unless you count predicting that the Sun will be shining in a Billion years as a prediction). Does this blog site have an intelligence filter that works? Apparently not.
gwb on Sat, 21st Mar 2015 6:24 pm
Bob,
The web site moderator is trying to keep us on our toes with the occasional cornucopian zinger. It’s called “sharpening our critical thinking skills” 🙂
nubs on Sat, 21st Mar 2015 6:27 pm
As they say, caveat emptor:
“This article is written by David Bernal who is a Senior Solutions Manager for Allegro Development, a real-time commodity trading information services and risk management firm.
I’m gonna belly right up to that website and hire David as my risk management solutions manager.
Anyone know where I can buy a used bridge?
Cloud9 on Sun, 22nd Mar 2015 6:35 am
We are going through the next phase of demand destruction. The world economy is like a rubber ball rolling down a staircase. Each time it drops lower there is a little bounce and then it’s off a cliff again. Cheap oil is being replaced by expensive oil on an exponential basis. We will get to a point that soccer moms will no longer be able to drive their Yukons to the outlet mall to buy a coach purse. Even then there will be plenty of kerosene for the M-1 Abrams and A-10 Wart Hogs. As long as the EBT cards work there is nothing to fear.
shortonoil on Sun, 22nd Mar 2015 8:36 am
“There seems to be no end to the amount of oil and gas embedded in the Earth’s crust and no end to humanity’s ingenuity in finding ways to extract it. The whole concept of “peak oil” may well disappear. “Peak technology”, meanwhile, also looks to be a long way off.
Between 1970 and 2014 the total cost of producing petroleum, and its products has increased 534% in energy terms, and 5,322% in nominal dollar terms. With levels of increases of this magnitude it appears that the author never even considered how future generations are going to procure the energy, and money to extract these resources. There is an advantage in using a theoretically based, tested, mathematical model over the Ouija board, and black magic approach that is used by the author. It gives some general sense of reality over the fairy tale world that some would like us to live believe in. The world is now going bankrupt in a frantic attempt to squeeze hydrocarbons out of every nook and crevice on the planet. Future generations are not going to be left with a plethora of energy delivered by some advanced super technology. They will be left wondering, what could they have been thinking – or not!
http://www.thehillsgroup.org
Kenz300 on Sun, 22nd Mar 2015 9:04 am
Anything associated with FAUX is playing fast and loose with the facts……..
Faux is where facts go to die………..
viewcrafters on Sun, 22nd Mar 2015 11:14 am
What goes up must come down.
viewcrafters
PeterEV on Sun, 22nd Mar 2015 12:18 pm
The only way for our oil production to last for two generations and to also become a “energy independent” is for us to switch our transportation fuel away from crude oil such as switching our vehicles to being powered by electric motors. This is happening now as the auto manufacturers are delving into hybrids, hydrogen based, and battery based vehicles. A Tesla can be refueled by solar albeit indirectly via the grid.
Apneaman on Sun, 22nd Mar 2015 12:24 pm
Oil majors pile on record debt to plug cash shortfalls
“The total debt raised in the first two months of 2015 by large US and European oil and gas companies has jumped by more than 60 per cent from the final three months of 2014. It outstrips the previous quarterly record set six years ago after the last price collapse, Morgan Stanley research shows.”
http://www.ft.com/cms/s/0/fc15b520-cf2b-11e4-9949-00144feab7de.html
shortonoil on Sun, 22nd Mar 2015 1:17 pm
Over the next few years the peak in conventional oil will result in lower and lower production from OPEC countries, probably pushing global oil prices considerably higher.
Over the next few years $37/barrel well head prices will put almost every shale producer there is out of business. $60/barrel oil would put them out of business, just not as fast as $37. Since the demand created by their production is equal to what they produce the market price won’t even notice. The price is likely to go up a little before it starts back down. The quality of the world’s petroleum supply has gotten so bad that much of it can not even power its own production. Depletion reduces quality before it reduces quantity.
peakyeast on Sun, 22nd Mar 2015 4:11 pm
I guess a surplus can exist for two generations actually even practically endless generations – it just requires usage to be lower than extraction and the generations actually exist.
We produce 1 BOE, but there is demand for 0… We have a surplus – hurraaay.
Just as we have oil for an infinite amount of time since a lot of it will be left in the ground for anyone to take – never mind the EROEI.