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Page added on May 13, 2016
Debunking the myths
In Monty Python’s Holy Grail King Arthur tells the black knight that he has no arms left, to which the knight replies: “It’s just a flesh wound.” This was how Standard Chartered’s Paul Horsnell described the so-called resilience of US shale production as he went on to critique commonly held views in the market.
The robustness of US production is certainly an important question, not least for OPEC strategy, with Horsnell arguing a sharp rise in the rig count, which is at its lowest ever according to Baker-Hughes, is needed to stabilize output.
Low prices have led to calls in the way the industry works. “No other industry would work backwards from the price of its output (in this case, hydrocarbons) in an attempt to justify the costs of its inputs (i.e. capital and operating costs),” said Allianz’s Chris Wheaton. He joked that the industry has often responded to underperformance with ‘it’s not our fault, the oil price did it,’ and he suggested the use of more technology appears to have increased costs and not cut them.
Wheaton’s key message was that 21st century oil needs to be a manufacturing business: standardization, repetition and low unit costs become competitive advantages. “Shell has 24 shades of yellow underwater paint,” he added, highlighting the overly complex nature the industry needs to address.
Moreover, Wheaton made the point that US shale is an example of poor capital allocation — everyone has capital with little differentiation and no requirement to a make a return on capital (or even return the capital). Shale will not ramp up as fast as it did in 2012-14 due to capital limitations and that the industry needs to deleverage.
The swing producer debate — the ability of a supplier to raise output from spare capacity — was also a hot topic: Kuwait Petroleum Company’s Abdulaziz al-Attar said OPEC will still respond to demand, while US tight oil will respond to price. He added that OPEC will continue to defend market share until the market stabilizes, estimating OPEC’s share will rise to 41.1% in 2017, its highest level since 2012. Saudi Arabia will be reluctant to lose Asian market share to Iran and Iraq and that could put its ability as swing producer in doubt. Energy Aspects’ Amrita Sen suggested that non-OPEC supply outside the US could become a swing factor later this year.
Horsnell also argued that the glut of oil has pretty much disappeared and that the rise in prices is not as speculative as many suggest, detailing the neutral positioning now in the market.
Were there any more myths or Monty Python anecdotes? Maybe the famous dead parrot sketch in reference to OPEC will be at the next Platts summit. “This parrot isn’t dead, it’s just resting.”
31 Comments on "Debunking the myths"
Dredd on Fri, 13th May 2016 11:54 am
Oilfluenza (Oilfluenza, Affluenza, and Disgorgement) causes those infected with it to consider oil as the magic fluid that stands alone.
That myth forgets seaports (The Extinction of Robust Sea Ports – 5).
Oilfluenza is destroying the arms and legs of Oil-Qaeda, and it is not just a flesh wound, it is bad to the bone.
rockman on Fri, 13th May 2016 12:33 pm
Just one more armchair expert with no clue about the basic business plan of most public oil companies. The most of the managers at the height of the boom hit their goals or did even better.
Don’t understand? Hmm.. apparently you never had a nice big stock option. LOL.
Apneaman on Fri, 13th May 2016 3:32 pm
rockman, look alive the undertaker is coming.
Civil disobedience is the only way left to fight climate change
Across the world, thousands of protesters are taking on the planet’s biggest fossil fuel companies.
We should support them – and if we can, we should join them
http://www.theguardian.com/commentisfree/2016/may/13/civil-disobedience-climate-change-protesters
Once the civil disobedience is squashed, then the uncivil disobedience will start. At that point you’ll want to go to work locked and loaded and wearing a flak jacket.
Monkey people are so predictable.
makati1 on Fri, 13th May 2016 6:41 pm
Platts. Another Wall Street shill.
shortonoil on Sat, 14th May 2016 8:12 am
With the cost of replacing the oil now being extracted increasing by 50% per year, in five years, it will will require 52% of the world’s total GDP to replace what is being consumed. Instead, Platts focuses on “dead parrots”!
Completely ignoring “WHY” oil is used in the first place has become the modulus operative of the industry cheerleaders. They are telling us not to pay any attention to the fact that oil powers the world’s economy, and we need not focus on how well it is doing that; ignore it, there are “resting” parrots to take under consideration.
Instead, they say, let’s focus on the recapitalization of shale oil, even though it was a completely worthless $trillion Ponzi scheme to begin with. Let’s ignore the fact that the Oil Production System is now dying from its own entropic decay. There are armless Knights, and man eating rabbits running around.
Everyone believes that the creators of Monty Python were brilliant. All that they did was copy the antics of the petroleum industry?
http://www.thehillsgroup.org/
rockman on Sat, 14th May 2016 9:07 am
I agree: civil disobedience is the best option at this point. The most effective approach would be to force all the gas stations to shut down. That would deny the largest group that DIRECTLY PRODUCE the vast majority of GHG the source of their poison: motor fuels. The next big target should be those utility plants that use fossil fuels (including NG): shut them down and cut electricity to those home owners and businesses that are aiding the destruction of our planet.
Yep…the only way to reduce our ff footprint is to go after those who are primarially responsible for climate change…the consumers.
Davy on Sat, 14th May 2016 9:33 am
If you are going to be disobidient at least do it for educated reasons. If you want to shut down modern life and kill off a significant amount of the global population shut down fossil fuels. That is the consequence not some green nirvana and peace on earth. We also know we can continue on and it is going to stop at some unknown point for reasons beyond our predictions. We have markers down the road that we can say this may happen but nothing definitive.
Personally a manged power down with restricted fossil fuels is my prescription for a way to force beneficial change through crisis. This would be a localizing event. It would also be a defining event with no return to status quo. So in a way I am saying civil disobedience may achieve these result partially and indirectly for reasons other than the reasons for the disobedience. The top global leadership will never do it nor can they because of the inability of nations to cooperate.
My main point is if you restrict fossil fuels people die. That is a direct and certain relationship. We need to realize the cost benefits and opportunity cost of doing this and doing nothing. Since all this is above any macro social understanding except obscure places on the internet I advise people to realize it is coming either way and you can adapt by preparing mentally and physically. What you should not do is believe your civil disobedience is going to be positive in the sense of being a solution without pain, suffering, and death. This is the end game we are in so choose your poison. Life will unfold in its own way but you personally can unfold with life in a way that is more advantageous to you. Civil disobedience is dangerous and may be a needless waste of your short time on earth. That is a choice and it is yours.
JuanP on Sat, 14th May 2016 11:36 am
I don’t believe in civil disobedience, revolutions, social resistance, terrorism, or drastic changes of any kind. I believe in solving my problems my own way and letting others deal with theirs. As far as I am concerned other people’s problems are not my own, and I won’t make them so. I made up my mind when I was a teenager never to vote, protest, or manifest in any collective way. I don’t believe in people, democracy, protesting, or revolutions. Those things are for people with unrealistic hopes and expectations, not for me. I am a realist and I know that there is absolutely nothing I can do to save the world, so I will focus on saving what’s mine, and fuck the rest of humanity. They don’t deserve my help in any way.
JuanP on Sat, 14th May 2016 11:46 am
“Moreover, Wheaton made the point that US shale is an example of poor capital allocation.” True, but so is the investment in Brazilian pre salt oil or arctic oil exploration. Americans are not the only stupid people in the world. Stupidity is an essential human trait. We are all incredibly stupid, but the smartest of us are aware of our own stupidity. It is not lack of stupidity that makes us wise, it is our awareness and acceptance of it. To become a wise person you first need to accept your stupidity.
Apneaman on Sat, 14th May 2016 12:22 pm
rockman how many of those
citizensconsumers do not believe climate change is a real or pressing issue for centuries because your industry has spent over a billion dollars a year for over two decades on the biggest disinformation campaign in human history?Well, I guess it’s inaccurate to credit you with such creativity since almost every one of them are talking points spawned at one of the many fossil fuel funded denier think tanks and propaganda outfits.
Lies for sale and the biggest single consumer of them is the fossil fuel industry.
Malfeasance on a scale previously unknown with species ending consequences.
Muddied the waters so much that y’all robbed humanity of making an informed decision on it’s biggest issue ever.
No consumer lined up at the pump for those lies and deceit – that’s all on you guys.
As I’ve said before maybe they would have chosen the same without being lied to and emotionally manipulated for decades or maybe they would have come together and slowed down and bought some time. We will never know because you and your oily masters robbed everyone of that opportunity.
BTW, suggesting the biggest social/economic/ideological change in history was always and only in the hands of “individuals” and their consumer choices is one of the most brilliant and effective talking points to come out of denier central – to try and claim that massive degree of change could happen without top down solutions is fucking ridiculous, but it played perfectly to the neo liberal ideology and myth of American individuality.
The endless justifications and rationalizations you come up with to protect your psyche and wallet are astounding.
rockman, did you know that small changes can have large effects on big systems? That goes both ways. If humanity had slowed down, not gone back to the caves, just acted like responsible adults starting a few decades ago it would have taken much longer to get to the state we are in today – decades to centuries. Instead we got globalization (more fossil fuel sales and blood money for you). That growth has speed up the deadly effects of planetary physics and chemistry and is like a boot to the head of interdependent biological systems – speed kills. The same amount of CO2 releases over a much longer period of time gives life a chance to adjust and adapt and survive. Going as fast as we can so people like you can have a few more unneeded dopamine hits kills. Gonna kill your daughter too. Cut her life expectancy in half and make her final years a living hell.
Consume that Dad.
Apneaman on Sat, 14th May 2016 12:43 pm
The science behind this one should be a no brainer for a geologist.
Global warming won’t just change the weather—it could trigger massive earthquakes and volcanoes
“Bill McGuire is not optimistic about humanity’s future. In his book, Waking the Giant: How a changing climate triggers earthquakes, tsunamis, and volcanoes, he explains why.
By his estimation, carbon dioxide emissions from human activity since industrialization began have changed the trajectory of earth’s climate for the next 100,000 years. We are already experiencing the mayhem and destruction that these changes can wreak, and, in the long term, things are only going to get worse.
On the face of it, the hypothesis that a few degrees’ rise in the average temperature of the atmosphere can cause the earth’s tectonic plates to move sounds ludicrous. Yet, McGuire, professor of geophysical and climate hazards at University College London, shows through careful analysis of historical records that the relationship between the weather and the “solid” earth is incontrovertible.
We caught up with him recently to talk about his hopes and fears. Here’s an edited and condensed version of our conversation.”
“We had a period about 55 million years ago, called the Paleocene-Eocene Thermal Maximum (PETM). It was a period of about 10,000 years, where global temperatures rose by about 6°C [11°F]. This is extremely rapid in geological terms. We had palm trees in Russia; crocodiles swimming in the Arctic ocean.
It sounds incredible, but the really scary thing is that we could now see our temperatures go up by 6°C in a few hundred years. What we are doing now, and if we carry on doing it for the next few centuries, is raise temperatures in 1/50th of time it took to do the same in the PETM. The rate at which we are raising the global average temperature is simply unprecedented.”
http://qz.com/681239/global-warming-wont-just-change-the-weather-it-could-trigger-massive-earthquakes-and-volcanoes/
onlooker on Sat, 14th May 2016 12:55 pm
For those who do not have time to go to this link. It is really quite simple. As the planet warms, the massive glaciers and Icebergs melt while introducing massive amounts of new liquid water. This has the effect of shifting the weight upon the planet which in turn creates movements in the mantle and tectonic plates. These movements open up fissures, gaps and opening by which molten lava escapes upward and can create volcanoes. Also, obviously any movements in the crust of the planet can potentially cause Earthquakes
makati1 on Sat, 14th May 2016 7:03 pm
Ap, that was the longest piece you have written in a while but it is totally true. Western humanity, and especially the Us has been brainwashed by Big Oil about as long as I can remember. There was never an “individual” freedom of though backed by honest science. We were totally sold (brainwashed) 24/7/365 on the benefits of oil, never the cost they call ‘externals” like global warming.
Now we will ALL pay the price for that greed. Even those still alive who are in the oily business and have kids and grand kids who will suffer and die in the brutal world we have made. And it will be brutal. The beginnings of it are already becoming visible around the world and especially in the dying America. I lived thru the best America had to offer and now I am living through the end of that America. Maybe the end of humanity. We shall see.
makati1 on Sat, 14th May 2016 7:10 pm
Onlooker, I mentioned that in a comment not too long ago. It was obvious to anyone who understands plate tectonics. It is why there is no place on earth where you will be able to escape the effects of global warming. Only a “degree of better” place, which will be constantly shifting along with the earth’s crust.
That southern island in Japan that is splitting in half, should be a warning of things to come, but Americans will say. “That is Japan. Not here.” I wonder how many know that the center of America used to be a huge sea and could be again anytime if/when the New Madrid Fault shifts? Changes, they are a coming.
onlooker on Sat, 14th May 2016 7:24 pm
Very well put AP. All along the Managers of Industrial Civilization were content to deceive and lie to create our a little “heaven” for a little “while”. Of course all those who knew kept quiet. It was a win win situation. The true beneficiaries being the elite wealthy oligarchs more addicted to wealth and power than anyone else. In the meantime the Masses were seduced by the “American dream”. To this day in China and India they yearn to realize that dream. Only you guys at the top, you in the belly of the beast ie. the fossil fuel industry knew it was going to be a nightmare. But you did not care you figured you would be dead by then. You figured you would escape an accounting. Your machinations and subterfuge to this day continues even as the world is literally burning. An accounting they’re will be but unfortunately the innocent will pay along with the guilty.
Boat on Sat, 14th May 2016 7:47 pm
ape,
Muddied the waters so much that y’all robbed humanity of making an informed decision on it’s biggest issue ever.
What a bunch of horse shyt. Even as a kid society knew about pollution from oil. Since the internet became popular the masses knew about climate change. We still flare nat gas like it means nothing in huge amounts.
Blame all us including yourself.
onlooker on Sat, 14th May 2016 7:55 pm
Boat, you truly are misinformed. By society I assume you mean most people. Just one decade ago Boat, climate change was barely on the radar of people. So your claim is horse shyt. As for blaming ourselves yeah right. Blames the addict rather than the drug pusher. That makes all the sense in the world. Besides if you had not notices living completely off grid and having to carbon footprint is rather hard when everything around you is based on carbon inputs.
onlooker on Sat, 14th May 2016 7:56 pm
no carbon footprint.
Apneaman on Sat, 14th May 2016 8:06 pm
Again Boat reads a comment, misses the point then starts arguing against points that weren’t even made. Another texass schooled fuck head. Enjoy the next biblical deluge – I know I will.
Apneaman on Sat, 14th May 2016 8:16 pm
US Climate Migrations About to Begin
http://www.dailyimpact.net/2016/05/12/us-climate-migrations-about-to-begin/
makati1 on Sat, 14th May 2016 8:17 pm
In other news:
“Overthrowing Other People’s Governments: The Master List of U.S. “Regime Changes”
55+ Attempted/Succeeded in the last 60 years alone.
http://www.globalresearch.ca/overthrowing-other-peoples-governments-the-master-list-of-u-s-regime-changes/5400829
The Empire would not exist without all of this meddling, and death.
makati1 on Sat, 14th May 2016 8:28 pm
Ap, I wonder how many Americans, all 320,000,000+ of them, have considered that their worry about Mexican migration into the US is less important than the internal migrations that are beginning? As Cali drys up, the mega storms intensify and multiply, the farm belt goes bankrupt, etc., All of those tens of millions will be on the move to “better places” in America. They have no option to leave the country. No money or passports or will. I see nothing but chaos and destruction ahead for those who believe that they are “safe”. The zombies are on the move.
onlooker on Sat, 14th May 2016 8:37 pm
Mak, my parents are from Colombia S.A. I came here when I was a 2yr old toddler. I am grateful for being able to live a relatively affluent and comfortable life here. But I know about all this pretty much that stains this country ie. Empire as the most vile country by far on this planet. That is why I speak openly about it. Knowing full well that I may be on someones list. This country or should I say the people who hijacked this country are by far the people most responsible for the state of the world. Since the 50’s the march towards hyper consumerism and Capitalism combined with the Arms Race and your links to the corrupting of many countries and also Institutions has basically created this unimaginably corrupt planet and thus nothing was able to budge the status quo. I am within the belly of the beast and maybe that is where I and my wife are meant to be to witness and communicate the reality of the Empire.
Apneaman on Sat, 14th May 2016 8:49 pm
mak, up to a couple of years ago the speculation was migrate north to Canada as the temperature increases. C’mon up there’s a real estate fire sale in Ft McMurray – cheap cheap. Bring a respirator because there’s lots more trees and tundra to burn.
Change of plans – Patagonia here we come.
makati1 on Sat, 14th May 2016 9:16 pm
Onlooker, I hope you have a bailout plan when it gets too hot in the “American Dream”. Your native country may not have all of the bells and whistles of America, but soon America won’t have them either. It will either be in a shooting war with bombs falling on American cities and/or be a dictatorship under marshal law. Either way, I hope you have made plans.
onlooker on Sat, 14th May 2016 9:23 pm
I do Mak, but I rather not reveal. Thanks for the well wishes. The same to you.
makati1 on Sat, 14th May 2016 9:25 pm
Ap, as I said to onlooker, I hope you have plans to bail out of the “American Dream” before it becomes more of a nightmare.
I am going back to the States, in a few months, for what may be my last visit. There is nothing there that is worth chancing being trapped there. I am making a list of the few things I can buy in the Us that I cannot get here in the Ps without paying import fees. I also want to be out of the States around and soon after the elections. Not sure why, just a feeling that it is not going to be a good time to be there. Every time I go back to the US, I feel like I am getting a cavity search by immigration and Homeland Security. I used to bid on prison work when I was in construction and getting in and out of a prison was easy compared to what you go thru getting in and out of the US.
Apneaman on Sat, 14th May 2016 9:39 pm
Beat the rush.
America’s Tent Cities for the Homeless-25 Photos
http://www.theatlantic.com/photo/2016/02/americas-tent-cities-for-the-homeless/462450/
Notice the 4 letter most of mention.
onlooker on Sat, 14th May 2016 9:43 pm
Careful because the municipality and/or private company may come to clean up your tent city. http://www.thestranger.com/news/2016/05/04/24038273/privatizing-the-clearing-of-homeless-encampments
Apneaman on Sat, 14th May 2016 9:47 pm
Mak, I’ve heard a number of doomers mention that they have already purchased their collapse plan either in Mexico or on line. It’s called Nembutal. Privileged to the end.
makati1 on Sat, 14th May 2016 9:56 pm
Well, if you cannot leave, it may be the best way of last resort. At least you will likely be smiling with your last breath. ^_^
I had to look it up as I am not familiar with drugs these days. Well, maybe, if you call light beer a drug, I am. One or two a day, when it is hot, is relaxing and they only coast P30 or about $0.65 each.