Could the bottom fall out of this oil rally?

41 Comments on "Could the bottom fall out of this oil rally?"

mx on Sat, 8th Oct 2016 11:16 am 



It already did, on Friday.

But, solar is a REAL BARGAIN Right Now. Many solar stocks below their 50 day moving average. Great time to Buy the FUTURE.

mx on Sat, 8th Oct 2016 11:17 am 



US rig counts going up, drives prices down, with no increase in global demand.

Hayek Econ FAILURE in Europe.
And China investing BIG in Wind and Solar for future energy needs.

Boat on Sat, 8th Oct 2016 11:51 am 



mx,

Short term Libya is the country to watch. They have opened up another port. If the fragile peace survives they alone can add a years worth of glut.

makati1 on Sat, 8th Oct 2016 8:13 pm 



Oil up. Oil down. Market up. Market down. Just like the clown show the US calls an election. Both sides grasping at straws, polls, the shaman looking at chicken guts. Both sides losing. The American sheeple have already lost. Neither oil, the market, nor who is the next teleprompter reader, will change the direction we are going. Down. Only the speed may vary.

All these oily articles are nothing more than pimps for the market. The good ship Petroleum is losing rats and that is not allowed. They have to stay long enough for the CEOs to cash out their stock options at the top. THEN the rats can fight for what is left, if anything.

Interesting times and going to get very scary and painful. The road is ending. The can is battered to pieces. Soon…

Truth Has A Liberal Bias on Sat, 8th Oct 2016 10:20 pm 



Boat, your talents are wasted. You should work for CIA. Thanks for pointing out the painfully obvious you fucking retard.

denial on Sat, 8th Oct 2016 10:35 pm 



doomers are disappointed if the outcome does not match their beliefs….just like a republican or democrat if their party does not win…..we don’t know the future ,telling someone is wrong with their prediction is just showing what a dumbs shit you are…..hell I don’t know… I expected collapse in 2016 but I don’t go attacking people because they don’t believe in what I do..

Apneaman on Sat, 8th Oct 2016 11:16 pm 



Election blindness: It’s the end of the world economy as we know it — and we feel fine

Our myopic focus on Trump and Clinton has blinded us to a looming debt crisis and a global economy on the precipice

http://www.salon.com/2016/10/04/election-blindness-its-the-end-of-the-world-economy-as-we-know-it-and-we-feel-fine/

dooma on Sun, 9th Oct 2016 1:11 am 



For years I have been wondering what our politicians were going to do about the aging of the baby boomer generation.

The boomers certainly lived in the best of times..jobs for life, free university education, plentiful resources and cheap housing.

Plus they have had a great medical system that sees them pay no more than $5.20 per script. I see them in the pharmacy, sometimes buying 5-9 types of meds at one time. And I wonder how much longer can this go on?

It will be a very different world in about 30 years when I retire. If we make it that far.

yoshua on Sun, 9th Oct 2016 5:23 am 



In round numbers

A gallon of crude API 37.5 contains 140.000 BTU.
The extraction of 1 gallon of crude API 37.5 costs 10.000 BTU.
The ICE works at 20 percent efficiency.
The extraction costs 10.000 BTU * 5 = 50.000 BTU.
50.000 BTU / 140.000 BTU = 0.35 = 35 percent

Diesel costs $2.4 a gallon.
It cost $2.4 * 0.35 = $0.84 to extract a gallon of crude API 35.7
1 barrel equals 42 gallons
It costs $0.84 * 42 = $35 to extract 1 barrel of crude API 37.5

The WTI crude oil price is $50 per barrel.

Boat on Sun, 9th Oct 2016 5:57 am 



yoshua on Sun, 9th Oct 2016 5:23 am

Do you have a link?

How does that compare with an oil api of 50 or 20.

yoshua on Sun, 9th Oct 2016 6:44 am 



Boat – Found the extraction cost in BTU somewhere here: http://peakoil.com/forums/the-etp-model-q-a-t70563.html?sid=4e73b4c7481ffcf562218abfdf48a21d

API 50 or 20 would cost more to extract.

Have you seen this: http://voxeu.org/article/shrinking-planetary-gdp

Davy on Sun, 9th Oct 2016 6:48 am 



It is important to realize this is a process of events. If you are looking for the event you may have to wait. This is a typical human condition. We want that great event to happen. The bible thumpers love to think about the rapture. Cornucopians think about a breakout into a prosperous world some green some brown. Doomers are deceived by the collapse. Many miss the process looking for the event.

I have been at this for most of my adult life with my exposure to early environmental and population concerns in the early 80’s. In college it was climate change, peak oil, and the philosophy behind inequality. I later became a globalist thinking development and education would shape the future for the better. I did not reject peak oil and climate change I just came to the understanding the worst might happen in my kid’s lifetime.

Around 2000 all this started to change with the Y2K hoax. It brought to my attention systematic collapse. Peak oil and climate change began to be more near term. By 2005 I was out of the corporate world and dooming and prepping for a collapsed world. I was a “Powerdown” and “Long Emergency” believer. I started keying into financial collapse 3 years before it hit.

The few months in 2008 was an event and it was a collapse. It was averted just barely. Most people do not realize how very close we came to a shut down and economic drop of terrible proportions. Simply, collapse was averted. The collapse and the staving off of collapse were both events. That was a classic stair step.

We have been in a collapse process since 08. We should have allowed a recession to clean house because that is what recessions do. The problem was it is likely a recession could not have been allowed because the forces of financial collapse were so systematic and dispersed. What our financial policy and actions allowed were the moral hazard of corruption of the normal workings of markets, price discovery, and traditional accounting practices. These actions saved us from a collapse event but also ensured we have no future only a continued collapse process. We basically adapted and evolved into a new normal of what we have today. What we have today is a process of collapse.

What we have is economic decline and decay because of a system that is no longer growing within the demands of a growth based system. We are global and in overshoot. We are a global economic system that must grow to battle entropy and accommodate rising population. We are losing this battle. As the pie shrinks and more people are added the social fabric is fraying. Culture is in decline and decay from cultural rot. Cultural rot has its own dynamics related to a lack of house cleaning. In previous times these same things occurred but the collapse phenomenon was regionalized like Rome or Chinese dynasties. This is now global and without an outlet. We can’t collapse and leave the cities for new pastures. The Earth is now one big collapse process.

The only outcome is a die off. This die off will be a slow or fast process and will likely be accompanied by events many and few. This may be a process of an average decline of populations with more deaths over births happening with jagged movements. It will be about economic decay and decline process fast and slow with many evnts and then few events over years. Both our culture and our economic arrangement can and might have events of great destructive forces or they may not. This is a global phenomenon so the process and events clusters may take on national character with contagions spreading regionally. There may be a collapse with a landing to stability then renewed collapse. We are in the zone of decline. It will likely be a jagged and chaotic decline. It will be characterized by the destructive change of the forces dysfunction, decay, and abandonment. Systems and networks will fail to function and will deteriorate.

We are there now we just have enough growth to mask the systematic decay of what should be growth but what is malinvestment and a waste stream. We are still building a civilization without a future. We are doing very little that represents constructions for a new and different future. The reason for this is we can’t. We are trapped. These traps are growth based. Our financial system cannot adapt without failure. Our energy system cannot adapt because we are too far into overshoot of consumption and population. We have destabilized the climate and are destroying the “Ecos” that supports us. This trap is existential and systematic at the macro level. It is now a catch 22 of only bad choices at the macro level. This means there is nothing left but private profit at the public’s expense. We are now in that last phase of civilizations where all that is left is the rush to the door only no one will get out alive. When I say alive I am referring to no nation or peoples will exit this door whole. We are going postmodern. This process is turning an epoch. Our climate and ecosystem will soon be in abrupt change and failure. This is a collapse process and the events will come as they will in a great turning of the Ecos.

Davy on Sun, 9th Oct 2016 7:27 am 



“Ray Dalio Warns A 1% Rise In Yields Would Lead To Trillions In Losses”
http://tinyurl.com/h46ayyk

“this isn’t a normal business cycle and we are likely in an environment of abnormally slow growth…the current tools of monetary policy will be a lot less effective going forward…the risks are asymmetric to the downside…investment returns will be very low going forward, and …the impatience with economic stagnation, especially among middle and lower income earners, is leading to dangerous populism and nationalism.”

“the debt bubble which was not eliminated during the financial crisis of 2008, has since grown to staggering proportions, and notes that “the biggest issue is that there is only so much one can squeeze out of a debt cycle and most countries are approaching those limits.”

“when we do our projections we see an intensifying financing squeeze emerging from a combination of slow income growth, low investment returns and an acceleration in liabilities coming due both because of the relatively high levels of debt and because of large pension and health care liabilities.”

“debt is fundamentally a liability even though it is treated as an asset by those who “own” it. As a result, “holders of debt believe that they are holding an asset that they can sell for money to use to buy things, so they believe that they will have that spending power without having to work. Similarly, retirees expect that they will get the retirement and health care benefits that they were promised without working. So, all of these people expect to get a huge amount of spending power without producing anything. At the same time, workers expect to get spending power that is equal in value to what they are giving. They all can’t be satisfied. How does the Fed react to this inconsistency? By a familiar tool: financial repression.”

“lots of pain for holders of duration: “If interest rates rise just a little bit more than is discounted in the curve it will have a big negative effect on bonds and all asset prices, as they are all very sensitive to the discount rate used to calculate the present value of their future cash flows. That is because with interest rates having declined, the effective durations of all assets have lengthened, so they are more price-sensitive. … it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest rates are embedded in the pricing of all investment assets, that would send them all much lower….. “Why The Fed Is Trapped: A 1% Increase In Rates Would Result In Up To $2.4 Trillion Of Losses”

shortonoil on Sun, 9th Oct 2016 7:37 am 



Will this rally fail; the Etp Model says that it must:

http://www.thehillsgroup.org/depletion2_022.htm

– but the Etp Model is esoteric, and difficult for most without a background in the subject to fully understand. It considers energy flows from the reservoir to the end user. It is not good bedtime reading material!

Most are looking for another simper explanation as to why the price of oil must continue to decline. Steve Angelo of the https://srsroccoreport.com/ may have found a simple link. Simply put, the downward pressure on the price may be resulting from no more than the accumulation of debt in the system. From an energy perceptive that makes sense, and we will be taking a much closer look at it in the near future. The debt accumulation is not the cause of the decline it is the effect. If true it can not be a reversed, or stopped and the price will continue down.

Steve’s last report is very interesting and well worth the time to read:

http://www.zerohedge.com/news/2016-10-08/warning-coming-collapse-us-net-worth-will-wipe-out-millions-americans

As we have been saying all along, it is not a petroleum problem, it is an energy problem with petroleum.

http://www.thehillsgroup.org/

yoshua on Sun, 9th Oct 2016 7:57 am 



Davy – Do you think that if the economy is a Self Organizing System… that a Controlled Implosion Economy will take form ?

For example: The central banks keeps on printing money that they give to the banks at zero interest… the banks then lend it to their Core clients and starves out the Periphery… the Core clients will never pay back the loans… a hole appears on the banks balance sheets from non performing loans… the central banks prints new money and gives it to the banks…

A Controlled Implosion Economy…

Davy on Sun, 9th Oct 2016 8:25 am 



“The debt accumulation is not the cause of the decline it is the effect. If true it can not be a reversed, or stopped and the price will continue down.”

This collapse process is not one cause and effect it is multidimensional. It is related to energy but with other issues. This process is systematic and influenced by global and macro overshoot of population and consumption. Consumption means more than just the consuming of things it is also the abstract of the system’s construction that consumes things. If it were just consumption we could degrowth and navigate through these existential traps. Population overshoot is clear in absolute terms but it is also systematic. We have too many people but what is even worse is we have too many people far beyond reasonable levels per the systematic dangers of overconsumption. Energy is directly part of this collapse process but so is poor human decisions that resulted in our trap. We are in an energy trap but we are also in an economic trap. These traps are related to living arrangements of globalism. In a different world the decline of the growth based influence of fossil fuels may have been mitigated and adapted to. This is not the case now. The economic system is partly the culprit. Free markets and liberal democracy are likewise a trap once they evolve as they have evolved. If the end point of our social narrative is ever greater efficiency, speed, and profit in a common prosperity it is clearly a limits problem. There are limits to growth and markets do not acknowledge them they point to innovation and substitution instead. Energy is only part of the issue of decline it is not the only reason for decline. It is one of the top reasons. This collapse will be unavoidable because of the fact it is multidimensional with multiple inescapable traps called existential predicaments.

Davy on Sun, 9th Oct 2016 8:38 am 



Clear a self-organization is driving global society and the global economy. This is systematic but it clearly has a human management function. We are making poor decisions no doubt about that. Those driving the poor decisions at the global financial level understand what their actions mean. They mean experimentation because none of this is text book and nowhere is there a reference. It is an experimentation in fantasy and unreality at the level of thinking you can skip a level in a cycle. In that regards this is a controlled implosion economy because we are trying to stave off collapse when there is no alternative except to collapse. It is necessary per natural law. Some may scoff at that idea which is fine but find some other explanation. Nature cycles and everything within nature cycles including modern human economies. To think differently is to feel we are exceptions to the rule which is absurd. Our controlled implosion economy is the conscious effort to maintain the unmaintainable status quo. To maintain the status quo is to go against nature’s cycles. It is against all relationships we see in nature through science and historical reference.

yoshua on Sun, 9th Oct 2016 10:12 am 



Davy – Here in Europe we have protected the Core (Germany) while we have starved the Periphery.

The oil consumption in the Core is intact while the oil consumption in the Periphery is in decline.

The Bail out of the Periphery was really a bail out the Financial Institutions in the Core. After the bail outs the Periphery was forced to accept austerity.

This Core / Periphery system is now collapsing after the Periphery took revenge by keeping their borders open and flood the Core with refugees (in the name of humanism) from regions outside of Europe that is collapsing even faster than the European Periphery.

It might in the end be impossible to control the events of this collapse… but I’m sure we will try.

yoshua on Sun, 9th Oct 2016 11:00 am 



What we pay for in a gallon of: Gasoline and Diesel

http://www.eia.gov/petroleum/gasdiesel/

yoshua on Sun, 9th Oct 2016 11:27 am 



In sharper numbers:

A gallon of crude API 37.5 contains 140.000 BTU.
The extraction of 1 gallon of crude API 37.5 costs 15.000 BTU.
The ICE works at 20 percent efficiency.
The extraction costs 15.000 BTU * 5 = 75.000 BTU.
75.000 BTU / 140.000 BTU = 0.53 = 53 percent

These numbers are also closer to the numbers
from EIA.

Boat on Sun, 9th Oct 2016 11:37 am 



yoshua on Sun, 9th Oct 2016 6:44 am

http://voxeu.org/article/shrinking-planetary-gdp

GDP would have been stagnate to shrinking in the developed world for decades except for bad decisions. Why immigrate people in a world so polluted. Why take on large debt by cutting taxes along with huge expenditures. When a country borrows from the future to support a life style/health care/economy/etc we create a bubble.
Another factor is efficiency. Without the bubble, energy prices and consumption would drop. With every product cycle for the most part less energy to power that product will be used. Of course gdp will drop.

Davy on Sun, 9th Oct 2016 11:42 am 



Yoshua, I see it like an orderly retreat. This will not be recognized as such but increasingly it will be reactive posturing to avoid collapse. It will be like the Germans in the long retreat from Russia in WWII where they won many of the battles while losing the war. Collapse will eventually overwhelm the collective efforts of the global world but the global world will never admit to this.

yoshua on Sun, 9th Oct 2016 11:59 am 



If these numbers are correct then we are dead.

Diesel costs $2.4 / gallon.
It cost $2.4 * 0.53 = $1.27 to extract a gallon of crude API 37.5
1 barrel equals 42 gallons
It costs $1.27 * 42 = $53 to extract 1 barrel of crude API 37.5

The WTI crude oil price is $50 a barrel.

The ETP-Model must be wrong or I must have understood it wrong and made a miscalculation ?

yoshua on Sun, 9th Oct 2016 12:02 pm 



Davy – Picturing it as a retreat from Russia is a nightmare situation. We are still alive ?

yoshua on Sun, 9th Oct 2016 12:09 pm 



Boat – I don’t know what to say. The economy is a monster ?

rockman on Sun, 9th Oct 2016 12:21 pm 



yoshua – “Boat – Found the extraction cost in BTU somewhere here…API 50 or 20 would cost more to extract.”

I studied the link and find it difficult to follow the logic and, more important, the implication. For instance a lot of “extraction cost” terminology used. For instance do you think 20 and 50 API cost more to produce from an existing well? Or do you thing it cost more per developed bbl to drill such a well? Or do you think it costs more to “extract” refinery products from those weight oils? Or do you mean the entire process from drilling to the motor fuel for your vehicle?

Some the discussion sounds a bit like the EROEI dynamic. For instance it makes no difference to a refinery if the producing wells have an EROEI of 10 or 100. Nor does it matter how many Btu’s were used the drill, produce and transport that oil to its gate. IOW it has no bearing on its process going forward: that bbl of oil cost $X and contains Y Btu…whatever those values might be.

But do you also understand there’s a good bit of Btu’s added to the refining process then just that of the oil? Often from different LPG, methane and even a tad of electricity. But again a refinery doesn’t buy or sells Btu’s. The refining decision process, just like that for drilling, doesn’t use EROEI or “BROBI”…Btu Returned On Btu Invested. Not just the drilling and production cost determine the ROR but so does refining and marketing.

IOW the system will go forward even if more Btu’s are used to produce less Btu’s at the consumers’ end as long as all the individual components from drill bit to gasoline pump generate a profit.

And again it seems counter intuitive but just as the lower price per bbl of oil will cause the EROEI of CURRENT AND FUTURE DRILLING products to increase (perhaps as much as 2X) so it has happened on the refining end: just read that refiner margins have dropped from around $0.75/gal to $0.50/gal. So for a refiner to try to maintain profitability they have to pay less for their feedstock…oil AND the other energy inputs. Just like an oil driller has to spend less to drill per bbl. And the only way to do that is only drill the prospects with larger reserves.

Which is exactly what we’ve seen in the shale plays…both oil and NG. Much fewer wells drilled but productively per NEW WELL increasing. A refinery can’t do much to increase its yield: that’s a function of the nature of the oil available. And it also can’t force drivers to pay more then what the market will bear, can it? So the only way a refiner can maintain profitability is reduce what it spends for a bbl of oil. Starting to sound familiar? LOL.

And how can a refiner make that happen? Real easy: don’t pay so much for the oil that it doesn’t make a profit. And there you go: back to the same FACT that so many can’t accept: the refiners set and have always set the price of oil. The producers can only control the VOLUME of oil they sell…not the price.

And guess what: even though the refiners have little control over the EROEI of their portion of the dynamic they do have control over the producers’s EROEI by lowering the price they pay which forces the drillers to go after the better EROEI prospects to compensate for those lower prices. Not only new oil but oil from existing wells has been affected by the lower price. Some of which convert from a profitable investment status to a money losser. But those producers have little choice but to generate as much cash flow as possible. And even increase production from existing wells (if possible) in order to max revenue. Sound even more familiar? LOL

Thus if one wants to look at the entire dynamic from reservoir to gas tank…wait for it…wait for it…yes, going forward the NET EROEI of the entire system has increased significantly. Just the opposite of what’s been proposed by those predicting a continuously decreasing EROEI/efficiency.

Of course as oil prices increase the trend will start reversing. Which is why there is “D” added to the tail of “PO”. IOW it ain’t a f*cking static system. LOL one more time.

rockman on Sun, 9th Oct 2016 12:55 pm 



yoshua – “It costs $1.27 * 42 = $53 to extract 1 barrel of crude API 37.5…The WTI crude oil price is $50 a barrel.”

It is sounding like you think the “extraction cost” is how much it cost to produce an existing well. What the oil patch calls LOE…Lease Operating Expense. The LOE of WTI isn’t anywhere close to $50/bbl. The LOE can vary greatly between fields and even wells in the same field. Impossible to calculate a weighted average LOE for all WTI producers. Can’t even offer a wild ass generalization. Some high LOE’s might be $20-$30 per bbl. But I have wells with LOE’s under $4/bbl. Yes: those wells would still be commercial to produce if I were selling for $10/bbl.

IOW companies are CURRENTLY generating positive a cash flow of many TENS OF $BILLIONS from US oil wells alone. But that doesn’t mean many of those companies aren’t going bankrupt or that the rig count won’t remain at the current low level for a long time.

I’m not sure but I think you and others are confusing the economics/efficiency of existing wells and new drilling projects. They really do exist in very different worlds.

(As an aside remember what I keep saying about companies now buying PROVED PRODUCING oil reserves for $10 to $20 per bbl? Obviously no company is going to buy hundreds of $millions of oil from producing wells if the LOE isn’t low enough to generate an attractive NET revenue at the current oil price, would it?)

And what happens when the LOE/low oil price reduces the NET revenue to less then the current oil price? You might produce at a small loss for a while but eventually you shut it in. And if conditions persist long enough: plug and abandone.

Boat on Sun, 9th Oct 2016 1:19 pm 



rock,

What is weird is if a refinery decides to run diesel instead of gas it appears they use the same basic blend of 32/33. Do you know why or do they run different api mixes for different products and the average is amazingly consistently.

rockman on Sun, 9th Oct 2016 1:47 pm 



yoshua – And to just add another layer of flavor to REAL oil patch economics (as opposed to theories and model) take this in:

I drill a well to “casing point”…the point in the decision tree to decide if there’s enough reserve potential to spend the ADDITIONAL capex to complete the well.

So again real life example: I spend $6 million to reach casing point. I evaluate the well and estimate it will only net me $4 million in revenue. But it will only cost $1.5 million to complete and put on production. So obviously I complete the well: spending $1.5 million to make $4 million ain’t a bad deal, is it? OTOH you wouldn’t spend $7.5 million ($6 + 1.5) to drill a well that nets you $4 million, would you? And let’s say when oil prices were much higher and that same $7.5 million investment would make you $12 million in net revenue you might drill it, right? But damn it: after you complete the well oil prices crash and you’ll only get back $4 million. So do you plug and abandone it? If it’s producing $200,000 of oil per month but your LOE is $100,000/month why would you abandoned a well making you $1.2 million per year? So yes: you’ve lost your ass but you’re making money. Go figure. LOL. BTW neither of those are rare circumstances: I’ve witnessed them first hand many times over the last 4 decades.

And now about DUC’s and why we still have so many uncomplicated shale wells. To make up for decreasing productivity companies began drilling longer laterals and pumping many more frac stages. But the additional drilling cost was much less then the added frac cost. In the early days the drilling cost might have been $5 million and frac’ng $1.5 million (6 to 12 stages). But of late: $6.5 million to drill and $6 million to frac…or more (60+ stages). So the economic threshold at $50/bbl is no longer $1.5 million but maybe $4 million (Halliburton et al can’t charge as much with the demand decrease). The latest estimate I’ve seen is 75% of the DUC’s remain unfrac’d.

Welcome to the real world of oil patch economics. LOL. Try to remember this when you look at any model and see if it incorporates such complexity. If it doesn’t then it really isn’t painting a correct picture of REALITY, is it? Modeling is much easier using generalizations then the details. Details that are difficult, if not impossible, to come up with.

yoshua on Sun, 9th Oct 2016 2:03 pm 



rockman – Yes, the $53 per barrel crude API 37.5 extraction cost, is as I understand it the full extraction cost (exploration, drilling, lifting, maintenance, capex and workforce).

You do of course have a point that most of the oil today comes from oil fields already in operation. I forgot the spacetime aspect.

You found my miscalculation. Thanks ! We are still alive… for now.

Now “we” are just in the process of depleting “our” reserves. Feel no pressure. Are you drilling something with a good prospect ?

And where are the engineers ? The ICE works with only 20 percent efficiency. We are wasting the crude you produce.

rockman on Sun, 9th Oct 2016 2:11 pm 



All oils yield gasoline and diesel (along with fuel oil called distillate in the stat). Here some stats on refinery yields from the EIA:

https://www.eia.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm

Notice they show “finished gasoline”. You never put the natural gasoline yield from any oil in your car. It gets a dose of “steroids” first. LOL.

Which is why there’s a big exchange system between the US and the rest of the world (especially the EU): we ship the a lot of our inevitable diesel yield and the send us much of their gasoline yield.

The oil blending process is much more complex the just API weight. Each blend, even with the identical API, can have very different yields. Which is why some refiners are now blend oil themselves instead of whats already blended and available from the oil blending companies. That way they can customize their yields to provide them with the highest possible margin. For instance there was an oil field in S Texas that produced an oil that yielded such a high quality lubricant that in addition to paying a premium for it a refinery also paid to truck it to their facility in Arkansas.

yoshua on Sun, 9th Oct 2016 2:38 pm 



roccosaurus – I peaked back in spacetime. Now you will ask me: Did you create Heaven and Earth ? No, not as far as I can remember. This is just a theory.

The Phanerozoic Eon started some 500 million years ago and gave birth to complex life on this planet. The carbon dioxide level at that time was 4500 ppm (particles per million) in the atmosphere. Carbon dioxides are building blocks of life used by plants and planktons. The planet was warm, moist and the poles had no ice at that time.

In the Mesozoic Era 250 million years ago (in the age of reptiles) the carbon dioxide level had fallen to 2000 ppm after plant life and planktons using carbon dioxides under millions of years had lived, died and been pressed into the earths crust. The planet was still a Green House planet though and the poles where free from ice.

In the Cenozoic Era 50 million years ago (in the age of mammals and birds) the Azolla event took place which caused the carbon dioxide level in the atmosphere to collapse to 200 ppm. The temperature dropped and the poles where now covered in ice. The planet started to have Ice Ages 2 million years ago which threatened to turn the planet into a snowball with a following extinction of life.

Humans learned to master the magical force of fire most likely because it was so bleeping cold. The burning of fossil fuels (coal, gas and oil) has increased the carbon dioxide level to 400 ppm and reversed the trend from a Snowball planet towards a Green House planet.

So… The Nobel Prize in medicine to the Rockman for healing this planet.

I know that they wont give you the Nobel Prize… but anyway… thanks.

Apneaman on Sun, 9th Oct 2016 2:49 pm 



Exxon Mobil sued for ‘climate deceit’ in US
Exxon Mobil is failing to safeguard Massachusetts communities against pollution relating to climate change impacts, the suit says. It follows up on revelations that the oil giant covered up climate risks of fossil fuels.

http://www.dw.com/en/exxon-mobil-sued-for-climate-deceit-in-us/a-35964796

rockman on Sun, 9th Oct 2016 3:14 pm 



yoshua – “You do of course have a point that most of the oil today comes from oil fields already in operation. I forgot the spacetime aspect.”

And this how it gets confusing. If that $53/bbl is someone’s estimate for the full extraction cost (exploration, drilling, lifting, maintenance, capex and workforce) of all the 37.5 API (a rediculous distinction itself) oil we are producing today not is it only incorrect it is insanely incorrect. Think about: the majority of the oil we are producing today was developed when oil was $40/bbl…or less. Sometimes much less. All the oil wells drilled during the first 6 years of this century were economically evaluated on a price of oil way under $53/bbl. Or look at it more simply: if the oil patch had spent $53/bbl for the exploration, drilling, lifting, maintenance, capex and workforce on wells prior to 2006 when the inflation adjusted price of oil was $40/bbl OR LESS for the previous 20 years would there have still been an industry left by 2006?

I’m sorry but it seems like this entire conversation is terminally plaqued by incomplete and incorrect concepts based on gross generalizations because the critical details are not available.

For instance: $53/bbl for 37.5 API oil. Obviously one can only compute that $53/bbl stat by dividing the number of bbls of 37.5 API oil being produced (X) by what was spent ($Y) for the “exploration, drilling, lifting, maintenance, capex and workforce” for those wells producing 37.5 API oil, right?

So ask around: what are X and $Y. Hell, no one can even tell you how many wells are producing 37.5 API oil let alone how much they are producing. And costs? Hell again, no one can tell you what those specific wells cost let alone the cumulative cost of all of them. But I can tell you exactly what you’ll hear: generalizations with no detailed data to back them up.

Perhaps you now see why I avoid getting into arguments over details: I neither know nor have access to half the data required. And I know a lot more the just about everyone here. But even more important: I know exactly what I don’t know and thus don’t try to bullsh*t folks with generalizations.

Well, at least not very often. LOL.

rockman on Sun, 9th Oct 2016 3:36 pm 



yoshua – You bring up an amazing detail that few know about: it was that poisonous CO2 atmosphere that helped bring about carbon based lifeforms on earth…but indirectly. That atmosphere couldn’t do it. It fed the organisms that replaced much of that CO2 with the O2 that allowed life as we know it to evolve. And did it much further back…about 3.7 BILLION YEARS ago to be exact.

STROMATOLITES: While prokaryotic cyanobacteria reproduce asexually through cell division, they were instrumental in priming the environment for the evolutionary development of more complex eukaryotic organisms. Cyanobacteria (as well as extremophile Gammaproteobacteria) are thought to be largely responsible for increasing the amount of oxygen in the primeval earth’s atmosphere through their continuing photosynthesis. Cyanobacteria use water, carbon dioxide, and sunlight to create their food.

More here:

https://en.m.wikipedia.org/wiki/Stromatolite

rockman on Sun, 9th Oct 2016 3:40 pm 



“The Nobel Prize in medicine to the Rockman for healing this planet.” Actually it’s the folks in the Midwest that have evolved the best: every 12 months they swing from freezing their asses off to sweating like stuck pigs. LOL.

yoshua on Sun, 9th Oct 2016 3:50 pm 



The crude oil 37.5 API is just the average (or median) API conventional crude oil between 30 API to 45 API, used as a reference point, to try to calculate what the average barrel of conventional crude oil costs to extract. Some barrels will fall under and some be over that API.

A theory can only be proven false. Reality and our understanding of reality are never exactly the same. Our perception is a psychological phenomenon of a physical reality.

Theories can perhaps still give us a glimpse of where we are in space and time.

shortonoil on Sun, 9th Oct 2016 3:56 pm 



“This collapse process is not one cause and effect it is multidimensional. “

It may be, but that multidimensional world is undefined, and most likely undefinable. That perspective give no useable date and time stamp. As a steering tool it is useless, sort of like watching the FED.

We have something that is a little more specific.

http://www.thehillsgroup.org/

Davy on Sun, 9th Oct 2016 5:10 pm 



Who says the only definable data is energy? A tool that is used beyond its design envelope will not operate properly. That makes the usable data and time stamp inaccurate for the whole picture. We then have a distorted view of reality. Using only an energy model to describe a systematic process that is multidimensional is useful but only if kept in perspective. The problem with scientist and engineers is they are prejudiced to their models, theory, and equations. When they step out of that comfort zone they feel threatened.

rockman on Sun, 9th Oct 2016 5:23 pm 



yoshua – “The crude oil 37.5 API is just the average (or median) API conventional crude oil between 30 API to 45 API, used as a reference point, to try to calculate what the average barrel of conventional crude oil costs to extract.” Yes, the midpoint between the numbers 30 and 45 is 37.5. I don’t want belabor the point but what does that number have to do with average API of conventional oil being produced in the US today? There are convention reservoirs producing 10 API to 55 API. And the average of those two numbers is 32.5. Which itself just as meaningless as 37.5 since it isn’t a WEIGHTED AVERAGE that takes into account the amount of oil produced at each gravity.

And then there’s still a question of well costs which is needed to compute the cost per bbl. Given there are some wells producing 37.5 API oil that cost less the $350,000 to drill and complete and others costing $5 million: what would an “average well cost” mean anyway?

I don’t wantto keep picking on you or anyone else. But if folks use generalizations that don’t make sense I’ll feel compelled to point it out. There is neither an “average API” oil produced from either conventional or unconventional reservoirs nor and “averave well cost” that can be used to calculate any meaningful statistic. But WEIGHTED AVERAGES might give some hint of the reality. But I’ve yet to see anyone invest the truly tremendous amount of effort that would take.

Hell, to do just one Texas county with just a modest amount of oil production could take hundreds or even thousands of manhours.

Boat on Sun, 9th Oct 2016 7:32 pm 



crude.www.phillips66.com/EN/products/business/crude_oil/gravityscale/Pages/index.aspx

When it comes to api the rubber hits the road when it comes to price.