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Page added on May 3, 2014
Peak Oil: What’s Their Plan C?
Given that shale oil production is, in fact, currently doing the most to meet growing oil demand, any shale oil ‘bust’ is likely to have significant implications for an already-strained oil market. [1]
While there’s some (strained) logic to the efforts of fossil fuel industry officials and their spokespeople to do nothing but offer the most optimistic scenarios and forecasts about future oil supply and production, it’s impossible to imagine that those in charge are not contemplating the very same facts we on the “other side” of the discussion regularly share.
Facts are stubborn things. They refuse to go away, for one. Ideology and optimism may carry one today, but eventually there simply is nothing left to contend with except those often-inconvenient truths. It’s also understandable that foregoing today the accessible and still-economically-feasible extraction and production opportunities at hand in favor of transitioning their own efforts to efforts largely unknown or at least untested hopes is tough to justify.
There are substantial bottom lines to attend to, a lot of investors, a lot of employees, vendors, and partners to answer to, and a public which both needs their products and is largely unaware of what lies ahead.
It’s a situation that seems ripe for full disclosure, cooperation, and planning. So where is it?
Given what they surely know or understand is looming just ahead, what are the oil industry’s plans once the inevitable weight of economic and geological realities take hold?
Maybe it’s just me, but I’m thinking that planning ahead for an issue even remotely close to one with the potential to cause so many unknown consequences as an inadequate fossil fuel supply is a better, wiser, and ultimately much more beneficial path to travel that continuing to hope for the best.
Not much has changed: Blind Faith is still a better rock band than strategy.
15 Comments on "Peak Oil: What’s Their Plan C?"
rockman on Sat, 3rd May 2014 8:49 pm
“…what are the oil industry’s plans once the inevitable weight of economic and geological realities take hold?” Hot a good laugh out of that. Of course the oil patch knows the future. Many here know the future. The plan: for the pubcos management/hedge fund managers it’s very simple: get the stock price up and bail before the fall. For privcos like mine: drill as many wells as possible that work at current prices.
Today we are drilling the prospects (shakes, Deep Water, etc.) that work at current oil prices. In time that inventory will be used up. So hit re the plays that follow? I wouldn’t guess. But whatever they are they’ll require oil prices significantly higher then they are now. But can the global economy afford such higher prices with inducing demand destruction? Demand destruction that would lower oil prices and eliminate fen more drilling prospects.
I know the folks from whom they are asking for Plan B…I work with them continuously. The “plan”? There is no freaking plan other then to cash up and retire. Of course, that’s not the story from the pubco PR departments put out.
bob on Sat, 3rd May 2014 9:12 pm
what kind of cash are you talking about? there may not be a system to support your cash….
Plantagenet on Sat, 3rd May 2014 10:12 pm
The oil industry isn’t the only group trying to score big and then retire. Thats also the plan for bankers, politicians, public employees, criminals, etc etc.
Everybody dreams of doing that.
ghung on Sat, 3rd May 2014 10:33 pm
“Everybody dreams of doing that.”
So you speak for everybody, eh? Know what their dreams are? You should start your own religion; I’m sure a lot of other fucking fools would join in.
BC on Sun, 4th May 2014 2:51 am
The system will adapt, families will all be living under one roof, as wages,pensions and superannuation decline as inflation and interest rates rise.Food and shelter will take center stage in people’s lives once again, bring it on I say.
Perk Earl on Sun, 4th May 2014 3:36 am
“The system will adapt…”
A lot of adaptation has already taken place with people going back to live with their parents and even with grandparents. There is only so much adapting that will take place before rage sets in, then look out.
With the Fed trying to taper QE to zero, the govt. trying to reduce deficits, oil companies reducing exploration, growth in the 1st qtr. at .01% this far along in a so called recovery, recession in the EU & soon in Russia, lies by the govt. about the US unemployment rate, too many high wage jobs replaced by low paying part time jobs, fuel prices at the pumps rising again, it’s starting to seem like we are not far from another step down.
The only question is; what will be the tipping point this time?
Kenz300 on Sun, 4th May 2014 5:16 am
Time to diversify away from fossil fuels………..
Second generation biofuels made from algae, cellulose and waste are the future.
The Time for Wind and Solar Energy Is Now
http://www.renewableenergyworld.com/rea/news/article/2014/05/the-time-for-wind-and-solar-energy-is-now
Pops on Sun, 4th May 2014 7:18 am
“there is no freaking plan”
Check
It amazes me, rock, how often I hear the idea that there is some secret cabal in place running things, that they are all knowing and have a plan.
It strikes me as wishful thinking. If the Overlords are in charge, at least we can have comfort in knowing that someone – anyone – is in control and that’s better than being left to our own devices.
Renewables for example can’t save our petroleum lifestyle but it’s nice to think “They” have a plan and are implementing it post haste. Sorta like say “It’s God’s will” when bad things happen.
Unfortunately, I’m pretty sure it’s every man for himself.
rockman on Sun, 4th May 2014 7:43 am
Pops – Exactly. Maybe folks think I’m kidding. I work with the movers and shackers in the oil patch along with their bankers and major investor groups. There is no long term plan because there is no long term solution for PO. All the current goals are short term…cash up and ride off into the sunset.
Bob – “there may not be a system to support your cash…”. Speaking on behalf of the entire oil patch: who gives a f*ck? LOL. Seriously. I’m talking about self enrichment…not for the oil companies or the rest of society. I’ll make the point that used to piss of some folks at The Oil Drum: the oil patch ain’t your momma. We’re not responsible for the energy security of the country. That has never been in our charter despite the BS from the Big Oil PR departments. Folks waiting for the oil patch to save them are going to be very disappointed. It’s pitched that the shale and Deep Water activities are our effort to help out the country. Super BS: it’s all about personal enrichment. If the county gets any benefit that just a coincidence. So far increasing the country’s oil bill from $225 billion/yr to almost $625 billion/yr doesn’t seem very beneficial.
We don’t care about what the consumers of the future will need. That’s not our responsibility…it’s theirs and that of the politicians they elect. I don’t mean to hurt feelings but it isn’t personal…just business?
eugene on Sun, 4th May 2014 7:51 am
I think you’re right on Rockman. Personally, all I see is people blindly trusting a system that exists only in their own minds.
Northwest Resident on Sun, 4th May 2014 9:23 am
“..what are the oil industry’s plans once the inevitable weight of economic and geological realities take hold?”
From my point of view, the “inevitable weight of economic and geological realities” has already taken hold — and with a very firm grip.
How the oil companies will react to those economic and geological realities is EXACTLY how the ARE reacting right now.
And how are they reacting? The big oil companies are withdrawing (or have already completely withdrawn) from shale fracking plays. The smaller companies have taken on massive debt and deployed a broad range of accounting gimmicks in partnership with Wall Street to squeeze what pathetic quantities of “oil” they can from the shale formations. And behind the scenes, not publicized, it is a pretty good guess that a large percent of the oil industry employees are stocking up and preparing to hunker down for that day when the oil stops flowing because they more than most others must know how fast that time is approaching.
I agree that their plan in general is to burn through the financing and investment bucks as fast as possible, take what they can get right now and retire — with “retirement” being defined as “holed up in a place of their choosing, stocked up with whatever they think they’ll need, prepared to ride out the coming storm.”
That’s the Plan C.
rockman on Sun, 4th May 2014 11:13 am
NR – A real bumper sticker in the oil patch after the bust in the 80’s: “Lord just give me one more boom and I won’t screw up this time”. Really. The mistake many made in the late 70’s boom was assuming it was a long term proposition. We had 2.5X as many rigs running then as today. No one is making that mistake now. It’s all about timing: every company has its finger on the trigger: bail right before we hit the iceberg. Once my private company amasses enough reserves we’ll sell out and never look back. And then y’all are on your own…nothing personal…just business. LOL.
meld on Sun, 4th May 2014 1:08 pm
I totally agree with Rockman here. If I made cakes and sold them, I’d make as many cakes as I possibly could to make as much money as I could. Who gives a fuck who’s supplying the cakes in the future. The oilmen are going to sell as much oil as they can as fast as they can for as high a price as they can and then retire to their personal mansions with their own personal armies. Who can blame them really, they’re just doing what daddy and the government told them. Live the dream! live the dream! live the dream! as far as they are concerned they are the good guys.
Northwest Resident on Sun, 4th May 2014 1:14 pm
rockman — Yeah, that’s what I figured… And I don’t blame you all not one little bit. Taking NOW while the taking is good makes perfect sense. They’re doing it on Wall Street, they’re doing it in the oil patch, and my guess is that it won’t be long before just about everybody else adopts that same attitude. And hey, no hard feelings — you guys in the oil business gave us a WILD RIDE. That rocket took us to unprecedented heights. Now the engine is sputtering, choking, running out of gas. One last WILD RIDE is in our future — back down to planet earth. Buckle your seat belts boys and put on the oxygen masks, gravity is about to prove who’s boss in this universe.
rockman on Sun, 4th May 2014 3:39 pm
NR – Another way to put it is that the oil patch is no different than all the other business sectors. Is Microsoft doing their thing for the primary benefit of the economy? How many folks on this site work for a company that doesn’t have the profit motive driving them? I can admit it because everyone
already dislikes the oil companies so got nuthin to lose. LOL.