[Zardoz]

$this->bbcode_second_pass_quote('crapattack', '.')..I would argue that building all these hundreds of plants is completely irresponsible...

[evilgenius]

I think the issue with nuclear power isn't going to be are we going to leave derelict plants to kill in various places upon the earth? Of course we are. Somewhere man will do just that, no doubt brought on by desperation. The issue is actually, do you live near a nuclear plant?

I think man's best hope lies in developing more efficient electrical generators. Imagine the kind of advances in coiling or interfaces or superconductivity or whatever that deliver efficiencies on the level with the advances in computer processing power. Imagine a single wind turbine generating the same power that a whole field of them do now. Of course the oil based power structure doesn't like to think of it unless they own the rights.

Twenty years ago we needed to get rolling with this. You don't just need more efficient ways to produce electricity, you need systems that use electricity as well. America still doesn't have a high-speed rail network. The transmission lines could never handle the demand that full electric would place on them. And that is just America. By now it ought to be possible to travel Africa by means other than foot or Land Rover. Europe definitely holds the edge.

[MonteQuest]

Bump up.

[Subjectivist]

$this->bbcode_second_pass_quote('MonteQuest', 'O')ne of the things that has continuously puzzled me is that amongst the optimistic solutions posited to solve hydrocarbon depletion, I see an assumption that we have, or will have, the time to mitigate the consequences of peak oil. Mitigation, of any sort, will take time and a lot of money. And it will have to be applied world-wide, not just in the first world.

The only crash plan I see in place at the moment is one to escalate the debt beyond the comprehension of man.

If it takes decades to prepare for this, and we have just a few years at best by most accounts and predictions, why is it that people continue to think complex, technical, and highly capital intensive solutions can be developed and implemented literally overnight?

{edit: literally overnight is a hyperbole}

If peak oil is at our door, and in planning terms—tomorrow, are we not beyond the point of no return?

[MonteQuest]

$this->bbcode_second_pass_quote('pstarr', 'A')h Yes. The Late Great MQ. All bow before his Eloquence.

He swims in deeper seas. LOL

[ROCKMAN]

Monte – Speaking of debt I was just discussing with my CFO the predicament the Eagle Ford players will be facing soon. Everyone understands that they’ve been using a lot of borrowed capex to keep the drilling machine lubricated. But almost all credit lines are linked to a company’s PDP assets (Proved Developed Producing) and lesser value assets. But a key to that valuation is the oil price used…an oil price calculated using the required SEC regs. Fortunately those rules changed a few years ago. Before companies had to use the closing price on the last market day of the year in December. Given where oil prices appear to be heading that would have led to devastating reductions in book values 1Q 2015. And also a reduction in credit lines which could significantly reducing drilling. Which would reduce reserve replacement efforts. Which would be the beginning of the death spiral we’ve seen before in the oil patch before.

Fortunately now the SEC uses a weighted yearly average for oil pricing so pricing changes used for valuation will fall more slowly then what we’ve just experienced. But if oil stays low for the next 12+ months the reserve reductions will eventually catch up with the companies. Not yet panic time for the pubcos playing the shales. But all the hands I know are beginning to position themselves for a fall out. At lunch where some of them gather I don’t have to ask…you can see it on their faces.

[shallow sand]

Looked at Texas RRC August, 2014 production info and compared it to previous months in 14 and 2013. I know there is a significant reporting lag, but looks to me like a plateau forming in production growth? Or is the reporting lag that bad, even several months out? Next looked at some PB and EFS counties, appears to be more pronounced in EFS. Is reporting lag worse in EFS or have things already slowed some there?

[ROCKMAN]

shallow - Always a lag with revised numbers out several months later.

[MonteQuest]

$this->bbcode_second_pass_quote('ROCKMAN', 'M')onte – Speaking of debt I was just discussing with my CFO the predicament the Eagle Ford players will be facing soon. Everyone understands that they’ve been using a lot of borrowed capex to keep the drilling machine lubricated.

[ROCKMAN]

Monte - Great chart. I still don't think some folks realize how insanely the oil patch can push itself into unsustainable and, more important, unprofitable expansion phases when oil/NG prices spike. Your chart shows the lack of proportional results from increased drilling activity of about 1,900 rigs running. Back in the late 70's we had more than 4,500 rigs running which produced even poorer results then you chart shows for the recent boom. If folks want to know how bad this down turn might be all they need do it research how many companies were destroyed in the early 80's as a result of the earlier boom. There used to be a Mobil Oil back then. And a Gulf Oil. And a Texaco. And a Getty Oil. And etc. etc. The remnants now: ExxonMobill... and some old Texaco and Gulf Oil signs for sale in antique shops.

The potential coming slaughter won't be the first. Or even the second...or the third. The boom/death cycle is well established.

[MonteQuest]

$this->bbcode_second_pass_quote('ROCKMAN', 'M')onte - Great chart. I still don't think some folks realize how insanely the oil patch can push itself into unsustainable and, more important, unprofitable expansion phases when oil/NG prices spike.

[MonteQuest]

Compare this chart to the 1st chart I posted. Capex is in serious decline as a result of poor production returns as chart 1 shows. "This chart isn’t for all companies. It excludes the smaller companies, and it excludes the National oil companies, so it is about one-third of the market."

[jedrider]

There seems to be a disconnect between what is required and what we are doing!

Well, of course, there is: We have an intellectual class and a wealthy class. The two are NOT the same. One has much more power than the other and has effectively bought the other.

When the wealthy class has some pain, maybe, and only then, we may get some change in direction. No one act like this will happen anytime soon, because it probably won't. They will be the last to feel the pain.

[MonteQuest]

$this->bbcode_second_pass_quote('jedrider', 'T')here seems to be a disconnect between what is required and what we are doing!

[ROCKMAN]

Monte - "And how long can they sell assets to pay dividends?" Until they can't. When I stopped counting over a year ago Chesapeake had sold over $25 in assets and was still deep in depth. Eventually the dividends fall so the stock falls. Eventually the big funds are made a buyout price the can't refuse. So maybe we'll see a new company in a year: ExxonMobilChesapeake. Although if that happens the "Chesapeake" will probably be silent. LOL.

The cycle has always been inevitable. The only question is how long before we see an ExxonMobilShell? Or some other combination. Little Oil, with has much of its value tied up in relatively short lived reserves, just isn't the plum acquisition target it was 20 years ago.

[MonteQuest]

$this->bbcode_second_pass_quote('ROCKMAN', 'T')he only question is how long before we see an ExxonMobilShell? Or some other combination.

[shallow sand]

It is interesting that we haven't heard rumors about majors buying shale companies given the shales have seen a much larger stock price declines than the majors. Would think they would be looking to snap up the best of these companies if shale was such a good investment. I may be skeptical just to remain optimistic as I really don't want to see sub 60 WTI for personal reasons. However, a model that requires continuous CAPEX just doesn't seem to me to be one that will work out. Maybe I'm just in my own little world of 2-3% declines, and drilling and or doing work overs a little to combat that decline.

I suppose if the shale wells have a long tail with a signicant daily average and low decline, it will work. Time and lower prices will tell

[ROCKMAN]

Shallow - "Would think they would be looking to snap up the best of these companies if shale was such a good investment". Big Oil only acquires smaller companies when they can buy a significant volume of PROVED reserves at a discount. Not only are the PROVED reserves of those companies not very large compared to a Big Oil they are relatively short lived. So would Big Oil acquire those companies to get their hands on the UNDEVLOPED shale acreage they own? Why would the buy an entire company (including it debt) when they can buy those leases much cheaper once the small companies faulted? You know all acreage positions automatically expire in just several years if they aren't drilled. If the shale plays do crater obviously those expired leases could be picked up very cheap.

Folks need to remember that Big Oil could have easily outbid Little Oil for the shale leases from the beginning if they wanted them: it held hundreds of $billions in cash reserves while Little Oil was struggling to raise capital from the start.

[MonteQuest]

$this->bbcode_second_pass_quote('shallow sand', 'I') suppose if the shale wells have a long tail with a signicant daily average and low decline, it will work. Time and lower prices will tell