Let us take a little trip down Memory Lane to find out what, according to the doomers, was supposed to happen with oil production in Texas. It was supposed to be the poster child of depletion, and everything!

Back in 1999, according to this, the following was supposed to be the trajectory of oil production in Texas. It was supposed to be all downhill!



Then over on The Oil Drum we have doozey's such as this, in which production in Saudi Arabia, the North Sea or any other place of interest is projected based on what has happened in Texas. I wonder if those same people are willing to maintain that line of reasoning today!
$this->bbcode_second_pass_quote('westexas', 'B')ased on the Texas model, one could argue that higher prices cause oil production to fall. By the way, note that the North Sea, since 1999, has shown declining crude oil production in response to a generally rising price environment.

In reality, Texas and the overall Lower 48 had simply consumed more than half of their recoverable reserves, based on the mathematical Hubbert Linearization (HL) model.

[ROCKMAN]

C-O: "And the doomers have had the nerve to ridicule the Cornucopians". I have to agree with you on this one. Their primary error was not anticipating the effect of a 300% increase in the price of oil. Any geologist worth his salt would have predicted big increase in Texas production if you had told him Americans would be paying an extra $400 billion per year for their oil consumption today. Yes indeed: a copious abundance of revenue for the oil patch. We thank you America.

[Outsailing]

$this->bbcode_second_pass_quote('ROCKMAN', 'C')-O: "And the doomers have had the nerve to ridicule the Cornucopians". I have to agree with you on this one. Their primary error was not anticipating the effect of a 300% increase in the price of oil.

$this->bbcode_second_pass_quote('ROCKMAN', 'C')-O: "And the doomers have had the nerve to ridicule the Cornucopians". I have to agree with you on this one. Their primary error was not anticipating the effect of a 300% increase in the price of oil.

[Outsailing]

$this->bbcode_second_pass_quote('copious.abundance', '')$this->bbcode_second_pass_quote('ROCKMAN', 'C')-O: "And the doomers have had the nerve to ridicule the Cornucopians". I have to agree with you on this one. Their primary error was not anticipating the effect of a 300% increase in the price of oil.

[americandream]

$this->bbcode_second_pass_quote('ROCKMAN', 'C')-O: "And the doomers have had the nerve to ridicule the Cornucopians". I have to agree with you on this one. Their primary error was not anticipating the effect of a 300% increase in the price of oil. Any geologist worth his salt would have predicted big increase in Texas production if you had told him Americans would be paying an extra $400 billion per year for their oil consumption today. Yes indeed: a copious abundance of revenue for the oil patch. We thank you America.

[Strummer]

$this->bbcode_second_pass_quote('Outsailing', 'W')ell, this is certainly some good news for continued world production rates I guess. The geologists have all underestimated the amount of available oil and gas and it just requires another price bump to get more.

[americandream]

$this->bbcode_second_pass_quote('Strummer', '')$this->bbcode_second_pass_quote('Outsailing', 'W')ell, this is certainly some good news for continued world production rates I guess. The geologists have all underestimated the amount of available oil and gas and it just requires another price bump to get more.

[Pops]

Actually the production of "Crude Oil" isn't 3Mb/d, the production of crude and condensate is 3Mb/d, big difference.

This ties in with the thread about exporting condensate, since all the increase in TX production (and all the fracked shales I guess) is essentially condensate. Condensate is light oil, naptha, natural gasoline, Coleman fuel, it is also the perfect feedstock to make plastics because it is easily (well, with lots of heat) cracked apart to make the ethylene, propylene etc that all our chachkas are made from.

From DCoyne


Here is a table from rbnenergy.com showing just how big condensate is:



$this->bbcode_second_pass_quote('', '.').. including EOG these companies were producing between them 456 Mb/d in October 2012 and that 7 out of the 10 companies were producing condensate – a total of 319 Mb/d or 70 percent of output – leaving only 30 percent of output or 137 Mb/d as crude oil.
The companies used in the IHS survey are not named (except for EOG) but the October 2012 current production volume estimates on the chart (456 Mb/d) exceed the “official” RRC production numbers for YTD November 2012 – so the companies do represent a significant chunk of Eagle Ford production.

[ROCKMAN]

Pops - All valid points. But: "All that explains the push to relax the rules to allow exporting condensate with little or minimal refining." As pointed out condensate has been exported for a long time as upgraded "product" and non-upgraded exempt oil. But more importantly about 1.2 BILLION bbls per year of CRUDE OIL in the US is cracked and shipped out of the country as refined products. So in essence there isn't today nor has there ever been an "effective" ban on exporting the value of US oil. Just one big game of smoke and mirrors IMHO. No different then me being banned from paying you in $100 bills and then my paying you in $20 bills: the money still leaves my checking count. But there is bright side: all that oil we crack and export is imported into the country. At least in the accounting ledger it isn't US oil. Which also explains the other smoke and mirrors con tossed out by Canadian oil sands importers who pledge not to re-export it from the US. No need: just crack it in Gulf Coast refineries that are well designed to do so and then export all the products if it makes good economics to do so. Not that this is a reason to not import the Canadian production but in theory, other then providing refinery jobs and industry profits, those imports might not add anything to US economy or supplies.

The US consumes more oil then it produces. We have no NET oil to export. A mute point IMHO.

[Outsailing]

$this->bbcode_second_pass_quote('Strummer', '')$this->bbcode_second_pass_quote('Outsailing', 'W')ell, this is certainly some good news for continued world production rates I guess. The geologists have all underestimated the amount of available oil and gas and it just requires another price bump to get more.

[Pops]

$this->bbcode_second_pass_quote('ROCKMAN', 'S')o in essence there isn't today nor has there ever been an "effective" ban on exporting the value of US oil.

[ROCKMAN]

Hmm..."But the real question is, how our success translate to success in other areas". Our "success" has translated into US consumers spending about $400 BILLION more per year for oil then we were producing less. Which means that in the last 5 years or our consumers have transferred an ADDITIONAL $2 TRILLION to the oil producers including foreign countries. We might be importing less oil but we are sending more $'s overseas then when we were importing more.

I suspect many Americans struggling to pay the higher bill don't feel very successful. But me and the other oil patch hands are feeling damn successful. LOL.

[Synapsid]

ROCKMAN,

I'd be happy to accept $20 bills. Send 'em along.

[westexas]

As Pops noted, the (so far) Texas peak in 1972 of about 3.4 mbpd was crude oil only (generally defined as 45 or lower API gravity crude oil). The Texas RRC data put the 2013 Texas condensate to C+C ratio at about 15%. If we apply this to the EIA C+C estimate for Texas, it implies that 2013 annual Texas crude oil production was about 2.2 mbpd. But of course, Texas is still on an upward trajectory in 2014, however, the rebound in Texas production--like the US overall--is built on the foundation of very high, and rising, underlying decline rates. I suspect that the underlying decline rate from existing Texas oil wells is at least 15%/year now, which would imply that the industry has to replace current 2014 Texas crude oil production in about seven years, just to maintain current production for seven years.

In any case, it's one of life's little ironies that the Cornucopians are using the examples of what are (so far) still post-crude oil peak producing regions, Texas and the US overall, to refute the Peak Oil "Theory."

Incidentally, regarding the Saudi C+C versus Texas crude only chart (which I believe was prepared in 2006), at the 2002 to 2005 rate of increase in annual Saudi C+C production (from 7.6 to 9.6 mbpd), Saudi Arabia would have been at about 18 mbpd in 2013. Saudi average production for 2006 to 2013 inclusive was 9.1 mbpd, although they did slightly exceed the 2005 C+C production rate in 2012 (at 9.8 mbpd, with an average rate of 9.7 for 2011 to 2013). However, the BP data show that 2013 was the eighth straight year in a row that Saudi net oil exports were below their 2005 net export rate of 9.1 mbpd (total petroleum liquids).

So to summarize:

Although currently rebounding, Texas and the US in 2013 were below their prior crude oil production peaks, with very high--and increasing--underlying decline rates.

Saudi Arabia averaged 9.1 mbpd (C+C) for 2006 to 2013 inclusive, versus 9.6 mbpd in 2005 (although the average for 2011, 2012 and 2013 was 9.7), but Saudi net exports in 2013 remained well below their 2005 annual rate.

Meanwhile, CNE (Cumulative Net Exports) depletion marches on. The BP data suggest that the Saudi ECI Ratio (Ratio of production consumption) in 2013 was down to about 66% of the 2005 value. Note that the Remaining post-2005 CNE by year are estimated, based on the 2005 to 2012 rate of decline in the Saudi ECI Ratio. Also, note that at the 2002 to 2005 rate of increase in Saudi total petroleum liquids + other liquids production, they would have been at 171% of 2005 production in 2012.



http://i1095.photobucket.com/albums/i47 ... 963fe3.jpg

Following is a similar chart for normalized Six Country values (1995 = 100%). These are the major net oil exporters that hit or approached zero net exports from 1980 to 2010 inclusive, excluding China. Note that as production rose slightly from 1995 to 1999, they had already shipped 54% of post-1995 CNE (Cumulative Net Exports). Note the correlation between a declining ECI Ratio and CNE depletion for the Six Country Case History, versus the observed decline in the Saudi ECI Ratio.

[ROCKMAN]

Syn - Yep...just like all the countries that are happy to buy our refined products. I've made a point about how the Chinese have been building leverage by trying to connect themselves at the hip with the oil exporters. To a degree the US has done so with our refiners. Just consider the 600,000 bbl/day Motiva refinery in Texas that is owned 50% by the Saudis. A good bet IMHO that they'll ship their oil to us if need be rather than let their multi $billion investment sit idle. The EU refiners are struggling to stay in business. Their loss is our potential gain. Besides the jobs and profits for our refiners there is the advantage of cracking imported oil here: if the market for products gets tight we have the edge over other countries that would have to pay transport costs as well as match our bid. Might not be critical today. But in 5 to 10 years?

[Outsailing]

$this->bbcode_second_pass_quote('ROCKMAN', 'H')mm..."But the real question is, how our success translate to success in other areas". Our "success" has translated into US consumers spending about $400 BILLION more per year for oil then we were producing less.

[Outsailing]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('ROCKMAN', '
')I suspect many Americans struggling to pay the higher bill don't feel very successful. But me and the other oil patch hands are feeling damn successful. LOL.

[americandream]

Rockman has the right idea....earning the maximum he can whilst keeping an eye out for developments. No point being sentimental as every dollar will count in the years ahead.