[Loki]

$this->bbcode_second_pass_quote('TheDude', 'M')eanwhile there's always that unconventional stuff: Lukoil, Total agree to work on Siberian Bazhenov shale oil-report | Energy & Oil | Reuters

$this->bbcode_second_pass_quote('', 'I')nterfax also reported an unnamed Lukoil representative told it the company plans to extract some 100,000 tonnes of oil (733,000 barrels) at the Bazhenov formation this year. Reuters could not reach Lukoil on Saturday.

[Subjectivist]

$this->bbcode_second_pass_quote('Loki', '
')The possibility of Russian tight oil flooding the market and dropping the price below production costs won't keep me up at night. But I'd guess there's a better than zero chance of Russia and a few other key countries developing unconventional reservoirs to a much greater extent then many of our fellow peak oilers might think, counteracting depletion of conventional reservoirs. We're already seeing this, not due to some great technological advance, but simply due to oil getting more expensive and society getting more desperate to maintain our energy fix.

Once the tight oil bubble pops (slowly, and from global region to region), I think we could very well see a coal-to-liquids bubble take its place in the US, Russia, China, India, et al. We'll burn everything we can. The key variable is how much we can afford to burn.

All scraping the bottom of the barrel, of course, but it flattens out the peak of Mt. Hubbert. Slow grind down.

[Pops]

The glitch in the conventional peak scenario so far is that the price was supposed to skyrocket because there was nowhere left to drill. That was wrong on 2 counts, first, the price can't skyrocket and second, there will always be somewhere left to drill.

Price can't skyrocket (as much as Gold Sacks would like it too) simply because the consumer does not have unlimited funds, to pay an unlimited price, to drive unlimited miles. Here at the apparent peak and US$4 unleaded, it is still easy to conserve around the edges and the price has been adjusted to to a great extent. Mom doesn't like denying the kids a drive across town for soccer or their 3rd trip to the mall this week but she will do it. That's the top part of the wedge, the demand ceiling.

Secondly, because no extraction technique is 100% efficient, there will always be somewhere left to drill/dig/etc, it just depends on incentive. Any old peaker knows that the "rule" is that peak happens at the halfway point, which means, obviously, that half is left. The second half must come from somewhere even if it costs a lot more.

That's the bottom half of the wedge, the production floor.

The question is which way is the wedge pointing?

If it's pointing up: rising sell price matches rising cost to produce. That means the consumer is becoming more efficient, using fewer units in order to pay more per unit to achieve the same GDP. Absolute production or even production as measured as Net Energy doesn't necessarily need to rise if Utility increases, think Shanghai motorbike-pickup-trucks vs Expeditions to the Quik Sac.

But if the wedge is pointing down (and per capita production is not increasing) it means the consumer is not able to increase utility further so is being forced out of the market for the marginal barrel. And necessarily, being out of the market means falling real GDP.

The new wrinkle that I hadn't heard about in the past is declining investment. Right now we have been hearing that the incentive to invest is on shaky ground, hard to know if that is just retrenchment on the part of a few companies and NOCs or if it's a sea change in investment. Maybe because lots of the PO pundits were from the rock side of the biz we didn't hear much comment about the profit side? I don't know. It's especially notable that Matt Simmons wasn't shouting about profits instead of geology, he was a banker after all.

Some NOC exporters look to be having the same problem as the major IOCs, which is that unhappy "shareholders" are demanding short term profits after a long spell of unprofitable exploration and capital expenditures. MENA, Mexico, Venezuela and maybe Russia are all in the same boat as Shell. Russia taxes oil exports as such:
US$29.2 per tonne + 60% x (Price-US$182.5 per tonne)
(link)
Looks pretty steep, and that's before income tax.


A little of topic . . .
The biggest factor left out of the PO debate all along has been the sheep. That is the Hard Crash Peaker's conceit, that we have the inside track and the sheep will either stampede over the cliff or lay down and die. Some will of course, but better to not base your plans on it.

[ROCKMAN]

Nice discovery for sure but not huge surprise: the local trend contains over 100 large fields. And the future: Dmitry Adamidov, head of the company developing the new field: "...opening of (this field) does not eliminate the problem of finding new resources. Even in the best case, it will add to the total oil production about 5 million tons per year, which today is about 1% of the total production. Eastern Siberia will remain in absolute priority." So if I have the math right it will take about 60 years to recover the hoped for 300 million tons. And that's his" best case" estimate.

[ennui2]

$this->bbcode_second_pass_quote('pstarr', 't')he destabilizing effects of the oil price variance has also been implicated in the so-called 'Great Recession.'(same article). Otherwise all we hear about is the undersupply of "creditworthy borrowers", "relatively safe, income generating investments " and "money" . . . never oil. (same article)

[ROCKMAN]

E - "...hasn't stopped peak-oil from completely falling off the radar". LOLLLLL. I gather that as a result of diminishing fossil fuels you haven't noticed the 300% increase in the price of oil or the fact that in the last 10 years the world's economies have transferred $5 TRILLION more then they would have to the oil producers had it not been for those higher prices? And for the love of Dog I wish folks would stop tossing out "the Oil Drum is dead so dead so PO must be dead" straw man. At the least don' be goofy enough to post it on a site where the PO discussion is alive and doing very well, thank you. LOL.

Perhaps you're just one of those unfortunate souls that doesn't understand the date of global peak oil (whenever it might be) will be an insignificant footnote on the history books. It's the dynamics of the demand/supply situation that rules our lives today. Not some meaningless date on a calendar IMHO.

[Pops]

Russian oil production expected to drop

$this->bbcode_second_pass_quote('', 'M')OSCOW, July 7 (UPI) --An anticipated drop in oil production by 2016 is expected to hurt the Russian economy, the Russian Finance Ministry said Monday.
The ministry said Monday it expects a $4.5 billion decline in oil export revenue because of an anticipated 6.3 percent drop in oil production from 2014 figures.

The ministry said the federal budget next year will receive about $2.2 billion less than expected because of a contraction in exports.

A report on the Russian economy from the World Bank in March said real gross domestic product growth in 2013 was 1.3 percent, compared with 3.4 percent in 2012. There's a "confidence crisis" emerging within the Russian economy, the bank warned.

"In the past, the lack of comprehensive structural reforms was masked by a growth model based on large investment projects, continued increases in public wages, and transfers -- all fueled by sizable oil revenues," it said.

Russian energy exports last year accounted for more than 10 percent of GDP.

[Quinny]

pretty significant IMHO!

[Pops]

Not sure why they keep announcing this?

$this->bbcode_second_pass_quote('', 'R')ussia Sees Oil Output Edging Down In 2015

MOSCOW, Sept 8 (Reuters) - Russian oil production, a major source of government revenue, may decline slightly next year, having risen steadily since 2009, the Energy Ministry said on Monday.

The ministry said oil production in 2015 was seen at 525 million tonnes (10.54 million barrels per day) compared to an expected 525.3 million tonnes this year.

Last year's oil output, which generates 40 percent of state revenues, stood at 523.3 million tonnes, a post-Soviet high.

Output declined by 0.6 percent in 2008 because of a global financial crisis, but has risen steadily since 2009 thanks to the introduction of a more favourable tax regime and other fiscal measures.

With Russia's $2 trillion economy heavily dependent on crude exports and on the brink of recession, oil production and prices are closely monitored by the Kremlin. The government is particularly wary now as tensions with the West mount over the Ukraine crisis.

Sanctions imposed by the United States and European Union have not yet hit oil production as the measures are aimed at new projects which are years away from coming on stream. But as Western funding closes off or becomes too expensive, companies are looking to cut investments.

The Energy Ministry said that oil output was seen level in 2016 and would return to a rising trend in 2017 when it was seen at 526 million tonnes.

It gave no explanation for the decline, saying that it had sent the forecast to the Economy Ministry and that this was the figure that should be used to map out taxation for minerals' extraction as well for social and economic development.

However, oil production has been broadly in decline this year mostly due to the depletion of West Siberia's oilfields and uncertainty over the government's taxation policy.

Russia plans to maintain its oil production at no less than 10 million barrels per day this decade.

[Subjectivist]

$this->bbcode_second_pass_quote('Pops', 'N')ot sure why they keep announcing this?

$this->bbcode_second_pass_quote('', 'R')ussia Sees Oil Output Edging Down In 2015

[JV153]

Ennui2,

More like world depression, but on the internet sites pop up and disappear every few minutes. You could try the peakoilbarrel.com if you miss theoildrum.com.

[EdwinSm]

Oil prices are having a serious effect on Russia:

$this->bbcode_second_pass_quote('', '[')b]The falling oil price is costing Russia up to $100bn a year, while Western sanctions have hit the country by $40bn, its finance minister has said.

Anton Siluanov made the comments on Monday at an international financial and economic forum.

Reports on Monday suggested Russia could cut its oil production by about 300,000 barrels a day in an attempt to support the oil price.

Opec members meet in Vienna this week where falling prices will be discussed...Analysts expect the Opec oil cartel to agree a cut in production to support prices. Brent crude closed on Friday just above $80 a barrel, while US crude was at $76.51.

"At minimum, in order for the rouble not to decline, a commitment by Opec to stop oversupply and hold to its official 30 million barrels per day production target is probably required," said Tom Levinson, an analyst at Sberbank.

Russian energy minister Alexander Novak said last week that Moscow was considering cutting its oil output, but said the measure had yet to be agreed.

Alexei Ulyukayev, the economic development minister, said last week that the slide in the oil price could have a significant impact on people and companies in Russia.

The European Union and the United States imposed sanctions on Russia following its annexation of the Crimea region in Ukraine and its alleged involvement in eastern Ukraine.

The rouble gained more than 2% against both the US dollar and euro on Monday, helped by the slight recovery in oil prices. The currency has fallen by almost 30% against the dollar this year.

Russia's central bank had been spending billions in a bid to prop up the rouble, but said earlier this month that it would limit its intervention.

[Islander]

I remember reading somewhere that Russia can't cut back on production because if they do, their wells would freeze up. Does anyone know if that is true?

[Subjectivist]

$this->bbcode_second_pass_quote('Islander', 'I') remember reading somewhere that Russia can't cut back on production because if they do, their wells would freeze up. Does anyone know if that is true?

[ROCKMAN]

Actually the production equipment on many wells includes a "heater treater": it keeps the wellhead from freezing. But in many cases it isn't the ambient air temperature causing the freezing problem but the endothermic reaction when the production (NG much more so then oil) reaches the well head: the reduction in pressure of the NG will actually freeze the piping shut even if the NG is 200F coming out of the reservoir. So we'll burn some of the produced NG in the heater treater to keep the lines flowing. Not so much a problem with oil production unless it has a lot of NG in it. But oil flowing from 5,000' or deeper will be at 150F to 200F when it reaches the well head. The low air temps are more of a problem moving the oil out of the lease tanks or down the pipeline. Depends on the gravity of the oil. Decades ago I produced some nasty stuff I had to run steam generates to heat the oil up to get it to flow down hill into barges when they came once a month to pick it up. But I had a clever engineer who took the hot water off some production equipment cooling systems and transferred the heat to the oil tank. Kept the oil warm enough all month long. Not only did it save the cost of running the steam generators I saved about $25k in chemicals every month I was using to keep the paraffin in the oil from breaking out.

But bottom line: even a small amount of 100F+ oil moving thru a well head will keep it from freezing. Getting a 30 ton oil tanker moving over an ice covered road is a different problem. Which is why some of the tanker drivers (many with only a high school degree) in the Bakken are getting paid $100k/year.

[Synapsid]

ROCKMAN,

"endothermic"?

For shame--that's adiabatic cooling. You put that in there just to poke me.

[sparky]

.
Typical grouch about heavy ,disgusting heavies , decreasing the production can increase the gas velocity in the pipes
Hydrates are a common problem ,so is hammer shock in the pipe when a slug of liquid come through , pretty common at the receiving end of a long pipeline ,
at 30$ a barrel "saving" for not exporting , the barrels are not lost , they are still there , edged
for 100.000 barrel that's 3 millions bucks not bad for a one year play , not so hot for longer

[dashster]

I am looking at a report from two Russian organizations, that someone referenced on Peak Oil Barrel. They forecast energy in 2040 as compared to 2010:



They also forecast energy consumption growth to 2040 by region:



and per-capita energy consumption by region (Russia is predicted to pass the US and lead the world):





They are way more bullish on US shale than the EIA:

[Sixstrings]

$this->bbcode_second_pass_quote('dashster', 'a')nd per-capita energy consumption by region (Russia is predicted to pass the US and lead the world):