[Revi]

Thanks Rockman. It makes sense to me, since I just finished maple syruping, and we wanted to get as much as possible once we tapped and got the season going. I'm sure it doesn't matter how much it costs, it's time to get something out of previous investment.

[Revi]

This is what I was talking about:
http://ourfiniteworld.com/2015/04/15/pu ... more-39725

[Revi]

In the article I posted above Gail Tverberg lays out why oil prices can't go up any more. We aren't going to pay more for oil because what it does isn't worth it any more. The only thing it really makes sense for in my opinion is farming and forestry. I would include fishing, but there aren't many left out there, so even that is a waste of fuel. The average person really has no clue what's about to befall us. And maybe that's a good thing.

[ennui2]

I disagree. I think oil can go up a lot higher than it is now before cratering the economy. I think Gail's piece is simply meant to pump up some sense of anxiety about the future now that The Oil Drum is no more and nobody is looking at the issue anymore. These alarm-bells just seem "forced". The same is true of a lot of Richard Heinberg's rhetoric from late 2008 onward as well. There is this constant fishing around for some looming crisis or another, and it just takes on a doomsday cult feel to it when it turns out to be one bad prediction after another.

Remember what Matt Simmons said about how cheap oil was for what it did even it were to be sold at several times what it was at the time (which is more expensive than now). I just think the EROEI argument was overplayed by some. Unconventional has more of a ROI than they anticipated, and while it's true that the industry overproduced, all that proves is that there's that much recoverable hydrocarbons that we've got more available than we need, so the market corrects, and BAU moseys on along.

[Subjectivist]

$this->bbcode_second_pass_quote('ennui2', 'I') disagree. I think oil can go up a lot higher than it is now before cratering the economy. I think Gail's piece is simply meant to pump up some sense of anxiety about the future now that The Oil Drum is no more and nobody is looking at the issue anymore. These alarm-bells just seem "forced". The same is true of a lot of Richard Heinberg's rhetoric from late 2008 onward as well. There is this constant fishing around for some looming crisis or another, and it just takes on a doomsday cult feel to it when it turns out to be one bad prediction after another.

Remember what Matt Simmons said about how cheap oil was for what it did even it were to be sold at several times what it was at the time (which is more expensive than now). I just think the EROEI argument was overplayed by some. Unconventional has more of a ROI than they anticipated, and while it's true that the industry overproduced, all that proves is that there's that much recoverable hydrocarbons that we've got more available than we need, so the market corrects, and BAU moseys on along.

[ralfy]

$this->bbcode_second_pass_quote('ennui2', 'I') disagree. I think oil can go up a lot higher than it is now before cratering the economy. I think Gail's piece is simply meant to pump up some sense of anxiety about the future now that The Oil Drum is no more and nobody is looking at the issue anymore. These alarm-bells just seem "forced". The same is true of a lot of Richard Heinberg's rhetoric from late 2008 onward as well. There is this constant fishing around for some looming crisis or another, and it just takes on a doomsday cult feel to it when it turns out to be one bad prediction after another.

Remember what Matt Simmons said about how cheap oil was for what it did even it were to be sold at several times what it was at the time (which is more expensive than now). I just think the EROEI argument was overplayed by some. Unconventional has more of a ROI than they anticipated, and while it's true that the industry overproduced, all that proves is that there's that much recoverable hydrocarbons that we've got more available than we need, so the market corrects, and BAU moseys on along.

[Pops]

$this->bbcode_second_pass_quote('Revi', 'W')e aren't going to pay more for oil because what it does isn't worth it any more.

[Revi]

Well, okay. I began to understand what Gail is saying by thinking of it as we are spending so much more getting the oil now that we don't have as much to spend on things like infrastructure and agriculture. There are more and more people who are pretty much out of the system. The industrial machine is slowing down.

[Pops]

$this->bbcode_second_pass_quote('Revi', 'W')ell, okay. I began to understand what Gail is saying by thinking of it as we are spending so much more getting the oil

[Tanada]

$this->bbcode_second_pass_quote('Pops', 'R')on @ POB has said for a while that he thinks peak is right now, I think he said in the 12 months from last to next October. Ron is talking about peak oil, which is the same as saying maximum flow rate, in other words, inability to increase or even maintain production volume, suffice to say the point never again to be exceeded, as such it would be the highest level of extraction ever attained and never to be repeated, the apogee before the long road to happy motoring nadir, the pinnacle of the oil age, the zenith of ...

Ron's is the typical PO prediction: depletion + nowhere to drill = decline. That isn't dramatic enough to make for a good "Movie Treatment" though. Even if there were absolutely no new wells drilled and no reworking of old wells, none, decline would "only" be in the 3-4% range, (maybe a little more the first couple of years as the shales rapidly croaked). But even that isn't going to happen since supply constraint will return the price to the edge of affordability and enable some newer fields to be developed, infill wells drilled, old ones reworked, tar mined, wet gas tapped, yada yada.

EROI by most accounts is in the 12-18 to 1 to one range, not 2:1. Does anyone remember this chart?



There is very little difference in net energy between 100:1 and 10:1 efficiency. Maybe 8-9% less energy out? Considering we have built the current economy on ICE engines that, at the theoretical maximum efficiency, waste 65% of the stuff we put in the tank (much, much more in a 3/4 ton coffee cup hauler or '72 Eldo), I'm thinking we have a ways to fall yet.

[Revi]

I think we are going to have to grow more of our own food, make some of our own energy and generally disconnect from the giant system that does everything for us in the near future. I am amazed that they are not encouraging more of this, but I think systems like to get as many people in them as possible in the hope that it will somehow save them. I think of the Mayan empire. They burned more and more rain forest and made more and more lime in order to paint the temples white to appease the gods so that the rains would come back. The rain forest was what created the rain they wanted. They conquered and pulled more and more people into their system, but it still failed spectacularly. Such is the nature of empires.

Peak oil might be a savior for the climate, but we are going to have some rough times as the empire thrashes about in its death throes.

Whatever happens, it's not going to be much fun from here on in...

[ROCKMAN]

T - "...their assets are auctioned off other companies buy the already producing wells cheap...". Which ties to the point I've made before: probably the largest fossil fuel wealth transfer in history is underway and essentially ignored by the MSM. All the production acquisitions are guaranteed to be PROFITABLE not just at the recent price levels but even if oil prices fall 50%...or more.

There's another meatball stat we use in the oil patch: $'s per bopd. IOW if one buys 1,000 bopd and pays $30 million you paid $30,000 per bopd. Since the price bust PROVED production reserves have been selling for $20k to $40k per bopd. By contrast before the bust those same wells were selling for $125k to $175k per bopd. So much focus on drilling investments but think about buying 1,000 bopd several years ago for $130 million and today it has a market value closer to $30 million...and only if it hasn't declined which isn't likely. Especially if you bought shale wells in their early high decline rate phase. The various fund investors were typical "mullets" (the actual oil patch term we use for the unsophisticated players) of companies looking to cash out. Those funds had very hungry investors looking to make more then 1.5% interest on their money. What could be safer then buying PROVED PRODUCING oil reserves? Certainly not drilling for them. LOL. And thus the truly obscene prices much production was selling for.

Today when running cash flow economic evaluations of a producing property companies ARE NOT using $40 to $50 per bbl. Closer to $12 to $18 per bbl for proven recoverable reserves. IOW those acquisions today are generating a nice positive cash flow on Day 1. And woukd still be doing so if prices drop to $25/bbl. And consider how cash flow looks if oil goes to $60/bbl. Compare that to the $35 to $70 per bbl some companies were spending to drill up new production.

Today companies are acquiring producing oil reserves at a lower price then they were able to do by drilling for about 20 years. And certainly a hell of a lot cheaper then any time in the last 8 years. The com!panics that are cannibalizing the crippled companies are establishing some of the best profit margins seen in the oil patch for many, many years. Remember oil is selling CHEAPER...not CHEAP: the current price is significantly higher then the historic average.

So one more time: between low drilling and acquisition costs the best profit margins have ALWAYS been generated during the busts with lower oil/NG prices then during the hyped high oil/NG periods when drilling and acquisition cost inflate to rediculous levels.

Just sit back and watch ExxonMobil et al acquire production that will generate some of the best profits they've seen for a long time. XOM isn't going to go bankrupt because of $50/bbl oil...it just experiences lower revenue. And during these times it will buy not only proved reserves on the cheap but also buy back its own stock at a big discount.

IOW despite what the unsophisticated think this is not the end of life as XOM knows it but a bit of a REPRIEVE from a declining reserve base it was unable to replace by drilling.

[AdamB]

$this->bbcode_second_pass_quote('revi', '
')Whatever happens, it's not going to be much fun from here on in...

[Tanada]

There is no fate but what we make. The future is not written.

It is not the peaking of resources we need to fear, it is how people and governments will react to peaking that will be the scary thing.

[ROCKMAN]

T - "It is how people and governments will react to peaking that will be the scary thing." Will react??? So you don't feet the $trillions in US tax monies and the thousands of our military's lives lost in the last 25 years wasn't a reaction to peaking? The hundreds of thousands of civilians killed in Syria and northern Iraq in the last 5+ years wasn't the result, at least in part, of a reaction to peaking?

Folks often speculate how the world will look when that magical PO date is reached. I think we already have a pretty good model already established.

[diemos]

$this->bbcode_second_pass_quote('ROCKMAN', '
')Folks often speculate how the world will look when that magical PO date is reached.

[AdamB]

$this->bbcode_second_pass_quote('Tanada', 'T')here is no fate but what we make. The future is not written.

It is not the peaking of resources we need to fear, it is how people and governments will react to peaking that will be the scary thing.

[Revi]

We use as much oil just driving around as China uses for everything. China has 4 x the number of people we do, and they are an exporting giant. We use ours in wave runners and monster trucks. Who is going to have to adjust more? Us at 22 barrels per person per year, or them at 2 barrels per person?

We are going to be very unhappy. The saddest thing is that we could be spending on infrastructure to deal with this right now instead of trying to revive the kind of industry that used to exist.