[AdamB]

$this->bbcode_second_pass_quote('', ' ')
When they meet, they often drive in the same car. When they make a visit together, they tweet the world smiling selfies. And when Alexander Novak, the Russian energy minister, and Khalid Al-Falih, his Saudi counterpart, speak they exchange so many pleasantries that oil investors talk about a “bromance.” While neither man is the ultimate arbiter of oil policy in his country, the blossoming relationship between them has helped to deliver an unprecedented period of cooperation that is re-shaping the global oil market and energy geopolitics. For Al-Falih, the spotlight is natural. But for Novak it is all new: The soft-spoken, poker-faced Russian has now become one of the key voices in global oil markets after Moscow joined forces with OPEC to cut production and lift prices. His role is likely to become even more important over the coming months as the market’s focus shifts toward

[AdamB]

$this->bbcode_second_pass_quote('', ' ')
OPEC’s crude production held steady in December as the group approached a fresh year of output curbs in full compliance with its supply deal. The 14 members of the Organization of Petroleum Exporting Countries pumped 32.47 million barrels a day, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Libya saw a 30,000-barrel-a-day decline to 970,000 a day following a pipeline blast, which was offset by an increase from Nigeria. Both countries were exempt from cuts last year but are now expected to join the effort with a combined limit of 2.8 million barrels a day. OPEC and its allies agreed Nov. 30 to extend their output agreement until the end of 2018 to balance the market. Production in Saudi Arabia, OPEC’s biggest member, slipped by 20,000 barrels a day to 9.95 million a day, the surveyed showed. Venezuela, which has suffered

[AdamB]

Didn't these guys peak like...DECADES ago!!!???? What happens when they begin to develop 100's of billions of barrels of oil from the Bazhenov? How many more peaks might this involve!!

[asg70]

I'm sure Orlov is bursting a blood-vessel over that considering that his whole schtick is that the fall of the soviet union was a test-bed for peak-oil doom.

[AdamB]

$this->bbcode_second_pass_quote('', '
')Russia’s oil production in the Arctic will reach peak levels in the 2020s, head of the state commission on natural resources Igor Shpurov said. Over 2017, he said, Russia produced in the Arctic about 76 million tonnes of oil, and the production would be growing to 2026 hitting a record of 122 million tonnes a year. “We forecast that by the mid-2020s, oil production [a year] in the Arctic zone will reach about 120 million tonnes,” he told a plenary session of the international Arctic summit in St. Petersburg. The oil production will grow due to Gazprom Neft’s developing of the Messoyakha field (Russia’s northernmost field in the Yamalo-Nenets Region – TASS) and also due to Gazprom’s growing production at the Prirazlomnaya pad – Russia’s first project on the Arctic shelf; as well as due to other projects, he explained. About 24% of the

[Plantagenet]

$this->bbcode_second_pass_quote('AdamB', '')$this->bbcode_second_pass_quote('', '
')Russia’s oil production in the Arctic will reach peak levels in the 2020s, head of the state commission on natural resources Igor Shpurov said.....hitting a record of 122 million tonnes a year.

[copious.abundance]

Geeze I hadn't paid attention to this one in a while.

Doomers seem to be absent from these threads.

[asg70]

$this->bbcode_second_pass_quote('copious.abundance', '
')Doomers seem to be absent from these threads.

[Carnot]

Did anyone do the maths. 120 million tonnes per year is about 2.4 million b/d . Hmm, and it does not come on stream until the mid 2020's and the IEA expect oil demand growth to be about 1.3 m/d this year alone. Looking at the OPEC production there does not appear to be much spare capacity; if it does exist it is in Saudi Arabia and I wonder just how long it can be counted for, especially as the Saudi's are potless. A huge budget deficit and rising expectations of the population does not bode well.

Of course you can all hope that Uncle Sam can come to the rescue with more yet shale oil, but so far shale has hardly made a cent for investors. They are still waiting for those elusive profits, while the debt mountain climbs. Perhaps it is the net energy gain that is the problem with shale, or is it the ego's of certain CEO's. Probably both. Happy days ahead.

2016 Results

Top 150 US oil and gas producers

Turnover $477 billion

Net Loss

[Subjectivist]

The saudis are potless? Did spell check substitute the wrong word?

[rockdoc123]

$this->bbcode_second_pass_quote('', '2')016 Results

Top 150 US oil and gas producers

Turnover $477 billion

Net Loss

[Carnot]

Rockdoc,

If my rhetoric is the same as Short on Oil (whom I have never heard of ) then it is purely coincidence.

My omission was the full data set. An error on my part.

2016 Top 150 US oil and gas co's

Income +$477 billion

Net Earnings $-47 billion (Loss)

24 companies made a profit $ +14 billion

Exxon made $8 billion of the the $14 billion

Number rounded to nearest billion

A profitable business then ? Source OGJ September 2017

I do go through the financial reports. I am a petroleum chemist, not a finance engineer. But I can follow most things and oil and gas companies are about the only ones who report EBITDAX, meaning exploration and other expenses (like drilling) are not included.This is non GAAP reporting standards. How quaint. So they can report a positive cash flow, pay off interest, but not the principal. That's all right then. Kick the can down the road.

Not surprisingly many shale companies have gotten into difficulties. Some have made money, but the majority do not appear to have done well at all for investors. That is my point. 2013 was like a Klondyke rush. Reality has dawned but there are a lot of companies that will likely never pay down their debt.

Subjectivist
Potless is an English term (think about it or look it up - the true meaning involves a bodily function). The Saudi's have significantly depleted their foreign reserves defending their oil market share and fighting wars. Current budget deficit is 8.9% GDP and GDP -0.7%. Source The Economist 17 February 2018.

[marmico]

$this->bbcode_second_pass_quote('', 'T')he Saudi's have significantly depleted their foreign reserves defending their oil market share and fighting wars. Current budget deficit is 8.9% GDP and GDP -0.7%

[rockdoc123]

$this->bbcode_second_pass_quote('', 'I') do go through the financial reports. I am a petroleum chemist, not a finance engineer. But I can follow most things and oil and gas companies are about the only ones who report EBITDAX, meaning exploration and other expenses (like drilling) are not included.This is non GAAP reporting standards. How quaint. So they can report a positive cash flow, pay off interest, but not the principal. That's all right then. Kick the can down the road.

[rockdoc123]

OPEC talking about a long term alliance with Russia
https://www.economist.com/news/finance- ... -long-term

$this->bbcode_second_pass_quote('', 'O')PEC mulls a long-term alliance with Russia to keep oil prices stable

OIL bears beware. On February 20th Suhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates, said the 14-member producers’ group is working on a plan for a formal alliance with ten other petrostates, including Russia, aimed at propping up oil prices for the foreseeable future. If it comes to anything, it could be OPEC’s most ambitious venture in decades.
The result will not be, he insists, a “supergroup”. The notion of Saudi Arabia and Russia joining forces as the Traveling Wilburys of the oil world may be a bit jarring. It remains an idea in “draft” form. But whatever its chances, it attempts to shift a belief widely held by participants in oil markets: that non-American oil producers are helpless against the shale revolution.

[Carnot]

Rockdoc. EBITDA

Hmm, I think we will have to disagree a little. EBITDA, if I my information is correct is Earnings, Before, Interest, Taxation, Depreciation and Amortisation. EBITDAX adds Exploration to the that list.

Splitting hairs I think. What my point is that should Shale resources be treated like conventional. I am not alone in this concern, as a simple search for Shale Gas / Tight Oil earnings will raise many a concern about shale oil and gas earnings, or lack off. Is it right to use methodology for long term assets, such as an offshore platform, with shale wells. A shale well, oil or gas prone, has in the main a lifetime measured in months- it is a rapidly depreciating asset in most cases, and if the well is not paid down in about 36 months it probably will not be profitable, especially for gas wells. A quick look at 5 year old wells in the Marcellus will show monthly production of gas frequently below 100 million cu ft . You do not have to be a genius to work out the revenue. Eagle Ford has suddenly gone off the boil and Permian assets are being looked at negatively on rising gas production. True some Permian assets are very good good, but these are the sweet oil spots and how long will they last? Moreover looking at a shale basin as being homogenous would be foolhardy as much depends on the existing fissures and fractures and geochemistry. That the US possess about half the drilled producing oil and gas wells globally only reinforces the low productivity. The US and Saudi Arabia have roughly the same oil production. Saudi Arabia does this will <3800 wells; the US does is with 460000. More than two orders of magnitude difference.

The amount of investment in shale wells has been far in excess of earnings. Shale producers will have to learn to live off cash flow in future as investors will be reluctant to keep pouring good money after bad.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'S')plitting hairs I think. What my point is that should Shale resources be treated like conventional. I am not alone in this concern, as a simple search for Shale Gas / Tight Oil earnings will raise many a concern about shale oil and gas earnings, or lack off. Is it right to use methodology for long term assets, such as an offshore platform, with shale wells. A shale well, oil or gas prone, has in the main a lifetime measured in months- it is a rapidly depreciating asset in most cases, and if the well is not paid down in about 36 months it probably will not be profitable, especially for gas wells.

[Carnot]

Rockdoc,

I have never said that ALL the shale resources are unprofitable. Clearly some are profitable but this does not mean that all shale resources are the same. If they were then why have so many companies not made any profit and why have so many gone bankrupt. I would evaluate a shale well in the similar to a petrochemical plant minor project upgrade. There we might spend $< 10 million and expect a payout in <3 years. The resource will exist for many more years, and will not exponentially decline in output as does a shale resource. There are similarities, but the petchem upgrade is a safer bet. Where shale differs, as you quite rightly point out is that shale producers of oil and gas hope to increase the value of the company rather than pay dividends, or hold cash. Sadly for many this has not happened either. I would not label the management as crooks, although there have been some very dubious practices by some, but is clear that some have embellished their prospects somewhat and have looked for exit strategies to benefit themselves ahead of the shareholders. Not illegal, but not very honourable either. Some might call it greed, like I do. I have not directly invested in oil and gas companies connected with shale, but some assets I do hold have shale interests, not all of them good.

Personally I never bought into the shale boom: one contributor to this blog once described the shale resource as a giant chum circle where the sharks feed on mullet ( the mullet being the investors who did not do their homework). I am not a mullet. I am too close to retirement to play risky games, and the outlook for shale remains choppy. Will drilling and completion costs continue to rise, rather than fall and what about resource quality.

In my earlier post I mad an error which I am surprised that you did not spot. I did not find 1 Marcellus gas well producing 100 million scuf per month at 5 years. There were plenty producing </= 100 000 scuf per month, which makes the revenue about the same as a row of beans. So as I stated before, and you confirmed, if at 36 months you have not paid down the cost of the well, you are probably royally stuffed. For an oil well ar a cost of $7 million that means about 135 000 bbls of oil give or take - 3750 bbls per month average. Far less than a Saudi well.

[StarvingLion]

Carnot is even more amusing than ShortonOil.

Lets see, the US dollar was in free fall come 2008 and was collapsing from 2001-2008. Then they invented the Shale "Revolution" which obviously isn't self funding otherwise why wait until the currency is toast. And Carnot comes in here evaluating it as an investment??? The only purpose of shale is to stave off currency collapse.

The official explanation (subprime mortgage crisis) of the 2008 Financial crisis is obviously nonsense. The real explanation is industrial decline as seen in the collapsing stock of General Electric.

The U.S. trade deficit with China was $375 billion in 2017. The trade deficit exists because U.S. exports to China were only $130 billion while imports from China were $506 billion.

U.S. trade deficit with China and Mexico is growing - Dec. 5, 2017
money.cnn.com/2017/12/05/news/economy/us-trade-deficit/index.html

[peakoilwhen]

carnot, ask rockdoc what all this hype and worry he's doing is coming to. is it..... peak oil? David called it wrong back i think in 2012, with a prediction of peak in 2013-2015. IEA said 2016 had highest oil production ever, and now they've announced 2017 topped 2016.
I wonder if he's had time to rationalise why he got it wrong by at least 2 years, and when his revised peak will be. I have reason to suspect their will be a peak in the next couple of years, except I don't think it'll be a geo peak. So David's opinion might be useful. First though, Russia has to be made to get in line or be shut out the oil market, cos the idea is to create an oil shortage, and for that they need russia to cut production rather than reap massive profit.

you have to ask him cos i think he's got me on ignore. He hates me cos I pointed out he got PO wrong last year, also i've got the correct theory of oil ( abiotic ) and he's got the shitty wrong one ( fossil ). His rage of me drove him to write an article for WUWT about this time last year on why he thinks abiotic oil is wrong.