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Page added on August 4, 2015

US Oil Production Finally Starting to Decline

There has been very little data to post about recently and as everyone should know by now, I post primarily about data. So if there is no data there is not much to post about. Also I have been very busy for the a week now and have checked in only a couple of times.

A few days ago a very racist post was posted on this blog. I completely overlooked it as I seldom scan the posts because I get an email for every post so I just read the posts in the emails. But when there is a guest post, as the one last week was, I get no emails, the guest poster gets them instead. Anyway I deleted the post and banned the poster. I also banned another poster because he accused me of deliberately letting the post stay up. That outraged me. It was the same thing as accusing me of such racism.

The Monthly Energy Review and the Petroleum Supply Monthly have US production peaking, so far, in March and April. The Petroleum Supply Weekly has US production peaking in June. In the chart above I have averaged the Petroleum Supply Weekly into monthly data. All data is in thousand barrels per day,

Here we have the weekly data from the Petroleum Supply Weekly. The last data point is July 24th. The huge jumps you see are basically just revisions. The huge jump you see for the week of May 22nd, was not really a jump. The EIA explained that their prior numbers were too low and the sudden increase that week was merely an adjustment.

The EIA is finally getting its act together as to Texas C+C production. They have Texas peaking in March at 3,770,000 bpd and declining 106,000 bpd since then.

The EIA had the Gulf of Mexico spiking up in April but falling right back in May. The BSEE data, like Texas, is always delayed but only by about four months.

The EIA admits that they show different data but tries to explain it here:
EIA reports show different aspects of U.S. oil production statistics and trends

EIA publishes several reports covering current crude oil and natural gas production conditions and how recent trends may affect the near-term outlook for the oil and gas industry. Each EIA product is distinct in its purpose, methodology, timeframe, and regional coverage. Some reports are considered estimates of actual production volumes, while others focus on future production.

One analyst suggest the EIA has been fudging the data all along:

EIA Capitulates Under Cover Of Darkness

Many investors know that when a company wants to mitigate media coverage of bad news, they typically release data on a Friday after the close.

Well last Friday, that is exactly what the EIA did, admitting the very thing I and Cornerstone Analytics have been arguing all year: EIA was and still is overstating U.S. production. The amount that they admitted to so far, as of Friday afternoon, was 254,000 barrels per day (b/d) or 1,778,000 barrels per week, 7,112,000 per month or 14,224,000 for June and July alone.

This is the most incredible cover up I have ever witnessed in my decade-long investment career and I have not seen one major media outlet even mention it so far. Instead China demand & Iran output are front and center as per prior posts in an attempt to divert attention (I call it moving the goal posts) away from the fact that both U.S. production and inventories were about to fall. The chart below speaks for itself on what is occurring:

peak oil barrel

77 Comments on "US Oil Production Finally Starting to Decline"

Nony-Marm on Tue, 4th Aug 2015 6:03 am

What a load of crap. Everybody knows the world will never peak in oil production, or anything else for that matter. Economics will just make more technology. Problem solved. Doomers are so obnoxious!

marmico on Tue, 4th Aug 2015 7:07 am

Doomers are so obnoxious!

You got that right.

Household gasoline spending as a percent of cash wages in the first half of 2015 is the lowest since 2003.

https://research.stlouisfed.org/fred2/graph/?g=1z2o

What’s the latest TEOTWAWKI affordability meme?

shallowsand on Tue, 4th Aug 2015 7:20 am

And household spending should drop even more for gasoline as summer driving season is ending and price could head below $2 by fall. Saw $2.19 Sunday.

Diesel prices have fallen quite a bit recently also.

Should increase demand.

Davy on Tue, 4th Aug 2015 8:24 am

Marm, I don’t want to be a doomer but I am not fooled by your empty graphs and numbers. Your brief bullet points with only pros but no cons. You are selling snake oil or selling yourself on a hollow prosperity.
“Household gasoline spending as a percent of cash wages in the first half of 2015 is the lowest since 2003.”

At face value if I am a brainless and equate lower and less with better that looks like tall cotton. When we look deeper and ask why we see this condition we see the situation is not so rosy. I need only ask the marmi why the fed can’t normalize? Could it be because it would be poisonous systematically to the global system causing all kinds of nasty consequences with debt, dollar, trade, and liquidity? Could it be it would poison the equity market bubble? Could it be the straw that breaks the bond market’s back? We know the Fed cannot repress rates forever. We also know from multiple sources easing can’t continue without nasty consequences.

Marm, you got me wrong. I want to be proven wrong with doom. I want my prep work to be nothing more than a passionate hobby. I want my community to prosper. Doomers are so obnoxious because they cloud your fluff message. Marm your message reminds me of http://www.preciousmoments.com/. Life is not always nice yet you are trying to tell me it is and it is getting better. That is a crock of shit and you know it.

Davy on Tue, 4th Aug 2015 8:34 am

Damn, Marmi, here is something related to our discussion this morning. Apparently there are others who are asking about the reality behind the numbers”

US Consumer Spending Declines For Third Consecutive Month, Down 5 Of Past 7 Months
http://www.zerohedge.com/news/2015-08-04/us-consumer-spending-declines-third-consecutive-month-down-5-past-7-months

There is (double) seasonally-adjusted, goal-seeked and revised (since 1976) consumer spending data as reported by the government and meant to validate administration policies, and then there is Gallup’s polling of 15,217 US adults who are asked to self-report on their daily spending patterns.

For those who prefer unbiased, accurately reported data, it should come as no surprise to those who have been observing the recent swoon in the economy, that according to Gallup data, July was the third month in a row in which the average American spent less than they did in the same month a year ago, confirming that the US economy is if not in a recession then certainly no longer growing.

Why is consumer spending, especially on the margin, so important? Because it dictates 70% of the direction of US GDP. And with 5 out of 7 months now posting Y/Y declines, one wonders just where is this 2.5% (and declining) consensus GDP growth going to come from?

marmico on Tue, 4th Aug 2015 9:21 am

You doomers are innumerate. Note that Patterson’s monthly U.S. oil production dots have no meaning in a global sense other than shallowsand’s livelihood.

Real per capita household consumption is okay (it’s not booming, but it’s not tanking).

http://economistsview.typepad.com/.a/6a00d83451b33869e201b7c7b970eb970b-500wi

Government has always contributed to growth in national income since 1945, except in the 2011-2015 period when it was a headwind.

http://economistsview.typepad.com/.a/6a00d83451b33869e201b8d1419627970c-500wi

The private sector is doing just fine, although specifically shallowsand’s business may be heading to the auction steps at the courthouse. 🙂

rockman on Tue, 4th Aug 2015 9:31 am

It’s truly hilarious: for a very long time the cornies kept touting the relationship between the rig count and production increases. And rightly so IMHO. But now that the rig count has crashed they’ll completely ignore the connection they bragged about for so long.

But not to worry: the oil patch has been hiding all this new technology that will allow producing as much new oil with the current lower price as it had been with just half the number of rigs drilling. We’ve also have been saving the better locations to drill. And the reason for both of these factors is that we didn’t want to bump profits up any higher and have to pay more taxes.

Truly comical. LOL.

Makati1 on Tue, 4th Aug 2015 9:37 am

Marm and his clones, are just agitators, probably bored sheeple that have a psychological need to be put down by their betters. OR, they are totally in denial for other psychological reasons. But ignoring them is the best offense.

Davy on Tue, 4th Aug 2015 9:43 am

Marmi, by private sector you mean wealthy. Yes you are correct Marmi in that regards.

marmico on Tue, 4th Aug 2015 10:27 am

for a very long time the cornies kept touting the relationship between the rig count and production increases

No, that was you mouthing off while Artie Berman computed it and turned out to be a doofus. Six months ago some cornies perfectly understood the relationship between drilling, completions and the fracklog.

Pot. Kettle. Black. Mudlogger.

marmico on Tue, 4th Aug 2015 10:49 am

No, I don’t mean wealth. Government consumption and investment have always trended ~ 20% of the U.S. economy for the last 50 years.

The simplest (not the best) way of demonstration is to subtract the government consumption and investment component of GDP (national income) from total GDP.

Repeating, the private sector is doing okay. The Freddy Fluff chart.

https://research.stlouisfed.org/fred2/graph/?g=1z9B

Dredd on Tue, 4th Aug 2015 12:33 pm

“US Oil Production Finally Starting to Decline”

There there now.

See, that wasn’t so hard to do.

We knew you could do it.

Now, on to the ports (Why Sea Level Rise May Be The Greatest Threat To Civilization – 5)!

davey thompsony on Tue, 4th Aug 2015 1:01 pm

“US Oil Production Finally Starting to Decline” Can anyone say “glut” over?

Bill on Tue, 4th Aug 2015 1:11 pm

I don’t see OIL going much lower and even if it did I don’t see many US and Canadian companies going bankrupt. OPEC is getting crushed, they lost the battle. For every fraction of a percent they gained back in market share they lost billions and billions in revenues. Their strategy was horrible. The US’s economy does not rely on OIL sales but all OPEC nations do and they’re all getting crushed. If OIL stays this low or goes lower more American and Canadian companies will go under but as soon as OIL starts heading back up drilling and pumping will resume. OPEC is in a no win situation..

MrNoItAll on Tue, 4th Aug 2015 1:21 pm

The Oil Crash Has Caused a $1.3 Trillion Wipeout

http://www.bloomberg.com/news/articles/2015-08-04/the-oil-crash-has-caused-a-1-3-trillion-wipeout

Commodities are plunging. The coal industry is choking to death. Factory orders are down for consecutive months. The global stock markets, beacons of hope and “reality” for so many people, would crash and burn right now if they weren’t being propped up by constant issuance of new debt and other central bank measures. Wealth transfer to the 0.1% is accelerating. Consumer confidence and sentiment is tanking.

But other than that, sure, the private sector is doing okay. Just dandy!

Bill on Tue, 4th Aug 2015 1:29 pm

Oil is oversold, not one country is doing well with OIL, so you know sooner or later they’re going to CUT. OPEC wants OIL over $70. It’ll happen sooner than later. It’s been a year and OPEC has done nothing but bleed money. A failed policy. They have no choice but to cut production…

steve on Tue, 4th Aug 2015 1:34 pm

bill I don’t know that they can cut production…if you are making $20 an hour and your wage gets cut to $10 are you going to work less? I think if you are like most people in debt you are going to have to work more….same with the oil companies….

Bill on Tue, 4th Aug 2015 1:45 pm

Steve I think you’re confusing the workers with the owners (cartels). If they CUT oil production by 500K-1M BPD OIL prices will shoot up making them a boat load more $$ then the very slight loss in production

shortonoil on Tue, 4th Aug 2015 1:46 pm

The majors are burning cash at an astronomical rate. If oil stays at $45/ barrel we’ll see shut-ins all across the board by year end. The price started down last June, and consumer spending began to fall 5 months ago. That indicates a 7 month lag time between falling oil prices, and a contracting general economy.

http://www.zerohedge.com/news/2015-07-31/exxon-earnings-carnage

Capex has already begun to deteriorate, and that will be another major slam to the economy.

Oil groups shelve $200bn in new projects as second oil-price slump hits. Wood Mackenzie reports 46 big oil and gas projects deferred. Only a handful of major projects fully approved.

$trillions in asset values are likely to be wiped off the books over the next year. Why the prices have fallen as low as they have is still somewhat of a mystery to us:

http://www.thehillsgroup.org/depletion2_022.htm

We expected prices to decline at this point in the depletion cycle, but not to the level they have gone to. The reason that the energy in a barrel of oil is worth 39% less than it should be is distracting at best. If prices do not recover within the next few months, we are headed for the Mother of all deflationary depressions. Get ready for a world where prices crash, and your income crashes faster. Without that price increase King Oil will be demoted to chief cook and bottle washer at Al’s French Fries.

“I want my prep work to be nothing more than a passionate hobby. I want my community to prosper.”

I realize that you have been hoping for a few more years of relative stability; our Model projected that would happen. The present price structure indicates that we may have overlooked something. An awful lot of energy is getting burned up someplace. The only hope is that it burns itself out before the whole thing comes unglued. Watch the price of oil, if it doesn’t recover soon, “Katie, bar the door”!

http://www.thehillsgroup.org/

Bill on Tue, 4th Aug 2015 1:51 pm

My point is that NOT one OPEC nation or NON is making money with OIL this low. At some point something gives. The US and Canadian producers are proving much stronger than OPEC anticipated. OPEC already hinted at reducing output 300K Barrels in September. If OIL stays this low they’ll likely cut much more

shortonoil on Tue, 4th Aug 2015 2:20 pm

“If they CUT oil production by 500K-1M BPD OIL prices will shoot up making them a boat load more $$”

If they cut by 1/2 to 1 mb/d the world will still have 1 to 1 1/2 mb/d of over supply. How is that going to shoot prices up? If prices go up producers will increase production to take advantage of it. Only wide scale shut-ins can keep the industry alive, and if CBs continue to keep zombie producers like shale in business much longer its going to be game time. The industry now has too much dead wood hanging over its head to keep going.

Jerry McManus on Tue, 4th Aug 2015 2:37 pm

@shortonoil

I always appreciate your posts, thanks for taking the time to make observations based in reality.

As you know we’ve heard the cries of “Hold on to your butts! This is it!” before over the years. Michael Ruppert comes to mind, and Nicole Foss recently came running out with the alarm bells ringing once again, despite all of her past predictions of currency crisis and imminent financial disaster having fallen flat.

I’m certainly no expert, but as I understand it all of the recent financial and resource crises of the last few years have turned out to be deliberately engineered by the vampire squids of the world (Goldman Sachs, etc.) to essentially stomp their boots on the face of humanity and in the process consolidate their wealth and power.

Is this time really any different? Just curious.

Boat on Tue, 4th Aug 2015 3:25 pm

shortonoil.

Wow we agreed 100%. And you kept typing.

buddavis on Tue, 4th Aug 2015 3:30 pm

short

majors are not going to be shutting in wells. As long as they can cover their lease operating expenses, they produce. And even if they can’t, they will still produce at a loss for a period of months if needed.

You would be amazed at the production that survived the crash in the 80’s (and is still producing).

paulo1 on Tue, 4th Aug 2015 3:42 pm

Jerry,

I think this time is different due to the huge increase in all forms of debt this past decade. While debt is a strange concept as a claim on future wealth, wiki sums it up quite nicely.

With reference to the Great Depression, (the above jibes at Nicole Foss, notwithstanding):

“This excess of debt, equivalent to excessive expectations on future returns, accompanied asset bubbles on the stock markets. When expectations corrected, deflation and a credit crunch followed. Deflation effectively made debt more expensive and, as Fisher explained, this reinforced deflation again, because, in order to reduce their debt level, economic agents reduced their consumption and investment. The reduction in demand reduced business activity and caused further unemployment. In a more direct sense, more bankruptcies also occurred due both to increased debt cost caused by deflation and the reduced demand.”

With all the investments on margin these days, from China to the Baaken, and the latest oil price declines accompanied by a crash in commodity prices, you tell me how this time is different?

Goldman Sachs squids are simply the pushers, satisfying the cravings of a society seeking more more more for nothing, much like an addict needing their fix. The oppulent lifestyles of the ‘first world’ is simply unsustainable and is unrealistic. (I include myself in this group). Maybe we don’t have to live on personal Walden Ponds, but when I see a behemoth motorhome towing a boat the size of a commercial fishing boat, all stuffed with toys and being driven by some obese senior, I know the end is nigh and hurry up already.

This society is fu%!ing sick. The world cannot support this consumption, to put it simply.

regards

apneaman on Tue, 4th Aug 2015 3:43 pm

“The present price structure indicates that we may have overlooked something. An awful lot of energy is getting burned up someplace.”

Bob mentions it often. Killing babies is high octane work.

US-led air strikes on ISIS targets killed more than 450 civilians — including 100 children: report

http://www.rawstory.com/2015/08/us-led-air-strikes-on-isis-targets-killed-more-than-450-civilians-including-100-children-report/?utm_content=buffer5ea74&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

paulo1 on Tue, 4th Aug 2015 3:46 pm

I forgot to add, the antidote to The Great Depression and its’ reset was WW2. Considering the crop of 2016 Presidential hopefuls, I worry that is written in the stars. Millions and millions of economic and climate indeuced refugees does not make for happy relationships and/or decisions based on concensus for the good of us all.

rockman on Tue, 4th Aug 2015 3:46 pm

Bill – “My point is that NOT one OPEC nation or NON is making money with OIL this low”. You need to be more precise in such statements. My company, like almost all others, are currently making a sh*t load of money. Notice the precision of that statement: I didn’t say they

Davy on Tue, 4th Aug 2015 4:16 pm

Paulo said “This society is fu%!ing sick. The world cannot support this consumption, to put it simply.”

It makes me sick also Paulo and I am a part of it. I am a part of it not by choice and I am chipping away at the connections to overconsumption as best I can. I love the simple life and being close to nature. I keep getting back to surreal and unreal when I reflect on what is around me especially in relation to the dangers all around us.

We are making significant investments in activities and assets with no future when we should be investing in preparations for a fall in economic activity unprecedented in human history. I say this because of the level of overconsumption and overpopulation within an ecosystem and climate in decline. The potential amount of the fall amazes me.

Maybe I am ultrasensitive to these issues so I see things normal people don’t. I get disgusted when I see ostentatious wealth. It is not only the fact that excessive wealth is ruining the earth and unfair I am also disgusted with what the wealth consists of. It is not even wealth in my eyes. It is junk and or a waste product. At least things of beauty could be made with the destructive overconsumption of wealth but no it is a horrible cancerous product of a species gone mad.

Take a McMansions for example. It is an oversized cheap construction filled up with cheapness like electronic devises and or cheap Chinese furniture. The same can be said about ghost cities in China and Chinese highways to nowhere. We humans are entropic waste walking. Everything modern humans touch today is soiled and dirtied. We are vile and a disgusting species. I wish I could find something good about humans but there is little to nothing left to be proud of.

Boat on Tue, 4th Aug 2015 4:18 pm

Bill,
OPEC owns big chunks of the Canadian Tar Sands. They also own big chunks of US refineries. I haven’t tracked yet but am sure they own big chunks of pipelines and any other oil related type business.

shortonoil on Tue, 4th Aug 2015 4:22 pm

“but as I understand it all of the recent financial and resource crises of the last few years have turned out to be deliberately engineered by the vampire squids of the world (Goldman Sachs, etc.) to essentially stomp their boots on the face of humanity and in the process consolidate their wealth and power.”

That is not my area of expertise, but the people I have talked to, and read that appear to be very knowledgeable in that area seem to agree with your statement. The Shadow Banking System has had a very pervasive, and disruptive impact on the world’s financial systems by playing the induced volatility that they themselves create. Because of their political connections, and vast private wealth (as individuals with incomes usually over $20 million/ year) they have been exonerated from the illegal nature of their activities. The world’s financial systems have undoubtedly become rotten to the core.

The fact that their positions, and power has thus shielded them from retribution on the legal level does not mean that they will be absolved from natures laws. Our Model is a thermodynamic construct that recognizes boundaries that no action from humans can transcend. Once those boundaries are reached Nature will not be impressed by some market manipulators balance sheet. We have already consumed 84% of the petroleum that the laws of physics says is available to us. Once that zero boundary is reached, it will be different this time!

A good example of how nature sets the final rules is displayed in this article:

http://www.zerohedge.com/news/2015-08-04/us-shale-how-smoke-and-mirrors-could-cost-investors-millions

Many have fallen victim to the the belief that Central Banks, and their cohorts are omnipotent. They believe that their power will insure that all things will continue as they desire. Nature has another agenda; and it does not include the counsels of man.

http://www.thehillsgroup.org/

“As long as they can cover their lease operating expenses, they produce.”

They produce until they can no longer cover their lifting cost. On a 10,000 foot well with a < 90% water cut they have already exceeded that at today prices. The average water cut for US conventional wells is now greater than 90%. At around $30 lifting cost will price most of those out of production.

Boat on Tue, 4th Aug 2015 4:37 pm

Rocrockman on Tue, 4th Aug 2015 9:31 am

Rig counts are an indicator, GDP is an indicator, Price is an indicator, production consumption are indicators.

You have preached this yourself rock. If there is money to be made on a piece of land that has been decided it is worth the risk. It will be drilled.
Some wells are deemed to have so much potential they will be drilled even with $40 oil. As you know there are thousands of wells waiting for $65 oil and then they will be drilled. Thousands that need an $85 dollar price etc I respect your views most of the time and you have taught me a lot over the years. I read all the posts of yours I see. Just keep it straight like you usually do.

paulo1 on Tue, 4th Aug 2015 5:01 pm

I want to apologize for sounding preachy about wealth, etc. I use way more resources than I need to do, just like many.

Energy relationship: I watched Obama’s speech yesterday and startled when he patted everyone’s back about the US reducing their CO2 output ny 29% (last decade? I didn’t catch the time frame). I had to laugh. You off shore all your manufacturing to some of the most polluting countries in the world, use underpaid labour to increase company profits and sell the same shit back to the end 1st world consumer, and then say, “look at us, we lowered our pollution levels”. These people are insane. We consume too much ‘stuff’, and it does not matter where it is produced. It is all just one atmosphere. One bio-sphere.

Boat on Tue, 4th Aug 2015 5:14 pm

paulo1,
You think the US should dictate/Obama where products should be made because of pollution? If your conspiracy theory is correct then why does the US refine tar sand oil in the US and eat all that pollution. Why do we waste all that fuel feeding the world and polluting our skies with farming. Your thinking kinda one sided aren’t you.

rockman on Tue, 4th Aug 2015 5:29 pm

I didn’t say they were make a good return on their investments. In fact I didn’t even say some aren’t running in the red of those investments. I didn’t say they could all meet their debt repayment schedules…many can’t. I also didn’t say the current price and their net income allows any of them the same incentive to drill they has a year ago.

The global oil producers are currently taking in about $1.2 TRILLION per year. Of course that’s an estimate of the gross. We still have to deduct royalties and operating expenses. Just a very, very rough guess I’ll say they are netting somewhere around 40% to 50%. Or about $400 to $500 BILLION per year. From that they have to repay debt, cover overhead and future capex investments. And in the case of NOC’s contribute to their country’s budget.
What I saying is they are “making a lot of money”.

Which us the primary reason almost none of the oil producers will voluntarily cut production. As far as OPEC, and especially the KSA, being able to quickly recover lost revenue by cutting production? The decrease in oil price is causing a revenue loss of over $300 BILLION per year. Just to stop the bleeding oil prices would have to immediately increase by 50%. Does anyone out there expect that to happen this August? I didn’t think so. LOL.

And even if it did it wouldn’t help OPEC recover the nearly $200 BILLION they’ve lost since oil prices have fallen. And if oil stays this low for until 1Q 2016 that’s $300 billion they’ll be in the hole. At that point they would have to maintain current production and realize another increase in price from $92/bbl to $122/bbl and hold that price for 12 months JUST TO BREAK EVEN.

It’s that simple math that easily explains why the KSA et al didn’t intentionally cause oil prices to collapse nor why they are also maintain current production rates: they desperately need the revenue. They can’t afford to cut production and lose anymore income on the hope that prices would shoot up over 100% in just a year or so.

rockman on Tue, 4th Aug 2015 5:35 pm

Boat – I’m a bit lost. Are you saying the increase in US oil production wasn’t a result of increased rig? I doubt that’s what you’re saying. Clarify please.

Boat on Tue, 4th Aug 2015 6:04 pm

I don’t think that statement is true.

Chris Feng on Tue, 4th Aug 2015 6:16 pm

Thank you for the post and glad somebody is willing to tell truth. I have been puzzled for a while why US production not going down after Rig count decreased more than 60% and billions dollar spending cut. US share companies can not survive at this WTI price and I bet more and more people will be laid off and companies will eventually bankrupt. There is nothing to against US share companies and you just have to understand Share production can not survive when the WTI is below $60. This is the war US will lose.

apneaman on Tue, 4th Aug 2015 6:20 pm

paulo1, it’s all bullshit. Any reduction in emissions was purely coincidental. There is no real plan to curb emissions and there never was. It was too late decades ago and many of TPTB know it and the rest don’t care. The rhetoric is just stick handling the sheep or telling them what they want to hear if you like.

Buried in Obama’s Climate Plan: A Promise of Business as Usual to the Fossil Fuel Industry

http://www.slate.com/blogs/the_slatest/2015/08/04/obama_s_clean_power_plan_analysis_business_as_usual_for_the_fossil_fuel.html

Boat on Tue, 4th Aug 2015 6:22 pm

Chris Feng,

Drilling is global. It’s not just the US that is shutting down drilling rigs.

Boat on Tue, 4th Aug 2015 7:07 pm

apneaman,
geesh we can agree on something…..consider flaring….just crazy stupid.

apneaman on Tue, 4th Aug 2015 7:15 pm

Natural Gas – a bridge to nowhere.

Bombshell Study Reveals Methane Emissions Hugely Underestimated

Findings throw EPA emissions database and countless other fracking studies into question

http://www.commondreams.org/news/2015/08/04/bombshell-study-reveals-methane-emissions-hugely-underestimated

Nony on Tue, 4th Aug 2015 7:16 pm

I’m actually lost on what aha on rig count Rock is citing. Not even disagreeing. Just not understanding his point. Maybe he can link to some comments or spell it out step for step.

Anyhow…here are my views (very micro based)

1. high price IS an indicator of scarcity. I often told Rock that it was the doomer’s best argument. I ceded it. (I didn’t cede the volume, because you all have gotten your asses kicked on Campbell, Ace, Deffeyes, Staniford, Simmons, etc. predictions.)

2. I always SAID that I expected a price crash would reduce US production. I actually expected a much faster and harder downturn (based on the Bakken 2008-2009 experience).

3. I have actually been surprised by how we didn’t turn down faster and seem to be hanging in there. I thought production would drop so much faster. (I think the answer is not just lag, but Pareto).

4. I do take rig count drops as indication that marginal drilling is not incented. If there were all kinds of great project at $30 breakeven, then the rigs would still be turning drilling them.

5. What we are doing now is feeling out equilibrium. Is it 45? 50? 60? 65? When rigs started picking up in the low 60s earlier, the market had a cow and dropped prices (granted China and Iran, but US rigs…they get watched now. There is no longer the “nobody cares about the pipsqueak of US shale production.” Not with 4.5 MM bpd of LTO that has come on in the last five years.)

apneaman on Tue, 4th Aug 2015 7:29 pm

Nony, your actually lost in the corn field, spinning in circles, looking for a way out. Sorry buddy. It is what it is. Best of luck feeling out the new equilibrium.

Boat on Tue, 4th Aug 2015 8:30 pm

Nony,
I am still lost that folks can’t understand simple logic. The market looking for equilibrium seems exactly right. The market won’t wait for a shortage before prices start eeking up. The market always looks for a leveling of supply and demand.
The great thing about the glut. When it disappears it will still be in the ground for later when the cheaper oil starts to run out. $65-$80 should be the new range at most for a few years assuming not much effect from geopolitical events. Maybe longer depending how well Iran recovers.

Makati1 on Tue, 4th Aug 2015 11:30 pm

Interesting debates above …lol.

We are headed for the cliff at breakneck speed. It is now in sight and approaching fast. If you do not cut yourself out of the herd NOW, you will go over with them. Nothing is going to change the direction we are going. Nothing.

Makati1 on Wed, 5th Aug 2015 1:01 am

Interesting article:

“Don’t Expect An Oil Price Rebound This Side Of 2017”

http://oilprice.com/Energy/Oil-Prices/Dont-Expect-An-Oil-Price-Rebound-This-Side-Of-2017.html

And the beat goes on…

Jimmy on Wed, 5th Aug 2015 2:31 am

I’ve never seen so many stupid fucking idiots trying to sound smart in all my life. There’s only a few of you with anything interesting and rational to say. This website is truly a catch-all for misfits and fuck-ups.

MSN Fanboy on Wed, 5th Aug 2015 6:10 am

Amen to that Jimmy

Beery on Wed, 5th Aug 2015 6:19 am

“What a load of crap. Everybody knows the world will never peak in oil production, or anything else for that matter. Economics will just make more technology. Problem solved. Doomers are so obnoxious!”

The stridency of this response! I think this marks the closest thing to an admission that the doomers are right that we’re going to get from Nony.

US Oil Production Finally Starting to Decline

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