My guess is that in addition to price level the volatility of prices is an important variable for producers. Before you invest in a multi- year project with possibly a multi-decade cash flow associated with that you want to have some degree of certainty before you start such a project. Over that kind of timeframe hedging becomes virtually impossible so that leaves only price projections as data points, and the variance around the projected prices is probably as important, if not more so than, the actual projected prices themselves.
Therefore I would not be surprised if a producer like Venezuela at some point enters into a very long term deal for a large part of its production, and certainly of its exports, with Chindia at a below market prices but with zero variance. I don’t think the US government would be pleased to say the least.

Rgds
WeekendPeak

Ron – “You only pull out what you can sell at a profit, at a rate the you can sell your product.” Sounds counter intuitive but this the reality of the oil patch: lower demand = lower prices = companies increase production as much as possible. I’ve seen this first hand many times in 36 years. For instance, NG prices fall as they did in late ’08. Might make sense on paper for companies to choke back rates and save those assets to sell later when prices rebound. Rare indeed to see this happen. Cash flow is truly king in the oil patch. I’ve seen many operators sell as much production as possible even when the price is below their finding costs. Lower prices certainly inhibit new drilling but not production.

“As long as the economy can support additional exploration and research, and the economy continues to create demand, additional resources are added to recoverable liquid fuel inventories”. Yes…until here are no more significant geologic trends to chase. Early 20th century Texas salt dome plays were dying out then the East Texas Field was discovered in the 30’s which was in deep decline when the prolific shallow Tertiary fields and the great West Texas fields were developed in the 40’s and 50’s which were in deep decline when the offshore fields began to be exploited in the 60’s and 70’s which were in deep decline when Barnett Shale in the 90’s and the DW GOM began to be developed after 2000. And fortunately as the DW trends have been stalled thanks to BP the Eagle Ford Shale has arrived. Additionally companies have begun poking around other fractured shale plays such as the Marine Tuscaloosa in La.

The problem in the near future in Texas is that there are very few oil bearing trends left to evaluate. The Eagle Ford is not a newly discovered trend…completed my first EF well 30 years ago. Horizontal wells with big fracs is not a new techniques: many thousands of such wells were drilled in Cretaceous oil shales more than 20 years ago. Obviously high oil prices are driving current activities. But these are not newly discovered trends. Even though few have heard of the potential “new” Marine Tuscaloosa play I reviewed such a proposal over 15 years ago…it’s not a newly discovered play…just being tested now due to high prices.

The point being is that in Texas there is literally no rock volume with oil potential that hasn’t already been discovered. And with current high oil prices all known trends are being actively evaluated. Once these plays have been tapped out there is no significant oil potential left in the state. And some years down the road the same will be true for the rest of the country. And some decades down the road the same will be true for the rest of the world.

“I'm guessing that rising prices and improving tech are extending the tail of production”. Only to a relatively small degree. Actual production costs are rather low compared to exploration costs. There have thousands of wells in Texas producing just a few bbls of oil per day that were profitable and kept on line even when oil fell below $20/bbl. Some folks have speculated that higher oil prices would lead to a surge in production due to secondary recovery efforts. But EOR efforts have been in full play in Texas since the 50’s. Most of Texas production today comes from wells that have undergone EOR in one fashion or another.

“These new plays will have their own unique discovery curve. That's not really apparent in Stuart's charts or my updates,. ” Folks shouldn’t be too critical of that. Really can’t see that very well except in the rear view mirror. Take the Eagle Ford Shale as an example. Its potential has been known for years as well as the tech to get it out. True for the shale gas plays also. From a purely economic perspective I would not have predicted their explosive expansions. But if one understood the near panic mode public companies fell into as efforts to replace production from conventional plays continued to fail they would understand the current acivity. As I’ve mentioned before my privately owned company doesn’t drill unconventional trends…not profitable enough and we don’t have stock to push on Wall Street. I once drilled four horizontal wells that we knew would cost the public company more than they would make but the sizzle due to a higher company production rate allowed Wall Street to bid the stock price up 400%. Needless to say this aspect plays havoc with you EROEI perspective.

“I think the decline side would be more difficult since URR will be more dependent on economic and technology factors.” Again, counter intuitive. URR of an existing field is rather insensitive to the future price of oil/NG. I’ve actually seen more than one operator continue to produce wells at a small loss for a period on time while waiting for a price rebound. Typically if an operator completely stops producing a well the lease terminates in 30 days. And when it does he’ll have to plug the well. That cost might represent more than year’s expense while producing at a loss. He’ll hope for a price rebound or maybe another company subleasing from him and drilling some new target they had ID’s. Sometimes it works…sometimes not.

There is one URR bump up potential in some mature Texas oil fields. I’m about to start a horizontal drilling program in some fields that are producing 98% water along with just a few bbls of oil per day. Not new technology but an application no one has recognized. They’ve produced over 2 billion bbls with 2 billion bbls of oil remaining. If we’re really smart and fairly lucky we might increase URR by 5 to 7%. Expensive wells but high oil prices can make it work. If our efforts work several years down the road the other companies will know….can’t keep such matters secret for long. Might cause another feeding frenzy like the shale plays. Even with current high prices the corporate mindset doesn’t favor pioneers. They are more comfortable being followers. I was part of a small band that did something similar in the 80’s using a seismic technology to find gas fields in the Gulf Coast onshore trends. Today this is the most common exploration approach in the region. So it can happen. I hope I can do the same thing with my hz program. Would be a very satisfying way to fade off into the sunset.

I think I see this slightly different. As long as supply outstrips demand, the production curve is a response to economic demand. You only pull out what you can sell at a profit, at a rate the you can sell your product. Demand side dominates.

Except oil production has costs - rent to the government, the cost of the men/machines to get the oil out, environmental liability while in production and some of these costs can be quite extreme if your environment is "harsh" like, say the north sea

You may wish to re-evaluate your vision as the above factors do not seem to account for the above list.

That was my thought also, Alan. But consider that the Central Limit Theorem relies on the random variables being independent. Here we have reason to believe that price, exploration, technology, and above-ground factors (politics) are all strongly (but not necessarily linearly) linked.

Edit: Demand is also linked to price in the long run, we think. It's a ball of wax in a can of worms in a tangle of string.

Scottie - "In comparison, onshore wells in Texas pump an average of 3 bpd, I believe?" Only the good ones. LOL. I know a very nice married couple who are netting over $500,000/yr from a bunch of wells making 1/2 bbl per day each. And they been producing their wells for over 30 years. Little pump jacks just about 1 foot tall...kinda cute. Gravity drainage of this heavy oil...takes 24 hours for that half bbl to feed into the tubing.

Unsuccesffully tried to buy them out when oil was less than $30/bbl. But who is going to sell a perpetual money printing machine? LOL. I hate remembering that field: 3 hours per day to manage it 7 days per week. And net $500,000 per year. And my 11 yo daughter could take it over in 9 years and turn it over to her kid in 40 years. Recovery so far? 75% of the oil is still down there.

I'll find his card and email you, Fred. While you guys should hit it off pretty good, I think he spends most of his time doing big billfish tournaments these days. Now that's a good use of resources, huh? (though I wouldn't mind doing a stint as his mate for a while ;-) At least they're only doing catch-tag-release these days, and they help fund research.

Well said. Fishermen need to speak for this protection, just as you have done. You are worth listening to. I apologize if I have offended you with my rant. A Paul Watson pronouncement is too much like a political leadership race. I admit that if he raises the issue this is a good thing, but as one who doesn't eat tuna, even off the boat, I believe the consumer will decide the issue, eventually.

Instead of racing around the sea harrassing fishermen with the cameras rolling, expose the consumers, embarrass them, harrass them. I assume the dolts who buy this stuff are sushi pounders trying make a statement on how great they are because they can afford to..... Those are the guys to hound, and the restaurants, fish auctions, etc. Just like one needs to be ashamed of buying and driving a hummer, the same can be done with housing and food and all conspcuous consumption.

"...They may very well not understand/believe that the fish they profit from will be fished into extinction..."

They don't believe it because their jobs depend on them not believing it. It seems to be a plague these days.

"The U.N. should establish (and enforce...with force) very conservative fish catch limits..."

Unfortunately, H, I predict the opposite will occur. When we see a decline in over-exploitation/consumption of resources it will be because it is no longer profitable or possible. The woodcutters of the Roman Empire didn't stop cutting wood to preserve the forests: No trees, no woodcutters; no fish, no fishing fleets; no soil or water, no farmers; no oil.......

By what course of action does humanity veer away from the path of causing grave environmental collapse with numerous extinctions?

Apparently there is no hope.

Perhaps the Earth will regenerate a diverse and healthy/in-balance ecosystem a few million years after humanity's flame burns down to an ember or snuffs out.

...but actually large-scale small-gift fundraising is always very inefficient;

Yes. My uncle spent 30 years at the national office for the YMCA, helping turn around failing branches. His rule of thumb was that to meet the goal for any particular fund-raising project (that is, raise the total amount at reasonable cost), you had to get 50% of the total from one donor, 25% from three more donors, and the last 25% from the little stuff.

He had an incredible little database of people in all different parts of the country who could afford a $100K donation, and what kinds of interests they had that the YMCA could support.

There would seem to be a difference between the groups which work in support of political candidates and those which work as charities. In a political campaign, the money raised isn't as important as the names and addresses of the people who contribute, who are likely to be voting in support of the stated positions of the PAC during the next election. Newt's group has developed a large database of people, many of whom might not contribute to Newt's campaign but who might be expected to spread his messages directly to other voters and then vote for Newt during an election. His political action committee may be closed, but a DVD ROM with the data base was likely deposited into his briefcase, so to speak.

This election cycle, we are going to see lots of effort by groups which aren't ostensibly connected to a candidate, but which act as if they were. HERE's a story from today's NYT which describes what's happening after last year's Citizens United case, as so-called Super PACs are now actively supporting Repub candidates...

E. Swanson

'The question of the future will not be "how can educators best teach their students"? It will be "how can parents best inspire their children to learn"?'

A good point, but... I think that has been the issue all along. Past, present, and future.

Must go now, Irene is knocking on my door with some pretty frisky lightning and thunder. Here we go!...

I think its pretty difficult to be a completely self-reliant autodidact. Especially, in math-heavy subjects. I expect the traditional teaching institutions aren't going to go away. I do have real hope, that the financial barriers to acquiring an education can be significantly reduced for those who have partial-auto-didact skills.

Merrill – Had not ever thought about it but here’s my personal experience. I received my BS in Earth Sciences from LSU-New Orleans in 1973. In the ES dept we had one of the best ratios of students/professors in the country and no Masters program. The undergrads had a relationship more akin to grad students. Often no more than 20 in a class. Thus a great deal of attention from our teachers. But I would guess that 95% of my education came from my self directed studies and not the classroom interactions even though I did do a couple of special projects. Our learning was primarily a function of self discipline. IOW how you applied yourself to the effort. The main motivation from our professors came from testing and not classroom lectures. And testing was tough. We ran on the honor system. Normally finals were given in 2 hours. With our honor system our profs could give us tests that could take 6 to 12 hours to complete…and many did

Just MHO but if I had the computers and Internet we have today it would have so much easier. Probably could have finished in 3 years instead of four. In addition to self directed studies maybe a 2 hour Q&A session with the profs once a week would have sufficed. Probably could have cut the staff 75%. The uni was experiencing a huge growth when I was there that led to a big building boom. But essentially just building classrooms to sit in while hearing lectures. Obviously couldn’t have eliminated all the infrastructure but a good bit wasn’t needed.

Grad school is an even better example. At Texas A&M I only took about 12 courses. The rest of the effort was working on my thesis research = 100% personal effort. Would have been so much easier with the Internet. How many here remember spending days going though the card catalog, hunting shelves for books that were checked out or waiting a week or two to have one transferred shipped from another library. What I spent one week doing in the library I could accomplish twice as much in half a day on the net. And composing on a manual typewriter and drafting displays with pen and ink. I could have written my thesis in several months instead of a year.

So could students perform as well without a professor looking over their shoulder? Why not? We did. We had a very nurturing relationship with our profs. But only 18 of the 46 members of my sophomore class got their degree. In the end you either did it on your own or you didn’t. I suspect a big part of the high early drop out rate in college these days is that many think it will be like many high schools: just sit in class, listen to the lecture, go though the motions and get your degree.

I know some folks poo-poo online degrees. I did too...sorta. But upon relflection I would have been no less educated had I done my BS one line than inside that brick and mortar. And probably a tad bit more knowledgable. If you don't have the discipline to handle it online then I doubt you'll get it sitting in a lecture hall. The current college drop out rate seems to support that opinion.

The most talented people are necessarily autodidacts

The vast majority of autodidacts, on the other hand, have a fool for a teacher. (I count myself in that group. ;-) )

The university education greatly expanded in the late 1800s, not mainly as an educational route to the middle class, but as a mark of the family having arrived in the middle class. In THE AGE OF EMPIRE, Hobsbawm writes:

Its major function was not utilitarian, in spite of the potential financial returns from trained intelligence and specialized knowledge in an age increasingly based on scientific technology, and in spite of its opening careers a little more widely for meritocratic talent, especially in the the expanding industry of education itself. What counted was the demonstration that adolescents were able to postpone earning a living. The content of education was secondary, and indeed the vocational value of the Greek and Latin on which British 'public school' boys spent so much of their time, of the philosophy, letters, history and geography which filled 77 percent of the hours in French lycees (1890), was negligible. Even in practical-minded Prussia, the classical Gymnasien in 1885 contained almost three times as many pupils as the more 'modern' and technically minded Realgymnasien and Ober-Realgymnasien. Moreover, the cost of providing such an education for a child was itself a social marker. One Prussian official, who calculated it with German thoroughness, spent 31 percent of his income on his three sons' education over a period of thirty-one years.

Formal education, preferably crowned by some certificate, had hitherto been irrelevant to the rise of a bourgeoisie, except for those learned professions inside and outside public service which it was the main function of universities to train, in addition to providing an agreeable environment for the drinking, whoring and sporting actvities of young gentlemen, to whom actual examinations wer quite unimportant. Few nineteenth-century businessmen were graduates of anything. The French polytechnique at this period did not especially attract the bourgeois elite. A German banker, giving advice to a budding industrialist in 1884, dismissed theory and university education, which he considered merely 'a means of enjoyment for times of rest, like the cigar after lunch'. His advice was to get into practical business as soon as possible, look for a financial backer, observe the USA, and gain experience, leaving higher education to the 'scientifically trained technician', whom the entrepreneur would find useful. From a business point of view this was plain common sense, though it left the technical cadres dissatisfied. German engineers bitterly demanded 'a social position corresponding to the engineer's significance in life'.

Schooling provided above all a ticket of admission to the recognized middle and upper zones of society and a means of socializing the entrants into the ways which would distinguish them from the lower orders.

Universities and colleges still play an important role in confirming the ability of families to spend liberally on their offspring's educations, providing the opportunity for social and business networking with other student in the same social class (including meeting a well-qualified spouse), and confirming the students status by granting diplomas (as well as other distinctions, memberships, etc.).

You have to face the fact that this place is still considered a 'fringe crackpot theory internet blog' to the mainstream.

The MIT website mentions Peak Oil in The Coming Years syllabus.

One of the recommended readings is Colin Mason's book, A Short History of the Future: Surviving the 2030 Spike.

The only question I have is how come there is not a single mention of the TOD site anywhere?!

Why would there be?

Fred, this is an awesome graphic...I spent some time magnifying it and scrolling all around the graphic...I just tried to order the poster (in fact I was going to order several depending on the price) and the 2011 version is sold out.

I subscribed to the author's site to get in line to order the 2012 version.

I would recommend that anyone interested in the U.S. budget (where does our money, and the borrowed money, go?) examine this closely...perhaps even order the oster if its cost is reasonable and one is sufficiently interested.

I wonder if Jonathan Callahan could partner with this author and put the U.S> budget over time into a data browser format, from the overall budget down through all of its major components, and sub components.

Then get with the folks who created the site where one can turn the knobs on the budget and increase or decrease spending and revenues.

Tie those three things together, and hyperlink everything to a 'U.S. budget Wiki' with all the detailed words, numbers, etc.

It would make the budget much more accessible and understandable to more people than is the case currently.

transparency and accessibility is good!

Basically what i see in those charts and pictures is the result of a group of people who got too used to the large profits they got during the cold war. the perpetual build up of arms and armor out of fear of attack. notice how others tried to cut back once that precevied fear turned out to be false. around 1989-90 when the ussr collapsed. also i notice how the climb started again in 2000 when the Clinton administration was ending and with it their plans on cutting back due to no large nation sized military threat..

So the question is: do you trust your govt? The govt has the primary responsiblity for evaluating the situation...not BP.

The same government that had BP fill out the forms in light pencil and then had the government staffers trace over the pencil in ink?

http://www.cbsnews.com/stories/2010/05/25/eveningnews/main6518694.shtml

CBS News investigative correspondent Sharyl Attkisson reports inspectors even went so far as to let oil companies literally fill out their own inspection reports using pencils. MMS inspectors would write on top of the pencil in ink and turn in the completed form.

What have these institutions done to earn or keep trust?

"...question is: do you trust your govt?"

answer is: Nope

Lizzie

"do you trust your govt?"

Do you mean that 'govt' that is a fully owned subsidiary of BP and its fellow mega-corporations?

The bad news is that Mr. Good Hair has almost a third of the field.

Yup, but to be realistic not all those who are elected are in control anyway..

I feel better already just knowing I am a king daddy dog!

There has been a weakening trend in the forcast intensity the past couple of days. I do think the media is overplaying the wind and storm-surge threat, but underplaying the inland flooding risk, which is extremely high. Many of these areas in the northeast have had near record rains the past couple of weeks, add 8inches from Irene, and its bound to be serious.

Flood sirens going off at Gilboa Dam/Schoharie area NY. Residents urged to evacuate the flood zone immediately.

TYPE B EMERGENCY DECLARED - "Possibility of dam failure has increased"

Hi dohboi,

Sadly, very true. As of 20h00 local time, the Associated Press was reporting the number of storm related deaths as "at least 20" –– one in Connecticut, two in Florida, one in Maryland, one in New Jersey, one in New York, six in North Carolina, four in Pennsylvania, and four in Virginia.

Cheers,
Paul

Yair...I just have to say Perk THAT YOU HAVE NO NOTION OF HOW BLOODY REDICULOUS YOU SOUND.

Living where I do I have been through quite a few hurricanes (cyclones here) and we often get the same clueless ignorant comments over here.

If you are in the wrong place at the wrong time even a Cat. one can be dangerous...and given what I have seen a Cat. two or three can result in catastrophic damage.

It is far better to err on the side of caution...you want to live through one of these suckers before you go spouting crap.

Cheers...and you have a nice day y'hear

Heavy rainfall - that's all this was. Sure, some local flooding, some power outages, some dummies getting hit by trees. It really should not be that hard to avoid getting killed in a cat. 1 hurricane.

It may have been just a Cat. 1 as far as the wind speed was concerned but it was a huge powerful and intense rain making storm that produced massive storm surges.

My guess is you've never experienced the consequences of a storm surge or flooding from heavy rains have you? And as someone who has been through more than my share of Cat. 1 hurricanes I can tell you they are no laughing matter.

BTW both my boss and I had electrical problems in our cars and the brake drum on our forklift froze up from going through standing water while cleaning up some debris in front of our warehouse. We are near Ft Lauderdale and Irene passed far offshore, we only got some 30 mile an hour wind gusts and heavy rains. Still, while not life threatening nor a huge expense I had to replace the ignition coil in my car, and we lost a day's worth of business... Multiply that by millions of other south Florida residents and you begin to get the idea of the negative economic impact of even some minor flooding, let alone, a little Cat. 1!

OH yeah, all that economic impact probably increased the GDP >:-(

Over twenty years ago, an electrician was installing new control wiring in the generator hall of the Fayette Texas power plant (LCRA + Austin Energy). He waved the conduit in the air just a little too close on a humid day.

Two poles of a 598 MW generator arced for an instant. Instantly vaporized and the plant was down for almost a year.

Best Hopes for Safety Consciousness,

Alan