Tech Talk - Some Thoughts on Current and Perceived Oil and Natural Gas Supply

For most of this past year, these posts have reviewed and then discussed data on the state of different reservoirs of oil and gas that ultimately provide the power we need and use every day. However, as we come to the end of 2011, it seems as though there is a gloss or spin applied to stories about the state of global energy supply, which implies that concerns about future energy supply are overstated. Instead, the impression is left that there will be, in the immediately foreseeable future, no return to shortages. So this post will be a more general view of the topic, less concerned with absolute numbers and references, but seeking to suggest that these perceived words of wisdom are like the promises of a return to $30 oil that we heard only three or so years ago, likely to fade into oblivion once they have served their immediate purpose.

It should be noted up front that there are considerable differences between the supplies of natural gas becoming available, and those of crude oil. Natural gas reserves are still increasing; I wrote just recently of the realization that exists in Azerbaijan that the gas produced from the Shah Deniz field will have a hard time competing in the global marketplace in three years because of the arrival of natural gas from the Levant Basin. The relatively low prices for natural gas in the United States brought about by the development of wells in the gas shales such as the Barnett, Haynesville, and Marcellus, and their initial high productivity, will continue to make it difficult to see much increase in price. Yet this comes at a time when the price that natural gas is sold for in America is around $3.50 per thousand cubic feet (kcf) or $124 per thousand cubic meters (kcm). That price is often insufficient to totally cover the costs of its production and return a profit to all the investors, with some indications that a profitable price would need to be closer to $6.00 per kcf. The low price of natural gas relative to world prices, however, means that it helps to keep American industry competitive, since fuel costs are usually significantly lower here than elsewhere.

China continues to show foresight in acquiring fuel since their agreement with and the creation of the pipeline from Turkmenistan now gives them natural gas at a competitive price ($280 per kcm - $7.93 per kcf) relative to the $400+ per kcm that Russia is charging Western Europe, though that price will also be vulnerable to supplies made available as the Mediterranean fields come on line.

The bent of recently appearing stories seem to imply that the United States is moving toward significantly greater crude oil production, and thus a greater independence from foreign suppliers than will actually be the case. Folks such as Dr Yergin are projecting production of oil from the shales around the country as rising to some 2.9 mbd by 2020 and being sustained through time – neither of which is likely since the Bakken in North Dakota may well start declining and be significantly below 600 kbd within four years, and the likelihood of new developments bringing in more than this on a sustained basis are not great.

The emphasis on such a possibility, however, removes some of the pressure and concern in the short term over the health of the global supply situation, and the concurrent dependence of the United States on foreign fields and suppliers. One need not be (as perhaps the argument goes) so worried about the time needed to bring Libyan production back to 1.6 mbd. Optimistic reports talk of Libya reaching 1 mbd, yet still leave a concern that without a stable government and infrastructure, it will be a little difficult to reach those earlier production levels. And the promises that Iraqi production will rise to levels far above 3 mbd may be more dependent on political stability in a country that isn’t showing much at the moment. Any thought that the Arab Spring would bring swift changes in the governance of the countries involved, and leave oil exports to the world sustained at previous levels, appear also to be less than realistic as countries such as Egypt begin to head into the second cycle of that revolution. The Syrian government is currently blocked from exporting (and thus producing) a third of their normal level, which has taken 100 kbd or so from the market, and the situation with Iran continues to fluctuate.

Now there are some political benefits to being able to project that the world is going to have more than sufficient oil for the next few years, among them the distraction from the less than healthy state of the alternate fuels and energy industry. Exxon noted in their recent annual report that they see little significant impact from solar and wind energy on the overall global supply of power over the next forty years. Were the nation still fixated on where we are going to get our power over the next decade, then the collapse of Solyndra due to poor market support, and the bankruptcy of Range Fuels because they could not produce cellulosic ethanol at the scale needed to have any impact at all, would raise worrying questions as to how we plan to cope with shortage. The current optimistic state of mind, of course, also makes it less of an imperative to approve the Keystone pipeline, which may now not be approved.

Because of this lack of concern, we see the Administration moving ahead to restrict further the use of coal-fired power stations through EPA enforcement of tougher emissions standards, and the corn ethanol subsidies appear to be very rapidly on the way out, which may impact the volumes of ethanol (now over 900 kbd) coming to the market in the future. But if the United States has become a net exporter of fuel, though mainly diesel, why should we worry? Perhaps because this is such a small fraction of the overall total that it is insignificant, even though it makes a nice headline.

The overall picture of crude oil supply to the United States, in reality, has hardly changed at all. Yes, demand for gasoline is down as cars are being driven less these days, and fuel economy changes have some small effect, but the economy is not robust (nor is that of Western Europe) and sustained high fuel prices are not going to help with recovery. At the same time, demand in Asia continues to increase, and more nations in the Middle East and elsewhere are shipping oil to China in agreements that will still be in place were the United States to continue to recover and suddenly need additional oil to sustain that recovery of growth.

Current complacency and spin will not make those agreements go away, nor will additional oil appear by magic to assuage American demand. The only question that I have is whether the current spin can be maintained through 2012. It is certainly unsustainable through 2014, and what impact the realization of reality might have, were it to become obvious by, say September of this year, as the election enters its final phase, is an ongoing puzzle.

We live in interesting times indeed, and I hope that you all have a Prosperous and Happy Year, as we sail into that future. I look forward to commenting on some of these issues as we move through those times.

Happy New Year, folks!

Yair...While we obviously do not want an all out shooting match (i.e. sabre rattling in the Straights of Hormuz) I can't help but think that some stand off or kerfuffle that restricts supply/spikes up prices for a few months would be benificial about now.

It would provide a reality check and give the few folks in power around the world who understand the situation (there must be some?) some sort of traction to state their case and point out that this temporary abberation is a portent of things to come.

Does that make any sense?


SP - Makes sense except the political reactions might not focus on the reality of oil supplies as many here see it. Even politicos knowledgable about PO still have a choice of spin: reality vs. blaming those damn Arabs/speculators/oil companies/US govt regulators. IOW we have plenty of oil here to solve the problem as shown by recent increases in oil rates: "Elect me and I'll make sure we'll drill even more oil wells and become energy independent". That politician's altenate story would be very negative about the future. And these days it seems most prefer the positive spin to grease their election machine.

I'm still wondering if it will make any difference anyway; that is, whether politicians begin explaining limits to growth, etc. At the end of the day, the few Joes and Janes who "get it" - following their stages of denial - will most likely revert to ignoring the problem anyway. All to hard. So why bother explaining?

I'm personally on the record three years ago agreeing with some on this site we're in for a long plateau of no-growth to an ultimate cliff. I see no reason why this is going to change. It'll come down to where you're positioned (as an individual) when that time arrives. 2020 seems as good a date as any.

Happy(ish) New Year to all,

Matt the pessimist
And still a concerned dad


Speaking once again as an armchair historian, and as a life long observer of human nature and politics

Nobody has been able, to the best of my knowledge, to put forth a rational argument against the proposed Keystone pipeline.

First off, even the most rabid opponents who remain rational must admit that the oil will be burnt,SOMEWHERE, barring an extraordinarily severe near or medium term collapse.There will be no ADDITIONAL release of CO2 .

Second, the pipeline will be brand new, and built to the toughest standards ever established, rendering the likelihood of a major leak extremely low.We have many tens of thousands of miles of existing pipelines, built to far less stringent standards, most of which are ancient by infrastructure standards, and even so, pipeline oil spills are infrequent enough that a very minor spill is newsworthy..

It is true that some considerable acreage of sensitive lend will be put at risk; biulding a pipeline is a disruptive undertaking, but we are losing sensitive land at a distressing rate ANYWAY, even under the current dismal economic conditions.We all here in this forum understand that oil company prnouncements in respect to the environment are honored mostly in the breach, and that oil (and coal and ng) company tears are crocodile tears.Nevertheless, IN REAL WORLD TERMS,the opponents of the pipeline , if they are smart, can extract enough money from the builders and operaters of it to set aside considerably MORE environmentally critical land in perpetuity than will be lost.

Third, there is the political backlash to be considered.Blocking the pipeline is not going to add anything of consequence to the Democrats tally next election cycle, but it is infuriating a lot of people involved in organized labor who generally are Democrats, and energizing the Republican base.

Elections are often close.The next one will either be close or a Republican blowout in my opinion, based on the observation that we usually blame the sitting President's party for any and all problems, right up to the rain that falls on a childs birthday party.Realistas among the ecological and environmental brigades who are too young to know what sort of creature a "Reagen Democrat" is will do well to spend a few evenings learning politics in a bit greater depth.

Control of the leglisative and executie branches may turn on this issue-and the republicans have the ball well inside the ten , on first down-based on the continued opposition to building the pipeline, at a time when jobs are scarce, etc.

The potentially most critical consideration of all involves our (Yankee)physical security in a world where we (broader humanity) willINEVITABLY be fighting for oil , coal, iron ore, natural gas, water, farmland, and the neighbors last sack of dried beans before too much longer.We YANKEES will be in a considerably better position, strategically and tactically, with the pipeline.

(Later on tonight,I will have to get down on my knees before the portraits of ole Jeff Davis, Gener'l Lees, and Stonewall, an' Jeb Stuart and beg forgiveness for saying the "Y' word wiothout a sneer-just kidding of course, we have no portraits of anybody at all, our kind were to poor to hire artists in those bygone days, and we don't know what our great great greats looked like)

Now there are those who will argue that they belive the best thing for the bioasphere is an early and violent and thorough crash of the population and of industrial civilization.I understand their reasoning, and respect these people personally.I even know a couple-just a couple-who I believe have the personal strength and integrity to carry through and die for their convictions.

I personally doubt very strongly if more than one out of a thousand such people could actually deal with collapse by just dieing quietly if actually face to face, up close and personal,belly to belly can't miss pistol range, with it.

I certainly can't;I would do anything whatsover that I could do to preserve the lives and well being of all the little kids who are the only real source of joy and happiness in one's old age.(There is no koolaid in my house, but there is lots of ammunition.Maybe I'm wrong, but as I see it, being well armed is far safer than being helpless in the face of potential violence.For that matter, I'm still rather fond of my own mangy hide and property, and most especially fond of my last sack of beans..

There won't be a free market in oil too much longer.Those who have ready access to it by pipeline will have it;those who don't will be in a very precarious position indeed.

No military commander worthy of sargeant's stripes has ever been, or ever will be interested in a fair fight;the goal is to always stack the cards in favor of the home team, and to actually avoid fighting if possible while still achieving the goal.

Collapse isn't a joke.Collapse implies one's younger daughters prostitutinging themselves in oder to obtain food for one's grandchildren.

That pipeline is an ace,and the name of the game is five card survival, and we have the opportunity to deal it to ourselves.

mac - Obviously "rational" is in the eye of the beholder. There are those who think it's rational to prevent any additional oil production. But as PO becomes more intense I suspect their numbers will shrink significantly.

[Sorry, edited for off-topic thread - better material for Drumbeat]

After reading about Keystone, this is what I could deduce. The Canadians have to do an awful lot of processing to reduce the tar sands content to a liquid before it can flow through a pipeline. They have all the natural gas they need to do the separation and so it is just a matter of time before they do some refining themselves. They are not refining it for heating oil, as NG is adequate for that. There are also plenty of pipelines in place that already go to the Midwest USA. The only reason for Keystone is to take advantage of Brent prices; get it to the gulf so they can ship it overseas. If it stays in the midwest, the Canadians only get WTI pricing.

I would like to get opinions on this to see the holes in the argument.

It sounds like a big non-story.

The objective of the Keystone pipeline is to get the oil to the US Gulf Coast because half of US oil refinery capacity is located there. Increasing Canadian production is exceeding the ability of US Midwest refineries to process it, but Gulf Coast refineries could handle those volumes.

The Gulf Coast refineries are already equipped to process heavy, high sulfur oil. Processing bitumen from the Canadian oil sands will be no big challenge since they already process heavy Mexican and extra-heavy Venezuelan crude which is not a great deal lighter or higher in quality. Mexican and Venezuelan production is declining.

If Canada is going to export oil offshore, it is going to send it through Canada's West Coast ports. The pipelines would be much shorter than sending it all the way across the US to a port.

In fact, there is already a pipeline from Alberta to Vancouver, the TransMountain pipeline, which is moving about 350,000 bpd to the coast. Vancouver has only one 64,000 bpd refinery, so most of the oil is going to export and tanker traffic is rapidly increasing out of the Port of Vancouver. The capacity of the TransMountain pipeline was doubled only a few years ago, but plans are to double the capacity again to 700,000 bpd ASAP.

Yair...RockyMtnGuy. this is where I get confused. I asked on the current Drumbeat about the quality of the oilsands product and you mentioned that it was deliberately formulated to be similar to WTI.

The Gulf Coast refineries are already equipped to process heavy, high sulfur oil. Processing bitumen from the Canadian oil sands will be no big challenge since they already process heavy Mexican and extra-heavy Venezuelan crude which is not a great deal lighter or higher in quality. Mexican and Venezuelan production is declining.

Not trying to be a smart-ass but the above extract from your current post (mentioning bitumen from the Canadian oil sands) seems to be at odds with this...what am I missing?


I agree it is confusing. At some point the oil is so heavy that it becomes difficult to flow through a pipeline. Where does bitumen fit in this grade? One classification states that the conventional vs unconventional oil distinction is made depending how well it will flow through a pipe.

Okay, this is not the simplest subject in the world, so maybe I should go through the basics.

Bitumen: The oil sands contain crude bitumen, which is a semisolid form of crude oil. It is defined as "crude oil that will not flow to a well", so since it won't flow you have to use non-conventional means to produce it (mining or steam injection). It also won't flow through a pipeline unless you heat it, upgrade it, or dilute it (see below).

Syncrude: (SYNthetic CRUDE) Bitumen under normal conditions will not flow through a pipeline and cannot be handled by conventional oil refineries, so the original oil sands plants upgraded it to syncrude, which is synthetic crude oil. It was designed to be a substitute for the benchmark West Texas intermediate. An upgrader is really not much different than the front end of a heavy oil refinery.

Heavy oil: There is not a great deal of difference between extremely heavy oil and bitumen, so heavy oil refineries, such as are found in the Mid-West and on the Gulf Coast can process bitumen if you can actually get it to them. If you can deliver it by tanker, that would be easy, but shipping it through pipelines is difficult. Mexican and Venezuelan heavy oil is shipped to the Gulf Coast by tanker, but supplies are in steep decline these days, as Westexas often mentions.

Dilbit: (DILuent+BITumen) This is one way you can deliver bitumen in pipelines - you dilute the bitumen with diluent (either condensate from gas wells or NGL from gas plants). The diluted product can be shipped through pipelines. Simple oil refineries have to take syncrude (hence its high price), but a lot of the Midwest and Gulf Coast refineries can handle heavy oil and bitumen as well, and given the difference in cost they would prefer to buy bitumen, and put the upgrading costs in their own pockets. This does cause a problem with the supply of diluent at the oil sands plants, but the refineries extract the diluent at their end and send it back to the oil sands plants. If you look at many of the new heavy oil pipelines, you will see a diluent pipeline parallel to them running the opposite direction.

Synbit: (SYNcrude+BITumen) This is another way to ship bitumen through a pipeline - dilute it with syncrude. This avoids the problem of having to build a reverse-flow diluent pipeline, but it is more expensive than dilbit. It is however, cheaper than straight syncrude and a lot of refineries can process it, so it is also popular with those oil refineries.

Hopefully this helps. If not, I can explain some more.

Yair...Thanks mate, my education continues.


I like the standard measures myself.

Just the centipoise sir, just the centipoise.

The Canadian oil industry uses its own terminology (not to mention metric units), which are not necessarily the same as in the US.

Oil Sands Glossary

bitumen: A thick, sticky form of crude oil that is so heavy and viscous that it will not flow unless it is heated or diluted with lighter hydrocarbons. At room temperature, bitumen looks much like cold molasses. It typically contains more sulphur, metals and heavy hydrocarbons than conventional crude oil.

blended bitumen: Cleaned crude bitumen that has been blended with diluent so that it can be transported by pipeline.

blended heavy oil: Heavy crude oil to which lighter oil has been added to make the product transportable by pipeline

conventional crude oil: Petroleum in liquid form that can be pumped without processing or dilution

dilbit: Bitumen diluted with a diluent.

diluent: A hydrocarbon substance used to dilute crude bitumen so that it can be transported by pipeline.

heavy crude oil: Crude oil that is very dense, highly viscous, and has a high boiling point, with an API gravity of less than 25 degrees.

light crude oil: Low density, low viscosity crude oil.

pentanes plus: A mixture of pentanes and some butanes. A key source of diluent for bitumen.

synbit: A blend of cleaned crude bitumen mixed with SCO for diluent in order to meet pipeline viscosity and density specifications.

synthetic crude oil: Similar to crude oil, created by upgrading bitumen from oil sands

They don't use the terms medium oil or extra heavy oil. The distinction is between light oil, heavy oil, and bitumen. The main criteria is how well it flows through a pipeline, but they don't spend a lot of time measuring the viscosity. If heavy oil is found in an oil sands region, they usually deem it to be bitumen.

So what do they do with all the residue or slag?
Why flow all that extra through a pipeline instead of dealing with it at the source.

The residue from the oil sands upgraders is petroleum coke. It is a replacement for coal, and much of it is burned by the oil sands plants themselves to generate electricity and heat. Some of it is sold to steel mills or power plants in Asia, but at the moment most of it is stockpiled. It's worth about as much money as coal, but transportation costs are a problem, just as it is for coal.

The non-upgrading oil sands operations don't produce any residue other than sand and water, which is separated on site. The bitumen from them goes down the pipelines to heavy oil refineries, who fractionate the heavy components into petroleum coke (see above), asphalt (for paving roads), and heavy residual fuel oil.

If I'm reading everybody right, Pre- versus post- "upgrading" and the degree of upgrading involved.

It is true that some considerable acreage of sensitive lend will be put at risk; biulding a pipeline is a disruptive undertaking, but we are losing sensitive land at a distressing rate ANYWAY...

But not this particular sensitive land. The Nebraska Sand Hills region (largest wetlands environment in the US) has a generally shrinking human population, like most of the Great Plains region that it is part of. I don't oppose the Keystone XL in principle; in fact, I agree with much of your reasoning that the oil in the tar sands is very likely going to be burnt at some point, whether this pipeline is built or not. Adding some modest amount to the length of the pipeline in order to route around the Sand Hills is not going to change that, or the cost of moving the oil, by enough to make any significant differences in the prices.

In fact, this past November, after TransCanada agreed to a alternate route that avoids the Sand Hills, Nebraska passed a law approving the new route and providing up to $2M towards the environmental study necessary for the new route. Whether the federal government will consider that alternative, or only the somewhat cheaper original route, remains to be determined.

I would be perfectly satisfied with the alternate route, and the principals can STILL be forced to pony up for some new protected parklands someplace else or nearby.

As a general thing, it's almost always a good deal to swap a few hundred acres for a few thousand acres , even up.

Furthermore, it doesn't sound to me as if the pipeline will be all THAT disruptive, given the way things are done these days.

The VDOT (Va state dept of transportation) looks to have spent at least a million extra preserving a couple of acres of wet land while building a nearby intersection last year.

That same million would have bought at least a HUNDRED acres subject to development within twenty miles.That hundred WILL be developed barring collapse.

But that little cattail slough is still there, and it will be a fine refuge for rabbits and muskrats, as it is surrounded by a partial cloverleaf, and legally protected from hunting and trapping due to proximity to a public highway.

There will be incredible pressure brought within the next few decades to put any and all land under the plow if anything will grow on it, and to graze it if it will support cattle or even buffalo, etc.

It sounds ironic, but we should keep in mind that artillery firing ranges and no man's lands have proven to be excellent wildlife refugees.

Why not make the route a couple of miles wide, and forbid any and all development of it, excepting the pipeline itself?

There won't be a free market in oil too much longer.Those who have ready access to it by pipeline will have it;those who don't will be in a very precarious position indeed.

That pipeline is an ace,and the name of the game is five card survival, and we have the opportunity to deal it to ourselves.

The ironic thing about the Keystone XL pipeline is that it, at least at first, reduces access to tar sands oil for most of those whose land it crosses. The point of the pipeline is to relieve the pileup of crude at Cushing, OK by shipping it to Texas refineries who will then likely export the products.

For the Midwest, now benefiting from lower crude prices, the pipeline is not an ace. It is a joker. WTI price would likely rise to Brent after the pipeline is completed if not before in anticipation of tar sands oil availability on the world market.

Furthermore, Texas politicians who are often funded by oil interests have made a point of attacking ethanol and have won that battle. Now it is the turn of states like Nebraska, a major corn and ethanol producer, to poke a stick in the eye of Texas oil interests.

They can't get oil subsidies eliminated because oil is too powerful, but they sure can block the oil coming down from up north. It's a win-win for the Midwest. It gets cheaper crude because of the surplus with current pipelines and a bargaining point with those who want to retain reliance on oil.

As you point out the Midwest has the opportunity to deal it to ourselves.

It's nasty tit for tat, but as in the recent ethanol subsidy battle, nasty and tit for tat are par to the course.

The idea that lots of jobs will be created by the XL pipeline is a joke. Most jobs would be temporary construction jobs. Pipeline and refinery operations are not labor intensive.

Plus higher crude prices for Midwest refineries would likely mean higher product prices that would lead to loss of jobs as consumers have to cut elsewhere.

There is no upside to the Keystone XL pipeline for the Midwest and very little for the rest of the country either. It's mostly a bonanza for Canadian and Texas oil interests.

Gotta love it - OFM's logic / practicality and Rockman's oilco reality. I was in full agreement with OFM until I read Rockman's reply above - now I agree with the both of 'em.

When it comes to trying to explain PO to others, I often use a comment from OFM such as how much sodbusting can one do with a pint of gas vs. the alternative; and I'll refer to Rockman's oilpatch wisdom when discussing the realities of oil production and delivery.

Here's to a great many more tidbits of wisdom in 2012! Happy New Year!

x - FYI: Around 99% of "Texas oil interests" don't want to see the pipeline built. Thus most Texas politicians, even though they wouldn't admit it publicly, don't want the pipeline built. Only a small handful of US companies want the p/l built. It's not difficult to understand. I've been getting $100+/bbl for my Texas crude that's barged to La. and sold at La. light prices. Dumping that Canadian crude into the Gulf Coast will cost Texas operators (and the Texas state govt) $billions by reducing the price we get for our production.

If folks are going to understand the dynamics of the US energy scene they need to get the idea out of their heads that the oil industry is one giant monolithic entity with a single goal. It's the Canadian producers who would do anything to see the p/l built. It could mean an increase in revenue for them and the Canadian govt of $15 to $20 billion per year.

And while I'm at it, that same 99% hope they never drill another well on the North Slope. And around 90%+ wouldn't mind not seeing another DW GOM well ever drilled.

It's my understanding that Port Arthur is the only place in Texas that Texas onshore producers can get coastal oil prices. Everywhere else in Texas is stuck with WTI. IMO, I don't think that increased supplies to the Gulf Coast will have any material impact on Port Arthur prices, but it should help to narrow the WTI/Global Crude price spread.

wt - At the moment I could care less what they are paying in PA. My crude buyer is barging my oil from 100 miles west of PA to Lake Charles, 80 miles east of PA. My crude buyer is paying me the differential less transport. No idea how much oil he's moving like this but I doubt we're the only ones he's doing this for. I'm sure a lot of that Canadian oil would make it to Lake Charles and there goes my $20-$30/bbl price bump.


American oil men and environmentalists (an unholy combination if I ever saw one) can continue to object to the Keystone pipeline. Meanwhile, Canadian oil sands production is ramping up, one 100,000 bpd oil sands plant at a time, and the oil is backing up in Canada. Canadian oil companies and Canadian politicians are asking themselves, "Well, if we can't sell this oil in the US, where CAN we sell it?"

Chinese oil companies, who have bought up a lot of the oil sands capacity in recent years, have a few ideas on the subject. There are some obstacles in the way, notably some native people who think the white people shouldn't build pipelines across their land over their objections, but historically, this has never stopped the white people before. Well, maybe it has but not when there was a Conservative government in power.

Odds are solutions will be put in place to get the surplus oil to China in the not-too-distant future. A lot of people may object, but given the amount of money at stake, and the political clout of the players, they may get bulldozed out of the way regardless of their objections.

Rocky - "American oil men and environmentalists (an unholy combination if I ever saw one)...". As been said many times: the enemy of my enemy is my friend. I do beleive the vast majority of the population doesn't understand that the great majority of US oil producers are praying Keystone doesn't get built. Ties back to the previous discussion about the public not understand the system.

Meanwhile, Canadian oil sands production is ramping up, one 100,000 bpd oil sands plant at a time, and the oil is backing up in Canada.

Precisely what environmentalists are hoping for. They see oil sands as producing much more CO2 than other oil production.

It's true that Canadian production is a bit more reliable than KSA production, but it has the same effect on the US' balance of trade.

Because the basic refinement burns lots of natural gas I presume. Heating up the sand has to use some joules. I would like to get an intuitive feel, volume of sand versus volume of oil, which could be used to estimate extra CO2 and EROEI as well.

"it has the same effect on the US' balance of trade" No. Richer Canadians and a higher loonie has a different impact on U.S. balance of trade than richer Saudis. My grandmother's next-door-neighbor in the AZ neighborhood where she lives is a retired Canadian, he's not the only one on the block.

Good point - Canadians are much more likely to recycle the $ to the US.

Such is true, the dollars do get recycled. Canadians are the #1 out-of-state buyers of real estate property in Arizona (attracted by the fire-sale prices).

The snowbirds need somewhere to stay in the winter when the Great White North is frozen. They just need to spend at least 6 months a year in Canada so they're still eligible for free medicare. And who wants to spend summer in Arizona anyway?

They sell their big, suburban house in Canada, take the pile of cash from it, and buy a big, suburban house in Arizona plus a small condo back in Canada, and they end up with a lot of extra money to spend on golf fees.

It's real easy to buy a foreclosed property for cheap in Arizona if you show up and offer the bank cash.

I left a voice mail with our oil purchaser, inquiring about barging our oil from West Central Texas to Louisiana, but he hasn't returned my phone call yet.

wt - You might check with FedEx...they might cut you a deal.


As a Texas land and mineral owner, this is exactly our feeling. This crap Canadian "oil" will be dumped on to our market at lower than market prices just like they do with their trees. The same thing has happened with both oil and trees from South America as well. The POO is finally back to where there are good leases and wells being given and drilled here in Texas. My partnership has closed three new leases this year and is in the process of doing a fourth really big one. The one we closed in May was only for 12 acres in Grimes County but the royalty checks are about $6k/mo. The well is 890 acres and is making $2m per month.

If the well Range Resources is drilling right next to one of our Walker County properties turns out like this, our checks could be in the $200k/mo range, assuming we get pooled into that well. If we were to have the Canadian oil dumped on us then prices would drop substantially. Unfortunately, we are not getting $100/bbl for our oil, only $80 but we are getting $7.49/MCF for the gas as an offset I think. I don't know what kind of deal the operator has going but that is what our royalties show.

ROCKMAN, where is your oil produced so that you get it on a barge?

..... we are getting $7.49/MCF for the gas as an offset I think. I don't know what kind of deal the operator has going but that is what our royalties show.

That is about the same as the ND bakken. The sales contract provides for a netback of NGL plus methane sales. The ND bakken associated gas has a BTU content of up to 1800 BTU/mcf.

Too bad the operators are flaring so much of it.



I could not have said the arguements against Keystone XL any better. Building the pipeline is a win ONLY for the large Independent Oil Cos. and a loss for the consumer in the entire middle part of the US.

I am not against oil cos. and refiners making a profit, in fact I just made a cool 35% profit this year on TSO. But to promote this pipeline as being in the interest of the typical US citizen is nothing but a lie.

Furthermore, as the price of oil from tar sands rise, so will the production, thus putting far greater amounts of CO2 into the atmosphere over a much shorter time span. Its not the total amount of CO2 (and methane) thrown into the atmosphere from now to eternity, but the rate! And that rate will increase as more tar sands are produced.

Keystone XL should not be approved based on facts about advantage to the US. Overall it will result in higher fuel prices thus further hindering the US economy.


"There will be no ADDITIONAL release of CO2"

I think the general consensus among scientists is that current levels will soon lead to irreversible rogue weather changes, so diminishing the co2 levels is a minimum requirement. And very soon ("yesterday").

The year 2011 was a record year in the U.S. for weather disasters in terms of each costing in excess of $1 billion dollars.

The snow fall / snow pack is down 500% in some places compared to last year, which will impact those areas in 2012 differently, in the sense of less flooding but more drought. One can only guess where the rainfall will go to cause excess in a new location. And as the polar ice over land melts there will be even more moisture available for even more rain:

Last year, emissions from burning fossil fuels rose by 5.9%, bringing the total rise since 1990, the baseline year for calculating emissions under the Kyoto protocol, to 49%, an average rate of increase of about 3.1% a year ... The study, published in the peer-reviewed journal Nature Climate Change, found that global carbon emissions were likely to carry on increasing at a rate of about 3% per year. It was accompanied by another study offering new proof that climate change is linked to human activities, in burning fossil fuel ... These two new results offer a stark message. Human carbon emissions are certainly disturbing the climate system upon which we depend, and in spite of the economic slowdown, and despite all the efforts by governments, businesses and people to reduce them, our emissions are reaching new highs. The climatic consequences, already emerging, will grow over time, and are irreversible.

(Damage Has Been Done). Irreversible is the operative word. Once that sets in the addicted government's policy will, at best, be triage.

Hi Dredd,

I am well aware of the climate change issue, and believe the odds are good that it is being UNDERSTATED by the scientific establishment.

But this is a case where in geopolitics seriously trumps scientists who think stopping the pipeline is going to help;all that will change as a result of their efforts is that it will be built to the Pacific coast, and a few more bau republicans will get elected to congress..

I am scared as hell of climate change, which I believe is already changing my local environment for the worse, although I am certainly enjoying our California weather here in the mountains for the moment.

To paraphrase the minutes of a cracker barrel conversation recently overrheard at the local country store-which has a tv tuned into a cable news channel most of the time :

But old farmers like me is hard headed old coots, and a life time of living in the business world as growers'n sellers larns us not to be fooled by pretty argyments about things that ain't so.;-)

It ain't so that them scien'ists and their buddies them tom fool treehugging whale lovers is gonna shut down the world and keepa eatin.I ain't even got no mule no more. What'n hell thep spect me to do for diesel to raise sunmptn for'em to eat?!

Wait'll their women finds out that they ain't a gonna get no more new cars and fancy outfits and trips to th beach!They'll sang a diffurnt tune n,They'll all git kicked out an th from n on them women'll vote 'publikin like they would now if n ay had any sense.

Nobody ever went broke overestimating the ignorance and stupidity and cupidity of the public.

My experience as a former teacher leads me to believe that it is infinite, and therefore CANNOT be overestimated.

As times get worse-which they will-the backlash against environmentally based initiatives which cut into living standards short to medium term will grow so large and powewrful as to stop all such initiatives cold.

We need to pick and choose our fights.

If I were a younger guy and an activist, rather than an armchair curmudgeon, I would work for a tax on imported oil the proceeds being earmarked to conservation and efficiency initiatives.I believe I could sell that sort of thing to the public.

But as I see things, our best but still slim hope is that the slide down from the peak be slow and prolonged and peaceful, giving the renewables industries time to grow up enough to truly compete with fossil fuels.I believe ten more years of bau will see us there, and then new zero energy houses, etc, can be built at COMPETITIVE prices.Older house and essential structures such as schools and hospitals can then be brought up to standard at competitive prices

We are probably closer to economic collapse as a result of unbearably high fossil fuel prices , with consequent wars, than we are from climate change.We need to cross these bridges as we come to them, keeping in mind that solutions that might be technically feasible are non starters unless they are also politically feasible.

If I were to be by some magical means transformed into the dictator of this country, I believe just about every member of this forum would get behind me in a hurry once he found out that I meant serious business, which would include such things as a gradually rising gas tax-maybe a quarter a year;a pound weight tax on all new noncommercial vehicles;refundable tax credits for energy efficiency measures such as adding insulation;three day a week mail delivery;offers to buy renew-ably produced fuels at a firm fixed price, but no subsidies to businessmen who will live high on the hog while running through the money;a serious reduction in our military forces;

freely organized schools publicly funded;

an overhaul of building and zoning codes placing heavy emphasis on energy conservation and efficiency;

research into biological methods of pest control;

removal of all incentives to having large families;

the restoration of our industrial base, thereby putting our poor people back to work rather than on welfare-which threatens to break us all;

the establishment of a new business model in the health and medical fields, based on the more successful European models.

Requirement that all cars get higher gas mileage every five years or so, and that for every new car sold, one must be a working man's priced electric people's car.

A CCC that busies itself with bike paths and sidewalks and solar farms and solar hot water heaters.An agricultural extension service that emphasizes small scale local agriculture, and a regulatory apparatus that supports rather than inhibits the same.

A requirement that all advertising for unhealthy foods be matched by equally large ads spelling out the health consequences of consuming such food

I could go on, but this should suffice.

Above all else, I try to be a realist.It behooves all of us to be realists.

As usual, I beg pardon in advance for my one finger, one eye typos and lack of literary polish.I don't want to take all day to get a comment exactly right but I could do better if I took the time to do so.

Hi oldfarmermac,

Your points are well taken.

I would add to your list only that we update the national power grid.

BTW, IMO "reality" is simply another word for "what happens when the stubborn oil baron power brokers, who know it all, kill many, many millions of people with their willful ignorance, and then blame it on someone else."


All excellent ideas! I am not sure that welfare will break us, but I agree that abuse of the system should be eliminated and that those that can work should work for their welfare benefits, the best idea is private employment, but the free market is not perfect and does not always provide full employment. This is why sometimes government is necessary (though also far from perfect).

OFM for president!

This is not intended as an insult, but as a self professed conservative, many of your ideas sound quite liberal.

On the education front, how does one decide the amount of public funding each freely organized school receives? How do you prevent some schools from cherry picking all the best students?


The words liberal and conservative no longer mean anything, except when used as insults or labels for factions, and the truth be told, I'm like Humpty Dumpty in this particular case, and define conservative, personally, politically, as advocating small government to the maximum practical extent compatible with ensuring the safety and overall welfare of the country while having enough , and powerful enough, government, to ensure that it can perform the essential functions that only government can perform, such as national defense.

Essential functions of government include protecting us from each other;I shouldn't have to come looking for you(rhetorically of course) with my shotgun because you are running a business up stream of my farm and dumping poisonous waste in my water supply.Nor should your downstream cousin have to confront me for selling milk laced with tuberculosis and thereby infecting his kids with it.

Good policy is good policy regardless of the label applied.

Hence the EPA is a necessary arm of the government.

Government should be kept out of the business of regulating commerce except when the failure to do so endangers us, individually or collectively.

Knowing when we are endangered depends upon the voter being well informed as to the facts prevailing in respect to any particular question.

I am , if I may be so immodest as to say so, a very well informed person, with a deep knowledge of a few fields, such as education and agriculture, and a respectable level of knowledge of many others.

One very meaningful way of defining our predicament is to acknowledge the fact that the VAST majority of us are woefully ill informed in respect to the sciences-this includes nearly all businessmen, most teachers, most lawyers, accountants..... and most especially our legislators and political leaders.Collective ignorance, in a nutshell , is the key to our approaching downfall.

At the present time, we are confronted with problems that are beyond the ability or desires of individuals and businesses to accomplish, such as the necessity of morphing the economy into a new form based on renewable energy.

We are confronted with businesses destroying the environment, upon which even the richest man depends for life.

We are facing a situation wherein poor people, deprived of an opportunity to earn a living, will starve unless supported by government;and even if one takes a raw Darwinian view of their suffering,it is good policy to support them rather than have them burn the rest of us out and shoot us on sight, taking revenge for their suffering.

We are confronted by businesses "too big to fail".

We are nickeled and dimed and bled to death by a thousand cuts as a result of government colluding with businesses for the benefit of special interests.

For instance it takes as long to get a barber's license as it does to get as associate degree enabling one to test for the registered nurse professional license.The nursing curriculum devotes about an hour to caring for the hair and beard-which is plenty, given that sanitation is covered separately.

We pay fifty percent or thereabouts of our automobile insurance premiums to lawyers, rather than accident victims.

We are subject to blackmail by unions of public employees, who are politically influential enough to ram through benefit packages an order of magnitude beyond anything affordable to businesses in a truly competitive situation.I would gladly have farmed all my life, but I hadn't a chance in hell of affording health insurance farming on a small scale, and no chance whatsoever for a pension, and no chance of having a high standard of living with holidays off......


In a big government environment, we are besieged by a million supplicants for a handout from the public trough, such that we are simply overwhelmed by the volume of them.I can stand another hundred such parasites if each one of them costs me only a single US penny a year;but another million of them at a penny each per year per taxpayer would put ME in food stamp territory.

But each supplicant stands to gain a living, maybe even riches, if he gets his program or subsidy approved.Therefore while I as a taxpayer am engaged in swatting ONE misquito, a hundred others are getting their drop of my blood, to be followed by another hundred........... while another hundred are taking aim at the public purse........ in oncoming waves... forever.....

Now of course some of these people do some useful work, and are thus commensals(organisms that mutually support each other are commensals), but the majority of them actually gum up the economic wheels and cost us as much more in lost productivity as they do in direct subsidies.

A well informed small government society would pass a carbon tax;a society captured by the big government philosophy might or might not pass some sort of carbon pollution controls;the most likely one to pass is estimated by respectable members in this forum to result in seventy percent of the funds allocated to it to be consumed by the parasitic classes of bureaucrats, bankers, lobbyists, lawyers, etc.So instead of accomplishing the goal and collecting revenue, we pee away revenue.

A society governed under basic conservative principle of limited government dedicated to the welfare and well being of the people would not countenance banks to big to fail, or hair dressers or lawyers or teachers or plumbers controlling their professions in such a way that the rest of us, the vast majority of us, are materially harmed.

A government not captured by special interests would not allow our industrial base to be moved overseas so that our ability to defend the country is imperiled, and our working classes thrown into the streets.

Good sense is neither liberal nor conservative.

Well intentioned and well informed people almost always agree on ultimate goals;the difference between me , as a self defined conservative, and the rhetorical "you"of the left leaning "liberal" portion of the public is that we have a difference of opinion as to how the goals can best be accomplished.

I have never yet met anybody of any political persuasion who is not in favor of a clean, safe, prosperous, secure, peaceful, sustainable world;even madmen expect to have children and grandchildren.Unfortunately some people of course think the best way to secure such a world for their own kind is to rule it by force, and they are always numerous enough that we must maintain standing armies.

We should always remember that today's "conservative" is the grandson of his "liberal" grandfather who lived a couple of generations ago; also that if you are not a liberal when you are young, you have no heart, and that if you are not a conservative when you are old, you have no brain.

The word "liberal" has been gang raped by the neocon "conservative" political element until it has become a badge of shame to most people;and that same element has kidnapped the word "conservative" and is holding it in slavery until its usefulness in hoodwinking the working classes is expired from over work and malnutrition, when it will be tossed aside.

Right now we are in need of is a genuine "trustbuster" and conservationist at the head of our country. Our odds of getting such a leader are no better than one in a thousand.

OFM: well said. I genuinely enjoy your posts for their wisdom and balance. Happy new year. Joe B.

... if you are not a liberal when you are young, you have no heart, and that if you are not a conservative when you are old, you have no brain.

Winston Churchill quote, if I'm not mistaken?

It's a conservative quote that pretends to be evenhanded. It conveys the patronizing idea that liberals are well intentioned but out of touch with reality. Quite the contrary: what is called "conservative" is rather more likely to be unrealistic.

One example: the dusty old idea that 50% of car insurance is paid to lawyers. This kind of trope is peddled by big business, that would like to end the modest accountability provided by lawsuits.

Upon checking, I find that I was wrong, and that it is probably misatributed to Churchill. Acording to wikiquote:

"If you're not a liberal when you're 25, you have no heart. If you're not a conservative by the time you're 35, you have no brain."

According to research by Mark T. Shirey, citing Nice Guys Finish Seventh: False Phrases, Spurious Sayings, and Familiar Misquotations by Ralph Keyes, 1992, this quote was first uttered by mid-nineteenth century French historian and statesman François Guizot when he observed, "Not to be a republican at 20 is proof of want of heart; to be one at 30 is proof of want of head." (N'être pas républicain à vingt ans est preuve d'un manque de cœur ; l'être après trente ans est preuve d'un manque de tête.) This quote has been attributed variously to George Bernard Shaw, Benjamin Disraeli, Otto von Bismarck, and others.

Furthermore, the Churchill Centre, on its Falsely Attributed Quotations page, states "there is no record of anyone hearing Churchill say this." Paul Addison of Edinburgh University is quoted as stating: "Surely Churchill can't have used the words attributed to him. He'd been a Conservative at 15 and a Liberal at 35! And would he have talked so disrespectfully of Clemmie, who is generally thought to have been a lifelong Liberal?"

A couple of remarks.

Regarding "freely organized schools publicly funded", I'd have to hear more about your specific details. In places where I or my relatives have lived that have some approximation of that, too many groups want public money but are anxious to exclude "those people" from their school. For all sorts of values for "those people": wrong color, wrong religion, too poor, developmentally disabled, etc.

Over the next 20-25 years, I am actually more concerned (in the US) about electricity than liquid fuels, and suspect that some regions of the country will have large difficulties keeping the lights on reliably. The nuclear fleet is aging, and none too gracefully; there will be lots of pressure to dump coal; the distribution of good renewable resources don't align well with the population distribution. Just my opinion, but unreliable supplies of electricity will have a much more dramatic effect on a "modern" lifestyle than unreliable supplies of petroleum.

Actually, on a per barrel basis and compared to more conventional, low-API gravity heavy oils, there is more CO2 released. Compared to light oils there is no contest that there is a large increase in CO2 emissions (Exxon commercials notwithstanding that also imply that the Cnadian oilsands are somehow "our" oil because it is on the same "North American continent)."

This CO2 originates not only from the energy required to heat the oil sands (regardless of whether it is the surface extraction or in-situ process), but from upgrading the oil (think natural gas) so that it looks like something other than a gooey, somewhat flowable asphalt-like material. By it's nature, the bitumen lacks shorter hydrocarbon chains giving it a higher carbon/hydrogen ratio that pushes it out of the realm of "oil" and towards the realm of "coal."

"Additional" CO2 is not the problem... the problem is the CO2 we are producing right at this moment.

If we are to address both Climate Change, which at present levels of CO2 emissions, will cause at best near-catastrophic weather and sea changes... and Peak Oil... then we will have to face a future where not only we use less Fossil Fuel energy, but less energy as a whole to conduct our business and lives.

Barring breakthroughs before 2020 in the field of Nuclear Fusion or some other wonder-energy, that is the future we face.

Any solution that does not come to that conclusion is, in my opinion, only making it worse for one side or the other.

Second, the pipeline will be brand new, and built to the toughest standards ever established, rendering the likelihood of a major leak extremely low.We have many tens of thousands of miles of existing pipelines, built to far less stringent standards, ...

Ah, but TransCanada sought (and will likely seek again) a waiver to cheat on the safety standards.
There is insider influence going on at the State Dept.

One of TransCanada's "brand new, ... toughest standards ..." pipelines has failed recently/repeatedly.

And the company has a history of shoddy work and harassment of inspectors.

I tend to agree with the rest of your statements,
but I have to wonder why TransCanada can't commit to being honest and forthright.
It would likely cost them far less in the long run.
As it is, it reminds people of "BP on the prairie".

And while we're talking Ogallala Aquifer:
It not only faces poisoning by pipeline, but depletion - in perhaps as short as 25 years.
Given that it irrigates 27% of the irrigated land in the U.S., if it dries up, TSWHTF food-wise in the U.S. (and the world).

The next one will either be close or a Republican blowout....

Which of the republican whack job favorites de jour are you expecting to pull off this landslide ?

Eliminate the whack jobs and who is left:

Sanatorium Santorum

Actually I expect it to be close;and I do expect the republicans to win the White House if they can field a decent candidate-but you are right about the current bunch, I expected better of them earlier.

But a blowout IN EFFECT need not mean a big overall republican victory at the polls-all that would be needed from their pov would be a little luck in a few key senate and house races, which would likely give them control of the legislative branch.Unless I am behind-I don't follow politics closely these days, it looks as if the Democrats are in bad shape in terms of retirements and threatened seats.

My theory about Obama's nomination is that he came out of nowhere as a result of an "anybody but Hillary" sentiment among pragmatic and realistic Democrats.

There is some slim hope that the republicans might likewise nominate a dark horse;otherwise, I am no longer as sure as I once was that Obama's days are numbered.But I would still give five to four odds against him.

The election of Bush(if indeed he was elected) can be written off by the stain on that blue dress, imo. That and the fact that Gore didn't carry his home state. Come 2004, the democrat field was weak and they ended up with a Kerry. If the democrats could have fielded a strong(er) candidate who knows ? I see 2012 similar to 2004 in that respect.

The DNC seems convinced that Romney will be the candidate. I ran into an OWS protest where Romney was appearing. I asked one woman: what is a 'mitt' ? To which she replied, "he has his mitt out to recieve corporate donations".

If Ron Paul were the republican candidate, I would vote for him(whack job and all), but not as a third party candidate.

First off, even the most rabid opponents who remain rational must admit that the oil will be burnt,SOMEWHERE, barring an extraordinarily severe near or medium term collapse.There will be no ADDITIONAL release of CO2 .

It matters a lot, both to climate change and to the global economy, how *quickly* the oil gets burnt.

The more slowly CO2 is released into the atmosphere, the more time the ocean has to absorb it, and the smaller the peak atmospheric concentration is.

The more slowly oil prices ramp up, the more time we have to gradually adjust and capitalize on alternatives.

If I've got a twelve pack of beer in my fridge, even my wife must admit that the beer *will* be drunk, eventually. But that doesn't mean I should drink it all right now.

Unfortunately, the rate matters very little on the ultimate atmospheric CO2 levels. The CO2 sequestration has a fat-tailed adjustment time that extends for hundreds of years. This is just a diffusional property for a relatively inert molecule. If we had huge excesses of flora to trap the man-made component we could slow it, but the numbers aren't showing this. It simply passes through the carbon cycle without getting permanently sequestered.

So slowing the rate can only defer the inevitable.

That's what makes the solution so painful, if you consider warming or depletion as real issues.

I comment at ClimateEtc and most skeptics there don't consider global warming or peak oil an issue.

Unfortunately, the rate matters very little on the ultimate atmospheric CO2 levels.

It's not the ultimate level I'm worried about, it's the peak. To a rough approximation (paraphrasing David Archer), the best approximate lifetime of CO2 in the atmosphere is about 300 years, plus 25% that lasts "forever".

The ultimate CO2 level is set by the "25% that lasts forever", and for that, rate is irrelevant. But for the rest, which eventually ends up in the ocean after in a few centuries, it matters a great deal whether the anthropogenic carbon pulse lasts for 1 century or 5.

Archer, D., 2005: “Fate of fossil fuel CO2 in geologic time”, Journal of Geophysical Research, 110:C09S05, doi:10.1029/2004JC002625

That's where I was going with that, so I essentially agree.

Dave, Leviathan is reported to contain 16 TCF proven + probable reserves. Nice to have but not big enough to be a regional game changer in gas market IMO. Troll, for example in North Sea contained 64 TCF.

And when you say "no return to shortages" I wasn't aware that shortages had disappeared. Surely sustained high oil price is a symptom of global shortage of cheap oil.

Happy New Year to all.

Euan - I think you hit upon an aspect that will become increasingly devisive: what does "shortage" mean? More specificly: a shortage for who? Many societies had a shortage of energy when oil was $50/bbl...a shortage of oil they could afford. At $147/bbl in 2008 the US had no shortage of oil available. It did have a significant shortage of oil that everyone here could afford.

It did have a significant shortage of oil that everyone here could afford.

In sort of there was a shortage of money, credit crunch.

As well as the development of the Levant Basin, there is President-to-be Putin accelerating the development of the South Stream gas pipeline so that it will be on stream by 2015.

Your point about the size of Troll underlines the point that whereas it was not long ago that we were looking at bringing LNG to the USA from Qatar to help cover anticipated shortages, the LNG facilities are now being examined to see if they can be reversed and allow LNG exports from the US.

It does not take a whole lot of extra production to drive prices down (Azeerbaijan was getting $61 per kcm last year because it was selling into an oversupplied market). There is enough conventionally available natural gas that it will be hard to make much profit from gas shales for a while, unless the political freedom in places such as Poland is factored into the equation.

I expect that the Poles will push hard in exploiting there gas finds irrespective of low prices The politics of a secure local gas supply will be paramount in there thinking. The political independence it would give them is more more attractive than cheap gas from Russia or anywhere else for that matter.

yorkie - I agree. Same reason almost all US operators would like to see the Keystone pipeline NOT built: political independence from the Canadians is more attractive than cheap oil from Canada or anywhere else for that matter.

Point one. Am I missing something?
Have just looked at Energy Export Data Browser.
Presume Jonathan counts 'shale gas'?
Late 2000s to 2010 saw an uptick in USA NG use, (and in USA production) but US was still a NG net importer; i.e. it was still necessary to buy from abroad to satisfy a market?
Although imports had gone down from year 2000 to more recently, US imports went up again 13% in 2010.
Seems unlikely there was a massive change in 2011?
Not much 'surplus' NG that I can see overall in the USA just now?

Point 2. Is a lot of domestic US NG production in the 'wrong' place, so that in a few places a local 'surplus' can be shipped abroad for profit rather than sold across the USA?
( NG is 'cheap' generally in USA just now is it not? Big price drop in last 3 years. Does that contradict the fact of continuing being a net importer?)
LNG is neither a storable commodity nor fundamentally cheap, and an ordinary pipeline network infrastructure must exist at the receiving end? Cheapest scenario must still be a large pipeline direct from a large source to a very large market distribution network? So calculating future profit must get complicated. Reversible LNG terminals could be a useful tool if both 'local' and world wide NG & LNG prices are going to fluctute? Somebody must be calculating that future NG shortages will be happening somewhere in the world, home or abroad, if they are investing in such expensive infrastructure?

LNG facilities are now being examined to see if they can be reversed and allow LNG exports from the US

Converting regasification plant into an LNG compression train will pose some challenges:-)

And not sure how this fits with US goal of petroleum independence.

But sure, recession combined with shale gas has led to glut of expensive gas in USA being produced at a loss - part of the American Dream;-)

Much UK nat gas imports still have to make its way through Hormuz and Suez - just to keep our lights on.

A Review of Annual Brent Crude Oil Prices Versus Global Production & Net Export Data
(A Tale of Two Price Doublings)

Here is a link to EIA data showing annual Brent prices:

Here are the annual Brent crude oil prices from 2005 on, along with the rates of change relative to 2005:

2005: $55,
2006: $65, +17%/year
2007: $72, +13%/year
2008: $97, +19%/year
2009: $62, + 3%/year
2010: $80, + 8%/year
2011: $111*, +12%/year


The 2011 annual Brent price is about twice the 2005 annual price, and it is the highest annual crude oil price ever, up 26% over the annual 2010 price, and up 14% from the annual 2008 price.

Note that we have had two price doublings since 2002, from $25 in 2002 to $55 in 2005, and then from $55 in 2005 to $111 in 2011.

In response to the first price doubling, we did of course see a substantial increase across the board in total liquids production (inclusive of biofuels), total petroleum liquids, crude + condensate, and in Global Net Exports (GNE) and in Available Net Exports (ANE).

In response to the second price doubling, we have seen a very slow rate of increase in total liquids production (up 0.5%/year from 2005 to 2010), virtually flat total petroleum liquids and and virtually flat C+C production (through 2010), and a 1.3%/year and 2.8%/year respective decline rate in GNE & ANE (through 2010). I estimate that the ANE decline rate will accelerate to between 5%/year and 8%/year from 2010 to 2020.

I estimate that the current CANE (Cumulative Available Net Exports, post-2005) depletion rate could be on the order of about 8%/year (versus a 2005 to 2010 2.8%/year rate of decline in the volume of ANE). The CANE depletion rate would be the rate that we are consuming the cumulative post-2005 supply of global net exports available to importers other than China & India. Based on a simple model and based on actual case histories, note that it is common for the initial depletion rate to exceed the initial annual rate of decline in net exports.

Here are the observed rates of change for key liquids measurements for 2002 to 2005 and for 2005 to 2010 respectively (respectively corresponding to first Brent crude price doubling and to most of second Brent crude price doubling):

Production/Export Measurement, 2002 to 2005 rate of change, 2005 to 2010 rate of change (change between the two)

Total Liquids (EIA, Including Biofuels): +3.1%/year, +0.5%/year (84% reduction in rate of increase)

Total Petroleum Liquids (BP): +2.9%/year, +0.15%/year (95% reduction in rate of increase)

Crude + Condensate (EIA): +3.1%/year, +0.08%/year (97% reduction in rate of increase)

GNE (BP + Minor EIA data, Total Petroleum Liquids, top 33 net oil exporters): +5.2%/year, -1.3%/year (shifted from increasing GNE to declining GNE)

ANE (GNE less Chindia's combined net oil imports): +4.2%/year, -2.8%/year (shifted from increasing ANE to declining ANE)

Five annual "Gap" charts follow, showing the gaps between where we would have been at the 2002 to 2005 rates of increase, versus the actual data in 2010 (common vertical scale):

EIA Total Liquids (including biofuels):

BP Total Petroleum Liquids:

EIA Crude + Condensate:

Global Net Oil Exports (GNE, BP & Minor EIA data, Total Petroleum Liquids):

Available Net Exports (GNE less Chindia’s net imports):

I would particularly note the difference between the first chart, total liquids, and the last chart, Available Net Exports (ANE).

CERA, et al tend to focus on the total liquids data while ignoring the GNE & ANE data. Since Yergin is now calling for less than a one percent per year rate of increase in total liquids productive "capacity," which is similar to what we saw from 2005 to 2010 in the EIA total liquids data (+0.5%year), it seems to me that Yergin is, almost certainly without realizing it, in effect predicting a continued decline in GNE & ANE:

Two GNE & ANE scenarios:

0.1%/year Production Decline (2010 to 2020), Top 33 Net Oil Exporters:

1.0%/year Production Decline (2010 to 2020), Top 33 Net Oil Exporters:

Thank you, WT, that's an interesting price history, and an interesting (non-) response from oil producers. I live in Asia, and it seems to me that this part of the world has not found the increase in prices to be a difficult burden. Quite simply, the East is out-bidding the West for an increasing share of a (for now) fixed supply-rate of oil.

Who knows what the future will bring, but here is a look at some oil consumption data in key countries and in a group of countries (top 33 net oil exporters):

Thus my definition of Available Net Exports (ANE) as: Production by the Top 33 Net Oil Exporting Countries, less consumption by top 33 exporters, less China & India's combined net oil imports.

I've described focusing on (very slowly) increasing total liquids production (which includes low net energy biofuels) while ANE fell at at average volumetric rate of about one mbpd per year for 2005 to 2010 as being analogous to passengers on the Titanic discussing dinner plans in New York, after the ship hit the iceberg.

With the East outbidding the West, it seems to me that we can assume that the East is using the oil and its products for more productive purposes.

Who is willing to pay more for fuel, a farmer using it to till the land, or a suburban dweller using it to commute to work? Who can endure a price increase easier? Which of these will be able to switch to an alternate at some price point?

I once seen a link to some good grafic detail of the end use of oil in the US, but it got lost when the last computer died. It would be interesting to see how the end use data for the US stacks up to that from the rest of the world in general, and Chindia in particular.

Some review of that information would possibly show who could absorb the higher prices and continue to outbid others for the oil.

At some point I believe the individual consumers, at least those not very well off, will be forced by high prices to do without or at least with very little.

If a US consumer switches from a Tahoe to a Prius, have they been "outbid"?

Are they worse off? They're still getting from point A to point B, and spending even less money than when oil prices were low.

Given the expressed market preference of the American public for SUV's over compact sedans when the price of oil is low -- Yes, they have been outbid. However, if they kept their Tahoe rather than trading it in then they probably ARE better off if they are driving the Prius most of the time and the Tahoe only when they need to do something the Prius won't or when they need an additional vehicle (most likely their third) simultaneously.

Yes, they have been outbid.

Technically, I'd agree. The point, however, is that they really have lost very little. The additional utility/value of the oil used to drive a Tahoe is very small.

So, the term "outbid" in this context has a slightly inappropriate connotation of a large drop in quality of lifestyle.

You can't tow your boat or travel trailer or horse trailer or utility trailer in a Prius. Doing more than going to lunch with 5 people is uncomfortable. If all you are doing is moving 4 or fewer 180lb or less people from point A to point B over well-maintained roads, then the Prius is great. Since that's the majority of what we do with cars, that's fine, most of the time. It isn't all everybody does with cars or even all most people do with their vehicle.

I went grocery shopping with my grandmother (88), aunt (66), and mother (65), in my Mom's Prius over the holidays. I've always liked the car, but it reminded me of the cargo limitations of a compact.

Well, sure. In this case, I'm using the Prius as a metaphor.

The original comment to which I replied said "At some point I believe the individual consumers, at least those not very well off, will be forced by high prices to do without or at least with very little." This suggests that reducing oil consumption is necessarily very painful, and will cause deprivation.

I'm suggesting that we can greatly reduce or eliminate oil consumption without deprivation. Hybrids, EREVs and EVs can do everything ICE vehicles can do, and do it better and cheaper.

I guess I'm in the middle. We will be forced to reduce consumption of liquid fuels by price, if not by other pressures. Some of the reduction will come in energy efficiency gains, with associated capital costs potentially reducing consumer's discretionary income (depending on the cost-effectiveness of the efficiency gain), and some will come in the form of curtailment (directly reducing what consumers are able to do and have).

If I understand you correctly, you believe that there is a lot of low-hanging fruit in the form of efficiency gains which will not only reduce fuel consumption but also result in consumers saving money despite higher fuel prices. This is sometimes referred to as the energy-efficiency 'gap.' I think you are right, but I think the ability to invest profitably in this gap is out of the reach (due to information and capital deficits) of much of the bottom 50% of the population, so that they are stuck with the 2nd type of conservation.

Sure. People who rely on used cars will be forced to make do with small fuel efficient cars until hybrids and EVs become available.

Don't forget, a Prius costs substantially less than the average new car price, and uses only 40% as much fuel as the average new car. It would be easy for most people to cut their car-related costs if they want to.

MOST people drive used cars.

Lots of the folks not in the upper-income brackets need vehicles which are not small or fuel efficient.
The "average new car price" is a mean and includes SUV's and luxury sedans. New cars are not representative of the median consumer. The median vehicle is nearly 11 years old. The median worker (there are fewer workers than cars in the U.S.) makes $26K/yr. The average vehicle tenure is 52 months. This means the median vehicle is on its third owner, who bought a vehicle that was 9 or 10 years old with over 100K miles for less than $5K. The average used car price in 2008 was $8200. This includes second owner cars, and is significantly more than the median car value.

MOST people drive used cars.

Well, technically everyone does...

Lots of the folks not in the upper-income brackets need vehicles which are not small or fuel efficient.

First, most people don't need SUVs or pickups. 2nd, work vehicles can be hybrid or EV.

The "average new car price" is a mean

Yes. Very expensive cars probably make the mean a bit higher than the median, but not by much.

The median vehicle is nearly 11 years old.

50% of vehicle miles are driven by vehicles less than 6-7 years old. The median age of the overall vehicle fleet doesn't tell us how much old cars are driven (which isn't much).

There are used hybrids available, and their depreciation is lower than ICEs, but not enormously lower. Not yet.


I agree that it will take a little while for hybrids and EVs to become available as used cars in large volumes. Low income drivers will have to carpool and drive small efficient cars like Civics and Corollas. And, yes, low income drivers will be hit harder by PO until the transition from oil is over.

In re your reference to 'people who rely on used cars.'
The majority of people drive cars which they purchased used and must rely on them because that is what they can afford.
The median new car price is lower than the mean new car price, yes, that was my implication. Further, the new car price has little to do with what the average American is paying for his vehicle. The average American makes less in a year than the average new car price.
Those new cars that make up that 50% of mileage are being driven primarily by the price-insensitive. The median vehicle age lets us know what the median American is driving, and how he's going to be squeezed by fuel prices. The average American will be outbid for gasoline by world markets and will have to curtail consumption, since efficiency investments will not be widely available to him, since the vehicles available to him (in his price range) consist of what the new car buyers purchased when oil prices were low. This will improve more slowly than depletion of ANE proceeds.

Corollas don't do well as lawn service vehicles. How many hybrid/EV work vehicles do you see coming on the used market in the near term?

benamery and nick,
There are 3 major groups of vehicle users;(1) people who need vehicles for work often light trucks, utes and pick-ups but not needing very large engines that are popular with <$4/gallon fuel. Fuel is usually a small part of the business gross income but essential (2) people who need a vehicle to commute to and from work or choose to drive rather than walk or use mass transit. These people can make savings by car-pooling or replacing present vehicle with a much higher mpg vehicle(new or used). They can also economize on non-commute driving.(3) those who either dont work or dont commute or walk or use mass- transit, but use a vehicle exclusively for shopping vacations and leisure activities, driving children to school and other activities. This group has a lot of flexibility as fuel prices increase.

As fuel prices continue to increase ($10-$20/gallon range) the business vehicle use will have to adapt where fuel becomes a major expense. In my lawn/garden care business my Toyota workmate fuel consumption accounts for <3% of gross income but I can imagine that others businesses could be using more fuel would have to change their business plans or use more fuel efficient vehicles.
All of the other car users have a lot of options including hiring a pick-up or larger vehicle the few times they have to collect fire-wood or a large group of people or tow a horse/boat/camper van. I dont see even $20/gallon fuel preventing most vehicle drivers from having a similar life-style as they have today providing they have time to adjust to the higher prices. Since most fuel efficient vehicles are cheaper and will retain higher resale value consumers may end up spending less of total vehicle costs with $20/gallon prices than they do today with <$4/gallon prices. If they also buy less fast food(on the road) and walk a little more they may also be a lot healthier.
Prolonged fuel prices >$20/gallon will be the death of most ICE vehicle manufacturing when PHEVs and EVs are widely available at similar prices.

Neil's thought above are good.

I'd add that I think you're focusing too much on the poor. Yes, they deserve our help and compassion, but...they're not representative of drivers (many of the poorest quintile use mass transit). The median driver is precisely the driver at that median point of vehicle miles: a 6-7 year old vehicle.

Other interesting thoughts: if you take a look at Carmax, you'll see that:

1) the median price for all their US used 2006 model year light vehicles is about $15,500 (search the whole country for 2006 models, and then narrow it to under $15k - you'll see the number drops by a little more than 50%), and

2) the median price for a 2006 hybrid is about $19k. Higher than for all vehicles, but not dramatically so - a couple of years of gas savings would pay for it.

3) it's possible to get hybrids for around $13k (search for hybrids under $14k).

I am using median vehicle as a proxy for median driver. You are using median mile driven as a proxy for median driver. Neither of these is precise. Some drivers own more than one vehicle, some own less than one (poorer families share vehicles). Some people drive 50K miles per year, others drive less than 12K. Both of these proxies vary primarily with income, but miles driven varies more. You seem to want to conflate my arguments about the 50th percentile American with arguments about the bottom 20%, by which I deduce that you do not realize how relatively poor the 50th percentile American actually is. A 2006 used vehicle will typically be purchased by someone in the top 50%. This is not to say that some Americans don't buy 'too much car.' There are people in the bottom half who buy new cars on credit, and probably more of them who buy 6 year old used cars, thereby reducing their purchasing power for other goods, but that isn't the median vehicle, and it has a higher average price than the median vehicle purchaser pays. The average used car is considerably older than 2006 (which makes sense in that most 2006 cars for sale are single-owner vehicles based on the average vehicle tenure).

As you note, the bottom 20% has it pretty hard. What I am trying to convey to you here is that rising fuel prices push the next 30% down that slope as well.


Thanks for the links to charts and data on net oil exports.

The most important data in your post IMO is the fact that "available net (oil) exports" is declining at 4% per year now.

Since the US is the largest net importer at 60% of 18 mbpd, the decline in oil available on the world export market means continually higher prices. The only way to contain prices is by using less each year, either by efficiency improvements or demand destruction. Due to the choices of our government and the sagging economy most will come by the later method and thus economic growth is stalled or will run negative from now on.


Your numbers clearly show what has happened and I am always glad you publish them, thankyou.

Just to add to the magnitude of what they show, I have extrapolated the following.

In 9 years we have had an average increase in the C+C numbers of ~1.1%/Yr, yet have had 2 doublings of the price. In the next 9 years we are unlikely to have an increase of 1.1%/Yr in C+C, yet 2 doublings in price would take the price to ~$440/bbl.

If we add the decrease in ANE to the picture, along with a possible decline in production by 2020, then $440/bbl is looking like an optimistic scenario.

My "fearless" prediction was that we would see a series of price doublings, but given the demand uncertainties, it was impossible to predict the time periods between the doublings. However, from 1998 to 2011, Brent has shown three annual approximate "doublings," from $13, in 1998, to about $111 in 2011. Note that the time periods between the doublings has been increasing, from two years (1998 to 2000), to five years (2000 to 2005), to six years (2005 to 2011).

I have previously noted the pattern of higher highs and higher lows. The post-1997 annual year over year price declines were 1998, 2001 and 2009. Note that each successive year over year decline, after 1998, was to a level that was at least twice the low reached during the prior year over year decline. If this pattern holds, the next annual year over year decline in Brent will bring it down to an annual average price of about $130. Time will tell.

Annual data table:

The resource assessments for the area including Leviathan are quite a bit larger than 16 TCF. The geologic potential is apparently quite substantial.

I believe this is the correct geologic link.

That's not quite the right area - though it certainly does add to the case.

Here's the correct information for the Levant Basin:

Levant basin holds 122 trillion cubic feet of natural gas

Thanks for the links. The USGS are famous for just making big resource numbers up. From what I can tell Leviathan is at an early appraisal stage by companies I am unfamiliar with. This looks like quite deep water in an area with no infrastructure.

The USGS are famous for just making big resource numbers up.

Basing something on the geologic likelihood of occurrence isn't called "making big resource numbers up". Do you have a reference to anyone else who publishes probabilistically quantified and geologically based resource numbers for this region?

"The USGS are famous for just making big resource numbers up".

"Basing something on the geologic likelihood of occurrence isn't called "making big resource numbers up". Do you have a reference to anyone else who publishes probabilistically quantified and geologically based resource numbers for this region?"

I had a discussion with several of the members of the Sub-basin Assessment Team "recently" regarding the "undiscovered, technically recoverable oil, natural gas and natural gas liquid resources" in another basin. In other words, these are the resources that could be recovered if there was unlimited supply of $ for capex and opex, and the sales price of the product was affordable by all.

This sounds like socialism to me, and I'm all for it, I can remember rationing.

The F95/F50/F05/F mean values calculated by USGS are resource estimates without any economics run.
They are also (2) "fully risked". Don't ask me to explain that contradiction ... I'm going to AAPG at Long Beach and I might find out.

USGS gets its resource numbers used for calculations per basin from IHS, and "where they get their numbers from, your guess is as good as mine" quote-unquote. And "the State Department won't let us field check because of the risk".

As a simple rule-of-thumb, use USGS F95 value as an approximation for P50 of what could be recovered from any given mature basin. The offshore Levant Basin (USGS FS 2101-3014) is an immature basin except offshore Palestine and Israel, where is is submature. And there is very little infrastructure, except into Israel.

I'd like a go at offshore Syria and Lebanon, myself. THEN, and only then if successful, ill the Levant Basin be a serious player in Europe competing against Libya, Algeria and the FSU. The gas from Leviathan will go to Israel to displace Egyptian imports for 25 years, and everybody will be happy for a generation.

The F95/F50/F05/F mean values calculated by USGS are resource estimates without any economics run.
They are also (2) "fully risked". Don't ask me to explain that contradiction ... I'm going to AAPG at Long Beach and I might find out.

Geologic risk relates to presence of source rocks, thermal maturity, timing, trap and charge of reservoirs, etc etc. Any economic overlay is done (sometimes) separately. I asked in New Orleans.

I would add, are you aware of anyone else who does this kind of work, and then provides the conclusion to the analysis, working from the basis of the geology, and quantifying the uncertainty in their estimate?

Certainly all of us are capable of "making it up", but claiming that entire scientific organizations specialize in it seems to be a bit of a stretch without at least another organization doing similar work to compare it to.

"Geologic risk relates to presence of source rocks, thermal maturity, timing, trap and charge of reservoirs, etc etc. Any economic overlay is done (sometimes) separately. I asked in New Orleans".

That's not including political and economic risk. And no, they don't do non-geological risk, I've been asking for years.

"I would add, are you aware of anyone else who does this kind of work (insert ... on a global or continental basis and publishes the results publicly), and then provides the conclusion to the analysis, working from the basis of the geology, and quantifying the uncertainty in their estimate?"

The GSC's blue books in Canada were up-to-date for the WBSB and Canadian Frontier basins when they were published. The WCSB books are now historical documents WRT discoveries and field size plots, but the geology is still solid.

The overall views by Heading Out on both crude supply and overall economy are valid. As (s)he says, any respite from the actual peak of conventional crude will be short-lived; the resulting continued high prices will remain a problem for the overall economy.

The world economy has another strong pull, that of climate change. As extreme weather becomes increasingly costly to the economy, and as study after study documents climate changes that appear to be caused by higher CO2 levels in the atmosphere, the body politic is beginning to demand action. The developing countries in Durban agreed that the situation requires negotiation of binding controls; the Obama administration believes that a strong environmental message will help it hold onto the White House.

By not acting 20+ years ago the world economy now finds itself between a rock and a hard place -- impede the economy with the costs of CO2 restrictions or burn coal, tar sands oil, etc. to keep powering the economy and climate adaptation costs impede the economy instead.

Much of the world that our children and grandchildren will inhabit will depend on how the world responds to this conundrum.

And yes, a very Happy New Year to all.

Since it makes for a more peaceful and fruitful discussion of fossil fuel issues here I post my comments on climate change elsewhere . I would point out, however, that there are a number of scientists who have studied the topic of extreme weather events for some time (Dr. Curry at Georgia Tech being one ) who, based on their scientific findings, disagree with you.

The more valid, for this site, concern with climate change issues relates, I believe, to the problems that the governments who have been introducing sustainable energy alternatives are now encountering with being able to afford the feed-in tariffs that they had promised for solar and wind, and the impact that will have on investment and the planned replacement of fossil fuel plants over the next few years.

In my comment above I mention a very recent report from the journal Nature: Climate Change that comes down on the side of the consensus of scientists, which is that climate change is a result of fossil fuel use.

Don't you mean "Global Warming"?

Much of this is just climate change due to emissions. A recent study came out showing the preference for hailstorms and tornadoes during the work-week.
Compiling data over 15 years, on average over 45 hailstorms occur in the middle of the week, Wednesday, versus less than 35 on a weekend day.

This is predicted due to the increase in aerosols during industrial and commuting work days, which concentrates water vapor nucleation into droplets suitable for extreme weather events.

I have to digest the statistics, but 45 events per weekday, 52 times a year over 15 years gives over 30,000 events for a weekday and less than 25,000 events for a weekend day. Try that experiment with random draws and the standard deviation would be closer to 200 events and not 5000. So they think it is statistically significant, and I would agree. Americans can actually change the extreme weather patterns by BAU!

The statement makes it sound like Dr. Curry is an expert who's scientific findings are frequently validated by other researchers and carry great weight in scientific discussions related to AGW. Such is not the case.

Dr's Curry, Lindzen, Christy, and Pielke, when writing on the subject of AGW, have a miserable record of validated scientific opinions/results. None of the business people here would hire any of them if the need was to know what the data actually said. There are a host of other scientists who do have good track records who you would turn to.

Alternately, as Rockman often states when he is commenting on business decisions in the oil paraphrase .."many business decisions are based upon money flows, profit potential, stock manipulation, etc, and have nothing to do with the actual reserves, data or what is best for the long term", one may have a need for an expert sounding opinion for entirely different reasons. Should that be the case then they might be very helpful.

Just saying.

I read almost everything that appears on TOD because I find it interesting. The in's and out's of the energy industry, energy supplies, "peak oil", the impacts these issues will have on BAU (or our current version of civilization), etc. I find a lot of food for thought in the comments of many of the posters here.

But I try hard to not lose sight of other issues. AGW is scientifically proven. All that remains to be determined is how fast the changes are going to come, how big the changes will be, and do we have any chance left of mitigating the situation or are we stuck with what adaptation we can manage.

It matters not how much additional fossil fuel supplies we can find when we change the subject to AGW. If we burn what we already have our hands on the results will be catastrophic for our species and most others. AGW is not just the most important problem of our time (sorry Peak Oil) it is the most important problem our species will face period. TOD can do better on this issue and it should.


Wyo - Well put except I disagree with one statement: "AGW is...the most important problem of our time...". Actually it's not. But it may well be the most important problem of "their" time. They being future generations. And, sadly, isn't that the root cause of many of our problems: beneficiaries vs. victems. And given that many who suffer negative consequences either have little or no influence or perhaps aren't even alive to argue the situation.


No argument there. I agree. But I feel responsible and it is only people in our time who have the option of significant mitigation. Future generations will only have the options related to adaptation. A much harder and more expensive problem. In such a situation we bear the ethical burden and it should be considered "our" problem. But I have no doubt that you are right about how it will play out.


By not acting 20+ years ago the world economy now finds itself between a rock and a hard place -- impede the economy with the costs of CO2 restrictions or burn coal, tar sands oil, etc. to keep powering the economy and climate adaptation costs impede the economy instead.

I agree - that is the conundrum, and as those two in a sense pincer in towards one another with the climate going even farther out of whack while oil price rises, humankind will be pushed into a corner, damned if we do (burn FF - greater climate change) and damned if we don't (economic collapse). Lastly though the conundrum is simply a symptom of coming to the close of the oil age. Even if we ignore climate change, oil depletion nips us in the bud anyway.

Any thought that the Arab Spring would bring swift changes in the governance of the countries involved, and leave oil exports to the world sustained at previous levels appear also to be less than realistic as countries such as Egypt begin to head into the second cycle of that revolution.

HO - while the gist of your post is unassailable and, indeed, an important message, why do you reference Egypt WRT the governance of oil exporting countries? Egypt is an oil importer.

Egypt, A Classic Case History of a Net Export Declne:

ps - Jonathan Callahan, any tips on linking directly to graphs of individual countries on your Energy Export Databrowser would be appreciated. Your site is most illustratively helpful!

Hi clifman,

You can right click on any image and scroll down to copy image location and then embed that link in your HTML or just use the hyperlink. Alternatively you can right click the image and scroll down to View image info.

Here's an example of what you will get:

Cheers and Happy New Year!


Thx Fred (and Jonathan). Then this is where I meant to send folks for a look at Egypt's 'exports'...

Right now, Fred's suggestion of linking directly to the image is the only solution.

I also want to let everyone know that in most browsers (except older versions of IE) you can simply drag and drop the images from the browser onto your desktop or into some other window.

The images are supposed to be "publication ready" and this drag-and-drop feature makes it easy to add charts to emails, documents or blog posts.

Best Hopes for 2012!


I was using it more as an illustration that revolutionary changes, such as the Arab Spring, rarely end neatly after the first election. There will be likely varying levels of turmoil in the MENA countries for some years to come, which will affect oil and natural gas exports. But it was the start of the second phase of protests in Egypt that I was using as the talking point, not their oil production. Sorry if that wasn't clear.

Could someone tell me please when does new BP statistical review of world energy will come out?

herb - This is what BP has posted as the 2011 review.

I meant excel workbook, but thank you

herb - Do you know how to turn a pdf (or any other data set) into an Excel ss? Just learned myself a while back. Rather easy as it turns out. I won't try to give details but try to save it as Excel and then see if you can follow the prompts.

thank, but that is not neccessary. I can find Excel sheet so I don't need PDF. I just want new statistics and they aren't either in Excel sheet nor PDF

Usually around June, for the previous calandar year.

A lot of the discussion on natural gas prices in the US revolves around fracking.

A while back, someone posted an alarming article on the future of gas fracking, predicting that the half-lives of new fracked wells was far far shorter than the drillers' projections, and that they were covering this up by drilling more wells to show ever-increasing production. The implication was that the glory days of abundant gas from fracking would only last a few years.

That was about a year ago, and if the "short well life" idea were true, it ought to be much more obvious by now. Anyone have any updated info?

Goodie – There has never been a debate about the decline rates in the various shale trends. The bigger debate was URR…takes more than a few years to get a good projection. But when a well starts producing at 900 bopd and then is producing 90 bopd just 12 months later…the decline debate is over. I have access to all the Eagle Ford Shale production. Before the holidays I promised to give an update after 1 January…I’ll start working on it today. Characterizing URR will still be difficult: not enough new wells with more than 4 years production history. But the general decline rate will be a much stronger statistic.

The oil companies never hide the decline rates of any of the US shale gas play (except for KY). All the data has been available to the public for free…if you knew where to look. But they also didn’t go out their way to draw a clear picture either. As far as the shale plays fizzling out that was never a realistic expectation if one understood the reason behind the push. As long as the public oils could drill new wells and add to their reserve base they would keep poking holes. And do so even if the profit margins were slim. Some plays, like the Eagle Ford, have a better margin thanks to the oil yield. But still not impressive. I can make a better profit drilling conventional NG even at today’s low price. But there are not enough conventional prospects left for all the public oils to drill. As I mentioned the other day, the shareholders of Petrohawk weren’t worried about the profitability of their EF wells after they sold the company for $12 billion to another public oil desperate for undeveloped EF acreage. As long as there are shale locations to drill the pubcos will keep drilling as fast as possible. They have no choice: as their new wells deplete they have to be replaced with even more wells to keep the reserve balance sheet up and Wall Street happy. But it’s also good to remember there are a finite number of shale locations left. A lot of them, of course, but still finite.


I am trying to gather some data to do a similar sort of analysis. I've been to the Texas RRC site looking for Eagle Ford Shale production stats but haven't found a way to download bulk data. Do you know of any public source for monthly production data that is organized by "well ID"?

For aggregate analysis, a single CSV file that had a couple hundred thousand rows (one for each well) and a few hundred columns (some metadata columns and 20 years of monthly production) could contain all of the pertinent information for production from Texas wells. This would be incredibly useful for those of us interested in doing statistical analysis.

If there were a way I could access that data programmatically, I would be happy to create such a data file and make it available. But access to data from the TRRC requires that I manually poke a web page for each data request. I need automated data access.

Does anyone have enough connections to get me access to some public version of this aggregate data, even if it's an SQL dump?

After a little closer inspection I see that I can purchase Production Data summaries at the well level for the last 24 months and at the lease level for historical data. But it's all in EBCDIC format -- Yuck! That would take some time to unpack. It looks like a longer term project.

Anybody want to fund "databrowser-style" access to the TRRC data along with some interesting statistical summaries and Tufte-style data graphics?

Jon - I have web access to TRRC data (3 month lag) thru my annual subscription. I can't let you have direct access without violating my contract but I can download the data and use as I wish, including sending you an Excel ss with the data. I can d/l bulk with three clicks of a mouse. What data are you looking for? I'm about to d/l all completions tagged "Eagle Ford": about 20 dfferent parameters including API number. Would that do you for?


That would be an awesome collection of data to start "playing around with". An excel spreadsheet would be great if the data fits in one sheet or any form of ascii is fine, too.

jonathan [at] mazamascience [dot] com


Jon - You're welcome. I'll send a full dump to you in a day or so. The Excell isn't as large as you might assume...still not a lot of wells. Production plots are a different matter. I'll send as many as possible to give some graphic depictions.

For most of this past year, these posts have reviewed and then discussed data on the state of different reservoirs of oil and gas that ultimately provide the power we need and use every day... The only question that I have is whether the current spin can be maintained through 2012.
~ Heading Out

What about advertising/marketing and so-called 'need-creation'?
Where does that factor in? Who says we need any of it at all? Toyota? Monsanto? BP? Unilever? Nike? Apple? America, Inc.? WALL STREET?
Quite a way to determine needs... I guess that explains the spin.

And I guess mother nature will step in and progressively beat some sense into us to help us better frame our questions, concerns, needs, perspectives and realities, etc., to better reflect her's. The question seems to be how punch-drunk we get before we do something about it before we're knocked out.

A low-energy policy allows for a wide choice of life-styles and cultures

...If, on the other hand, a society opts for high energy consumption, its social relations must be dictated by technocracy and will be equally degrading whether labeled capitalist or socialist... Participatory democracy demands low-energy technology, and free people must travel the road to productive social relations at the speed of a bicycle.

Perhaps, the DoE has a public face and a private face in which the public receives one set of information and special interests have access to another?...

Sweetnam's graph and warnings may reflect insider knowledge of the energy market. His opinions may not represent the official opinion of the U.S. DoE and the U.S. government. Another important figure in the DoE is the U.S. Secretary of Energy, Steven Chu, Nobel Laureate in Physics in 1997. Chu is also aware of the issues of global peak oil production. In March 2005, Chu presented on a hypothesis of an imminent decline in the global production of liquid fuels while he was director of the Lawrence Berkeley National Laboratory, a U.S. Department of Energy National Laboratory. In his presentation, Chu indicated that peak oil and gas liquid fuels production would occur around 2005, and then decline rapidly starting in 2010...
At that time, David Fridley, an expert on oil economics, worked under Chu. In an interview given in 2009, Fridley claims47, '[Chu] was my boss...He knows all about peak oil, but he can't talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can't say anything about it.'
It is interesting to note that Chu based his projections for peak oil on the calculations of Colin Campbell, an expert oil industry geologist, who supposedly based his estimates on the confidential data of the consulting firm Information Handling Services (IHS) (see below for more about IHS). The data and estimates of IHS on the global oil reserves are significantly less than those published in the public domain...
~ Peak Energy, Climate Change, and the Collapse of Global Civilization: The Current Peak Oil Crisis

Who says we need any of it at all?

All products are consumer driven. All those corporations do is fill consumer demand. Sometimes advertising can drive consumer interest, particularly with pharm drugs, but its still the consumer that either keeps those drugs and other products moving to the marketplace or whether they get discontinued.

Whether or not we actually need them in the sense of survival, well no, not most, but that is the on demand world we live in.

I am new to commenting here, but I have a basic question that relates to this issue. There have been reports that US oil dependence from imports has been dropping lately, sometimes with the spin that increasing production is the reason. Here's a link:

It appears that this commentator is using the EIA's Dependence on Net Oil Imports figure, which in 2010 was 49 percent (, and in 2011 must have dropped even further. However, if you look at EIA's figures from 2010, it actually lists US petroleum consumption at 19,148,000 barrels/day, and US petroleum production at only 7,513,000 barrels/day. That means that production is 39 percent of total consumption, not 51 percent as you I would expect from the Dependence on Net Oil Imports figure.

That's a pretty big discrepancy. Does anyone know what EIA means by Dependence on Net Oil Imports and why it does not appear to line up with actual consumption and production in the US? I can find no EIA explanation of how they calculate this.

The EIA is using total liquids, which includes more than "crude & condensate" petroleum production.

The 7,513,000 that I referred to includes "crude oil, NGPL, and other oils" — I thought that did refer to total liquids. Is there another major category that is missing?

Ethanol is one. I believe refinery gain is another. Refinery gain, AFAIK, is real: volume gains come from hydrogen added during refining.