Well based on your excellent analysis I just parted with my KOG, all signs are that the top is in... I have also sold a number of preferred shares, e.g. Gastar series A, knowing full well (pun intended) that the fat monthly divvy was unsustainable..

The gas industry has forever been cyclical, as with oil, and as scarcity increases there is no reason to expect this to stop. However, I suspect the cycle lengths will be shorter/faster. With shale wells, depletion is faster and drilling is more expensive, so companies will be faster to stack rigs when costs are high and profits low, but excess supply will drop more quickly as well. The shifts between coal and gas for generation will be slower, and between gasoline and CNG for vehicles slower still.

Economic recession, a core aspect of price cycles, is likely to be quicker too, given recent gov'ts willingness to quickly shirt monetary policy. As supply can adapt more quickly today, price signals can be more quickly addressed.

Gas has already risen from a low of $2.00 or so to about $3.50. As truck conversions (Picken's plan is moving along, albeit slowly), generation, home usage, chemical/fertilizer plants, LNG terminals, and other consumption industries pick up at the same time the shift from dry gas drilling to wet progresses, and now as rigs are stacked, the stage is set for weak companies to crash as cash runs out and investors flee, a year of consolidation, and then a super-spike as supplies drop. A cold winter could make that next year; most likely it will be 2014-15.

If not for the high price of oil the rig stacking and crash would already be in play for a year or two. The unusual combination of high oil with low gas has kept the production of gas high. When gas goes back to 12-15mcf all the bcfs flared in ND and West TX will be sorely missed. It's almost criminal to waste so much precious fossil energy, but that's the unregulated world of economics at work.

I think NG itself has likely already bottomed, but dry NG companies perhaps not yet. As for shale oil companies, I am somewhat surprised to see such high monthly losses -- oil is high enough that many companies should be highly profitable. Of course, Bakken sales suffer from the sub-WTI pricing, so $70 local prices may not have been expected in a world of $110 oil. And of course all drilling expense is front-loaded, as infrastructure and equipment must be bought up front and amortized over years; however, it really needs to be in a just a year or so for many shale wells even if the goal is to use debt to grow quickly. It would be interesting to see analysis of an Eagle Ford oil company, and see if they carry more debt given higher oil prices to also maximize growth, or if calmer heads prevail and most drilling is funded from cash-flow alone.

Interesting!

I was noticing that the drop in rigs in North Dakota somewhat coincides with a drop in the price of WTI. WTI spot price was above $100 a barrel fro quite a while before about May 4, 2012. Then it dropped into the 90s and even 80s. The number of drilling rigs in North Dakota hit a high of 203 on June 1 and June 8, and then started dropping. If it takes a month or so to be able to start getting rigs moved out, it seems like the lower price may have played a role in the decision to cut back drilling rigs.

Another thought is that if the cash flow is not so good for oil, it must be terrible for natural gas, with its low price.

I am curious how you estimated these amounts. Are they intended to include all costs, including costs of leasing the land?

article is here:

http://www.pnas.org/content/101/39.toc

from the conclusion:

our analysis shows that methane production
is thermodynamically favorable under a broad range of
high pressure-temperature conditions. The calculations indicate
that methane production is most favored at 500°C and pressures

7 GPa;[...]
The wide pressure–temperature–composition stability field of
methane documented here has broad implications for the hydrocarbon
budget of the planet and indicates that methane may
be a more prevalent carbon-bearing phase in the mantle than
previously thought, with implications for the deep hot biosphere. In particular, isotopic evidence indicating the prevalence of
biogenic hydrocarbons pertains to economically exploited hydrocarbon
gas reservoirs, largely in sedimentary basins; these
observations and analyses do not rule out the potential for large
abiogenic reservoirs in the mantle.

so "inexhaustible" in the sense we can't get to it? I like that.

If it exists and we CAN get to it, just one more "greenhouse bait" monkey trap.

GOWHN – As before I’ll completely ignore the debate of whether any or all oil/NG has an abiotic source or not. It has no bearing on what I’ve been doing for the last 37 years. Which has been looking for areas where oil/NG has ACCUMUATED. I’ve spent zero effort concerned with where the hydrocarbons originated. Other geologists, drilling in the few new basins where there had been little or no drilling, would focus on source rock potential. But not me and the vast majority of other geologists.

We look for those subsurface geologic conditions conducive to the ACCUMULATION of oil/NG. One key is finding TRAPS. Oil/NG, just like the oil in your salad dressing, floats to the top. NG, being a gas, more so. The great majority of oil/NG ever generated (regardless of the nature of that process) didn’t ACCUMULATE in traps but leaked all the way to the surface. So if the trap didn’t exist when the oil/NG were migrating thru the area it leaked to the surface. But a geologic trap has to contain pore space in the rocks for the oil/NG to ACCUMULATE in. Even the low effective porosity shales wouldn’t trap producible oil were it not for their fracture systems.

So what we drill are geologic traps with sufficient pore space that existed at the time the oil/NG migrated through the area. The oil patch spends $billion every year on data that allows us to find these traps. Notice at no time does this process focus to any significant degree on the origin of the oil/NG. There are physical (pressure and temp) limits to where FF can exist with oil being much more limited than NG.

Bottom line: I and every other geologist can fully sign on to the abiotic origin of FF and our process would carry unchanged just as it has been for almost a century. A process that has led to millions of wells being drilled around the planet. We still have a few relatively undrilled regions to poke holes in. But areas with proven FF sources and ACCUMULATONS have been heavily drilled. And that’s the problem: not a lot of proven traps left to drill. Especially those with the size potential of our giant oil fields. Accepting abiotic origins doesn’t change that calculus.

It's been discussed here before. It came up during a Florida town meeting about whether they should prepare for rising sea levels, among other things. Search the site on agenda 21 and previous mentions should come up.

Unlike guns, in the U.S.,anyway, I don't think cars are protected as a fundamental right guaranteed by the constitution. Not that I don't think there are good arguments against guns,either. I would be glad to forego any attempts to get people out of their cars if they would, in turn, quit sponging off the taxpayers to use public roads. I don't think you will hear many on the right arguing that the public provision of roads and highways is a socialist plot. But it is very much a socialistic enterprise. Socialism is only directed at the things they don't like, like solar companies and environmental protection of air and water and the regulation of the financial industry.

Freedom has become another word signifying a willingness to sacrifice the future of the planet for what are perceived to be fundamental rights that trump every other consideration.

In answer to the issue about another 50 million new housing units, they would probably answer with something like there is plenty of available land, especially in Canada and in places like Nevada.

The Southern Poverty Law Center has this piece on who is promoting Agenda 21 misconceptions:

http://www.splcenter.org/get-informed/intelligence-report/browse-all-iss...

Here is one of the newsworthy parts..

Much of this opportunity comes from America's newfound ability to draw oil and gas from geological formations that just a few years ago geologists deemed impenetrable.

It would be nice if the journalists could get their facts correct. Probably any O&G geologist could have told them about these formations being too expensive to drill, not impenetrable.

The Harper Cons are good at bait and switch... one should ask oneself what the switch is!

In the latest Greek polls, the neo-Nazis got 15% and the communists got about 29%.

All this echoes of the final stages of the Weimar Republic.
In the late 1920s and early 1930s there was an ideological struggle between communism and facism all over Europe.

Germany has a historic responsbility to unify the European project in financial terms and deepen the political dimension too. It would stem this decline in political degeneration, but it is too early to say if it would change anything over the long haul.

It is very hard to maintain the sort of deep trust one needs in a post-peak scenario within communities, not to mention nations, when resources are running low. If depopulation would start to slowly set in, even if only quite mildly, the survival instincts would go into overdrive and then the true conflicts would being to flare.

One of the details I found interesting, and frightening, was that apparently sections of the police were joining the neo-Nazis in their roundup on immigrants.

It is this basic need for order, almost at any cost, that also drove the Nazis to power and which Hitler had an instinctive ability to understand in a way that his left-wing antagonists never did. More than freedom, people crave stability and safety. If violence is necessary to get there, so be it, as long as they don't have to be directly involved. Self-rationalization can then kick in and explain almost anything to a mind willing to find any answer for the brutality unfolding before their eyes - a brutality they may have been voting for.

It was this that led to the widespread acceptancy of the persecutions of Jews. People just started to believe that, in fact, the Jews were behind all the problems in society.
And now it is immigrants in Greece.

The social/political costs of Peak Oil are seldom discussed on many sites concerning Peak Oil that I frequently visit. Many seem to either fall into the perpetuating doom category or convince themselves that post-Peak a new brave world would arrive where human nature is somehow erased (or at least suppressed somehow by natural constraints).

I think that Greece is a good example of what an uncontrolled crash of a "Wants" based economy looks like, and the above NYT item is a very good and very sobering article.

This is why I think that we need to focus on advocating for training of young people and retraining of older people--in vocational and agricultural skills--in order prepare them for the reality of our ongoing transition from a "Wants" based economy to a "Needs" based economy.

I also think that we need to consider an "Enemy of my enemy is my friend" approach, i.e., I think that we should seek support from people who, while they may not agree with us about Peak Oil/Peak Exports (although I think that the GNE/CNI data speak for themselves), they may agree with us about a desperate need to reform our educational system.

Following are some excerpts from an article I am working on:

A Gradual Descent Versus a Crash

Let's assume that it is possible to at least makes things not as bad as they would otherwise have been if we recognize the reality of finite fossil fuel resources and if we especially recognize the problem of constrained Global Net Exports of oil (GNE).

Let's assume you are on a commercial airliner, and the pilot starts a gradual descent for landing. As the plane approaches the runway, if the pilot is maintaining a safe rate of descent, about a 1,000 feet per minute, you have a safe landing. If the rate of descent is too high, say several thousand feet per minute, it becomes a crash, instead of a landing.

Using the airliner analogy, recognizing the finite resources problem would be analogous a gradual descent for landing. Not recognizing the finite resources problem would be analogous to an airliner showing an increasing rate of descent, resulting in a crash. Regarding the ongoing decline in the GNE/CNI ratio, we are seeing the latter, an accelerating rate of decline, not the former, a steady, very slow rate of decline.

In other words, in my opinion, 99.9% of the population are like passengers on a plane discussing dinner plans for that night, oblivious to the fact that the airplane is showing an accelerating rate of decline, headed toward a near vertical dive into the ground.

The GNE/CNI Data

I frequently refer to the ratio of Global Net Exports of oil (GNE*) to Chindia's Net Imports (CNI), or GNE/CNI. We have nine years of post-2002 annual GNE/CNI data. I have shown the declines in the ratio in three year increments, and I have shown when GNE would equal CNI for a given decline rate, when the Chindia region alone would theoretically consume 100% of Global Net Exports of oil, i.e., when the GNE/CNI ratio would be 1.0.

2002 to 2005:

Ratio fell from 11.0 to 8.9, a rate of change of -7.1%/year. At this rate of change, the ratio would approach 1.0 around the year 2036, i.e., in 34 years after 2002.

2005 to 2008:

Ratio fell from 8.9 to 7.0, a rate of change of -8.0%/year. At this rate of change, the ratio would approach 1.0 around the year 2033, i.e, in 31 years after 2002.

2008 to 2011:

Ratio fell from 7.0 to 5.3, a rate of change of -9.2%/year. At this rate of change, the ratio would approach 1.0 around the year 2030, i.e., in 28 years after 2002.

As the saying goes, making predictions, especially about the future, is difficult, but note that the rate of decline in the ratio has accelerated, at least through 2011. A key but massively overlooked consequence of this declining ratio is what I estimate is a monstrous rate of depletion in post-2005 Available Cumulative Net Exports (Available CNE), i.e., the total estimated post-2005 supply of global net exports of oil that will be available to importers other than China & India.

Based on the current data, through 2011, I estimate that globally we have already consumed, in only six years, roughly half of the total post-2005 cumulative supply of net exported oil that will be available to importers other than China & India.

The following chart shows global public debt versus the GNE/CNI ratio for 2002 to 2011:

My premise is that the oil importing OECD countries are trying to keep their "Wants" based economies going, in the face of constrained supplies of Global Net Exports of oil, via massive deficit spending--financed by real creditors and by accommodative central banks--as the 2002 to 2011 decline in the GNE/CNI ratio strongly contributed to an average 17%/year rate of increase in annual Brent crude oil prices from 2002 to 2011 (with one year over year decline, in 2009).

*GNE = Top 33 net oil exporters in 2005, BP + minor EIA data, total petroleum liquids

A recent interesting opinion piece in the Sunday NYT, with a very interesting graph:

Do Tax Cuts Lead to Economic Growth:

http://www.nytimes.com/2012/09/16/opinion/sunday/do-tax-cuts-lead-to-eco...

Each point on the following graph, taken from the above article, represents the average annual US economic growth per year over a five year period, starting at that point:

http://www.nytimes.com/imagepages/2012/09/15/opinion/15captial-graph.htm...

Note the severe contraction in average five year growth starting in 2002. The author of this article attempts to link faster growth to higher tax rates and slower growth rates to tax cuts, with the peak five year average growth period being from early 1995 to early 2000.

However, the average rate of increase in annual Brent crude oil prices from 2002 to 2011 was almost 17% per year. I think that the combination of the Bush tax cuts and massive deficit spending, financed by real creditors and massive Quantitative Easing (QE), were all necessary to keep our average five year rate of growth in GDP after 2002 just barely above zero.

Sub, not sure what your hangup is on using the 120V inverter with an auto-transformer. I recently installed such a system for a friend (Outback GVFX-3524 & FW-X240). Works well, feeds the grid and keeps a 20 kwh battery set charged. The auto-trans is on the switched side of the well pump's pressure switch, so it only draws power when called for. Cost for inverter and transformer was under $2200. I put in a small 240V transfer switch so the pump can be run either on 240V grid power or inverter power. No big deal. This is the setup we plan to use to replace our old stacked Trace inverters with (less the grid tie of course). Lots of options there.

As for code, inspections, all that; sometimes it's best to get the core system installed to code and make some modifications after the inspectors leave (not recommended for the electrically inept). I installed a separate panel for our current Outback; moved critical loads (lighting, electronics, refrigerator) to it for pure sign and reliability). I've also moved some loads to direct 24 VDC battery power (this computer, some LED night lights, vent fan for the batteries).

Jamaica has this weird voltage/frequency combination (110/220V/50Hz) that rules out the use of equipment that, on the basis of frequency, rules out ALL grid interconnected equipment spec'd for the US market. Most if not all grid connected inverters being used here are Euro spec (240V/50Hz) and there can only be used in single(split) phase installations under certain conditions (depends on what relationship the inverter expects between neutral and ground).

As a result, I have attended two major trade shows in the US recently and had discussions with inverter manufacturers with a view to seeing if there is any way tht I can source grid tied inverters that can work in Jamaica without having to do anything unusual. It is my hope that a certain large market that has recently instituted a very aggressive program of incentives for renewables and has sections of it's grid that are somewhat similar to Jamaica (hint: 100V/50Hz), might stimulate development of some compatible inverters.

Which brings me to the subject of your requirements. SMA is introducing a series of new, transformerless inverters that have a 15A 120V "backup power" output that will continue to produce power in the event of an outage.

The Sunny Boy 3000/4000/5000TL-US series will offer lighter weight and higher efficiencies for residential 3-5 kW systems. Featuring dual MPP trackers and OptiTrac Global Peak MPP tracking, the TL-US series is an ideal string inverter solution for shading situations and difficult roofs. Integrated AFCI (UL 1699B) meets NEC 2011 requirements and the units’ unique Emergency Power Supply function provides daytime power in case of a grid power outage.

AFAICT there is no storage at all so, a cloud passing over your array will mean lights out! I overheard discussions about sophisticated systems that do grid tie and incorporate storage and standby power but, it sounded like these were future products. Based on the level of PV penetration in Germany, storage and the ability to provide power after sunset seem to be getting some attention.

If things hold together long enough a product that suits you just might come to market.

Alan from the islands

"Solyndra was the victim of a silent trade war with China "

Not entirely. Solyndra was targeting a niche that went away on them while they were getting their technology to market. It wan't just the Chinese that were cutting prices.

By the way, on the well pump issue, you can get an variable frequency drive that will make the 120 to 240V conversion, and get three phase out of it as well. And a soft start capability so the surge doesn't fry the inverter. When the pump is not running the drive will be off, and have less parasitic load than the transformer.

http://www.mcmaster.com/#motor-speed-inverters/=jtgfw0

$701, bottom of the page. I'm not sure that one has a three phase output, but if they don't Allen-Bradley will. They have everything.

With A123 - they effed up. Built a defective product and crazy expensive cars caught on fire and/or stopped working triggering a massive recall. Solyndra was the victim of a silent trade war with China where China subsidized the hell out of their PV industry and simply drove Solydra into the ground.

Solyndra was as much a mistake of technology choice and management as was A123. Solyndra proposed to manufacture CIGS thin film solar cells by coating the cells on the insides of cylindrical glass tubes -- sort of like flourescent tubes. These would be capped at both ends to seal the tubes and bring out the electrical leads. The tubes would then be assembled into frames which made up the solar panels.

CIGS is inefficient. Their factory took too long to build and put into production. The machine to cap and seal the tubes never really worked right. The assembly was expensive. CIGS is environmentally unfriendly and the tubes have to be recycled.

Solyndra was a science experiment that was scaled up and went wrong. It's not really clear why anyone ever thought their approach was a good thing.

Meanwhile, the Chinese bet on the very old and proven silicon solar cell technology which was known to produce more efficient, environmentally friendly, reliable, long lived cells. The problem with these was cost, but they drove down the cost of polysilicon, of sawing the wafers, baking wafers, and assembling them into solar panels. These required more straightforward innovations in manufacturing, low cost labor, and good management.

Unfortunately, much of the alternative enery government funding seems to go into highly innovative, but highly risky, new technologies. This is consistent with the view that research should be done by relatively small teams working in research universities and then their science experiments are somehow "technology transfered" to industry, which is supposed to gratefully receive this wisdom and turn it into economic miracles with minimal effort. This relieves industry of the need to support large-scale R&D projects. And indeed, industry R&D in the US has been mostly abandoned.

(The other misconception in the US is that there are some tinkerer inventors working in a garage somewhere who will use their innate cleverness and shrewd business acumen to produce some novel energy products that will be deployed across the country and save the day.)

The way we went was "both"... a microinverter system with a lot of panels to keep our energy-using room renters covered, and a separate cheap off-grid system for battery storage and daytime uses, like running freezers, computer screens, fans, pool pumps, etc.

I'm going to pile on here and say the biggest problem with solar is that it is unlike any other type of energy we have used up to now, and the utilities have a vested interest in fossil fuels and hydropower.

Homeowners generally don't buy part of the power plant; they only pay for the hookup and the electricity. With solar, we are expecting homeowners to own their own plant, and shell out the money for it. Lately solar leasing has become a thing, so this is slowly changing, but in any case nobody is thinking of solar as basically a distributed power plant. This also put solar in a place where it competes with existing utilities which have every interest in squashing it, which they make every effort to do.

I am not sure what would work (other than a government program ala Tennessee Vally Authority, the interstate highway system, or the early nuclear industry), but as it is the government subsidies for efficiency and solar are not doing the job. Voluntary programs like what exist today don't do squat.

But... It'll all be "Restored". NOT!

Ron
The rate of tar sand extraction is set to at least double is it not?
Phil

We created this landscape - every time we fill up, it gets that much bigger.

View it here: Dilbert, Sunday October 21, 2012

We don't care what smart people think, there aren't that many of them.
We only need to convince our dumb customers.
Dumb people will believe anything.

Sounds a lot like the peak oil argument. There aren't that many smart people out there who understand what is really happening right now. Dumb cornucopians will believe almost anything. They believe world oil production is about to skyrocket because of fracking.

Ron P.

"We don't care what smart people think, there aren't that many of them."

http://dilbert.com/

The daily strip for today.

Supposedly, that's the reason those scam e-mails are so ridiculous. A Nigerian prince died and left you all his money! Your e-mail address has been chosen as a lottery winner! A beautiful girl wants to meet you, but needs money for a plane ticket! All with atrocious spelling and grammar errors.

That way, the scammer doesn't have to waste time with people who aren't completely trusting and gullible.

As is to be expected, lots of great(?) comments. I liked this one:

The sea levels are not rising as a result of climate change. There are a secret group of liberals who each night gather up all of the b-s generated by the pugs that day, put it in bags and then dump it into the ocean. Hence the rising sea levels.

Alan from the islands

The answear to the question is simple: "With a boat".

The more interesting question is; where do you move them to?

They won't even move when a deadly hurricane is heading their way.

The answer is: they can't be moved it they don't want to.

We would all rather die in place than solve our problems.

There you have it.

ulan - As far as oil and NG goes IMHO very little is being held of the market by regs. At least compared to how much we produce today. And what difference would a D president make compared to an R president re: future energy supplies? Again IMHO very little. Both parties are controlled by a very powerful special interest. If one party or the other does't satisfy this SI it will destroy those politicians. That powerful SI: the American voter IMHO.

A stronger dollar and a reduced trade deficit

A stronger dollar would decrease exports and increase imports, thereby increasing the trade deficit.

Hi Ulan,
Maybe this isn't quite the answer to your question but I suggest this excellent powerpoint by Dr. David Rutledge, particularly slides 16-19:

http://www.its.caltech.edu/~rutledge/Energy%20Supplies%20and%20Climate.ppt

Dr. Rutledge shows that the U.S. oil production curve has, since 1901, deviated from a perfect normal curve by at most 10 months. Think about that. The bank panic of 1907, WWI, the boom of the 1920's, the great depression, WWII, the post-war baby boom, the cold war, Apollo, Hippies, Computers, and all the election campaigns of 111 years affected the residual by less than 10 months.

OK, so assume politics and culture have no effect - its about geology and technology after all. There was the invention of hydraulic drilling, the tri-cone bit, modern geology, seismic surveys, plate tectonics, horizontal drilling, fraccing, 3d tomography, deepwater, name your favourite...

10 months.

Rutledge also calculates the correlation coefficient of actual production vs. the normal growth curve, such as observed when a bacterium is inoculated in a flask of nutrient broth. He gets 0.99991. Over 111 years, American behaviour has deviated from that of a flask of bacteria by 0.00009.

Canadian production has been a bit more bumpy, and i don't know about any analysis similar to what Rutledge has done with US data, but i doubt that PEMEX or PetroCanada, or any national strategy has had much effect.

OTOH, renewables are still at the lag phase and early exponential phase of the growth curve. A boost in the form of subsidies now would produce an effect that would amplify as the renewables base grows. Which policies do you think would best promote renewables?

Yes!!! Death by a thousand cuts!!! This is what the fossil fuel based energy industry fears and it helps answer your question further up top.

Alan from the islands

Steps up and back, since meanwhile, our earswhile steed, the '97 Subaru Legacy has just announced her retirement to us, and it looks like despite my pleas that we figure out how to become a 1 car family, that we'll be following Senor Dave Edmund's tragicomic example..

http://www.youtube.com/watch?v=ed2qhaGSOXs&feature=related
"Crawling from the Wreckage into a brand new car.."

(The 'safety' argument by the mom is a tough card to trump.. even with a Royal Oil Flush!! I'll be keeping my eye out for a good electric scooter or bike mod just the same..)

Big drops in gas prices in the northeast recently, too, but I think that was because of the earlier spike upwards. Prices have been quite volatile lately.

Here's an interesting story about island communities getting together on renewable energy...

Just wait and see what will happen in the U.S. of America :-)

http://www.fa-mag.com/fagreen/11949-ford-boosts-spending-to-develop-batt...

Ford has said hybrids, plug-in hybrids, and all-electric cars will account for as much as 25 percent of its new vehicle sales by 2020, from less than 3 percent last year.

http://www.plugincars.com/obamas-green-car-rules-electric-cars-124092.html