Drumbeat: March 25, 2013

Life After Oil and Gas

WE will need fossil fuels like oil and gas for the foreseeable future. So there’s really little choice (sigh). We have to press ahead with fracking for natural gas. We must approve the Keystone XL pipeline to get Canadian oil.

This mantra, repeated on TV ads and in political debates, is punctuated with a tinge of inevitability and regret. But, increasingly, scientific research and the experience of other countries should prompt us to ask: To what extent will we really “need” fossil fuel in the years to come? To what extent is it a choice?

As renewable energy gets cheaper and machines and buildings become more energy efficient, a number of countries that two decades ago ran on a fuel mix much like America’s are successfully dialing down their fossil fuel habits. Thirteen countries got more than 30 percent of their electricity from renewable energy in 2011, according to the Paris-based International Energy Agency, and many are aiming still higher.

Could we? Should we?

Hydrocarbons Forever?

Every time supplies of oil and gas get tight, the rising price that comes with scarcity creates incentives and the “invisible hand” does the rest. What is certain, however, is that the fossil energy era is far from over. Just as the stone-age did not end when there were no more stones, the oil and gas era will not end when we run out. It will end when technology develops an alternative that is abundant and just as affordable.

WTI Crude Rises to One-Month High; Brent Spread Narrows

West Texas Intermediate crude rose to the highest in a month as Cyprus agreed on an international bailout, allaying concern that Europe’s debt crisis will worsen. WTI narrowed its discount to Brent to the least since July.

U.S. Gasoline Prices Fall to $3.7074 in Lundberg Survey

The average price for regular gasoline at U.S. pumps fell 3.2 cents a gallon in the past two weeks to $3.7074 cents, according to Lundberg Survey Inc.

Around $100 a barrel is good oil price - Saudi's Naimi

Oil prices at around $100 a barrel are reasonable for both consumers and producers, OPEC heavyweight Saudi Arabia's oil minister said on Monday, again highlighting the top crude exporter's preferred oil price.

Vehicle Miles Driven: Population-Adjusted Numbers Hit Yet Another Post-Crisis Low

Clearly, when we adjust for population growth, the Miles-Driven metric takes on a much darker look. The nominal 39-month dip that began in May 1979 grows to 61 months, slightly more than five years. The trough was a 6% decline from the previous peak.

The population-adjusted all-time high dates from June 2005. That's 90 months — over seven years ago. The latest data is 8.59% below the 2005 peak, a new post-Financial Crisis low. Our adjusted miles driven based on the 16-and-older age cohort is about where we were as a nation in March of 1995.

Better route planning cuts fuel use in freight sector

(Reuters) - U.S. distributors and freight hauliers have held down diesel consumption even as their business recovers from recession by making thousands of small changes to their operations.

Improved driver training, restrictions on idling and careful route planning to reduce deadheads (where vehicles travel empty) are all reducing consumption of expensive diesel while helping companies promote their green credentials.

How to drive down the cost of petrol and diesel

How many trips do you make each week in an empty car?

By arranging to travel with three other colleagues who live relatively close (sometimes called a car pool) you could drive just one out of every four days, significantly reducing the wear and tear on your car, as well as fuel and parking costs.

Hedge Funds Most Bearish Ever on Copper, Favor Gold: Commodities

Hedge funds are making the biggest bet against copper on record as global inventories expand to a nine-year high, while concern that Europe’s debt crisis will spread spurred the biggest gain in gold bets since 2008.

Iraq to Fall Short of 2014 Target for Oil Output, Lawmaker Says

Iraq, the second-largest producer in OPEC, won’t reach its target of pumping 4.5 million barrels of oil a day by next year and plans to announce revised production goals in April, senior government officials said.

The country will fall short of its target partly as a result of bureaucratic hurdles and the lack of an energy law, Adnan al-Janabi, chairman of the Iraqi parliament’s oil and energy committee, said today at a conference in Dubai. A draft energy law is “stuck” because of political disputes and won’t be passed soon, al-Janabi said.

Russia, China find compromise on gas deal after 15 year standoff

MOSCOW (Reuters) - China has accepted an olive branch from Russia's Gazprom after years of tough talks which had failed to yield a deal on gas supplies, though the main point of conflict - price - remains.

Russia Lets China Into Arctic Oil Rush as Energy Giants Embrace

Russia’s decision to give China a share of prized Arctic exploration licenses as part of a “breakthrough” deal signals how the world’s largest oil and gas producer and the biggest energy consumer are redrawing the global energy map.

Nigerian oil auditors welcomes passage of energy bill through Senate

Lagos (Platts) - Nigeria Extractive Industries Transparency Initiative (NEITI) Monday welcomed the passage of the Petroleum Industry Bill to the committee stage of the Senate, reiterating that the bill will boost the agency's efforts to create transparency in oil acreage awards and management of oil revenues.

Sinopec Joins China Peers in Posting Lower Full-Year Profits

China Petroleum & Chemical Corp., Asia’s biggest refiner, joined PetroChina Co. in posting lower 2012 profits, as the nation’s largest energy companies look to overseas growth to counter the impact of price controls at home.

Oil industry success due to tax system, says Norway MP

Conservative (H) MP Siri Meling believes current tax scheme legislation has been crucial to oil companies daring to invest in innovation.

Sitting on too much money, Norway risks going off course

Middle East-style oil wealth combined with a generous Nordic welfare model is slowly throttling big chunks of Norway’s economy, threatening western Europe’s biggest success story.

On the surface, Norway is the envy of the world: growth is strong, per capita GDP has exceeded $100,000 and the nation sits on a $700 billion rainy day cash reserve, or $140,000 per man, woman and child.

But it may just be too much money as Norwegians, more keen on leisure and family life are working less and less.

Lebanon urged to privatise more

Lebanon risks going the way of Greece and Cyprus because of the lack of privatisation, warns a senior government official.

High public spending, conflict of interests and a constrained economy affected by the Syrian crisis is fuelling problems that could lead to chaos, especially after Najib Miqati's resignation as prime minister on Saturday.

Mursi warning stirs fears in Egypt opposition

(Reuters) - Egyptian President Mohamed Mursi threatened on Sunday to take unspecified steps to "protect this nation" after violent demonstrations against his Muslim Brotherhood, using vague but severe language that the opposition said heralded a crackdown.

Syrian rebels bombard central Damascus, army artillery hits back

BEIRUT (Reuters) - Syrian rebels fired dozens of mortar bombs into central Damascus on Monday, hitting a high-security area within a kilometer (less than a mile) of President Bashar al-Assad's residence, residents and a security source said.

The military retaliated with artillery fire from Mount Qasioun, overlooking the Syrian capital. "I've heard dozens of regime shells so far, pounding rebels," one resident said.

Kerry Visits Iraq in Push to Halt Iran Flights Aiding Syria

John Kerry, the first secretary of state to visit Iraq in four years, urged Prime Minister Nouri al-Maliki to stop Iran from using Iraqi airspace to fly arms and fighters to Syria’s military, arguing that if Iraq wants a say in Syria’s future, it must help end the bloody conflict there.

Australia PM appoints new resources minister in reshuffle

CANBERRA (Reuters) - Australia's prime minister appointed Gary Gray, a former adviser to the country's largest oil and gas firm Woodside Petroleum, as resources minister on Monday in a cabinet reshuffle forced by a string of ministerial resignations.

Centrica buys U.S. LNG in 20-year deal as U.K. output wanes

Centrica Plc, the U.K.’s largest household energy supplier, signed a 20-year deal to import natural gas from the U.S., securing supplies as production from British North Sea fields decline.

US shale gas to heat British homes within five years

Nearly 2m homes in the UK will be heated by shale gas from the US within five years, under a deal agreed on Monday that is likely to be the first time major exports of the controversial energy source are used in the UK.

The US government has kept a tight rein on exports since the shale gas boom started more than five years ago. But the deal struck by energy company Centrica marks the start of a new era in gas use in the UK, because it opens up the market to cheap supplies from the US, as North Sea gas fields run out and pipelines to Europe remain expensive.

Canada’s pipeline preacher will not slow down

OTTAWA—Stephen Harper’s pipeline preacher has not lost any of his zeal.

Joe Oliver takes to his pulpit daily, spraying statistics and “fact-based” arguments at his opponents, refusing to be slowed by recent heart surgery, perhaps the loudest and most determined environmental protest ever mounted on both sides of the border or native leaders who promise a long, hot summer followed by potentially years of court challenges.

For Obama, Keystone decision is a study in symbolism

The Keystone XL pipeline taking more of Canada’s oil sands oil to refineries with the required capacity on the U.S. Gulf Coast seems in serious jeopardy. Oil sands are atop the “kill list” of some prominent climate activists. The New York Times is now urging President Barack Obama to deny Keystone’s entry into the United States. And Tom Steyer, a California billionaire, is reportedly willing to use his wealth to punish pro-pipeline politicians. They expect a presidential veto to be an important symbolic victory in the larger fight against global climate change.

In Ohio, the fog begins to lift over the Utica shale

NEW YORK (Reuters) - Shares of Gulfport Energy were in free fall last spring, dropping 55 percent in four months, until the oil and gas producer announced it had drilled its first three wells in the Utica shale formation in Ohio.

The Oklahoma-based company's value has since more than doubled, bolstered by a series of company production updates on those and a handful of other new wells located in what many believe to be the next frontier in America's oil and gas revolution.

Asia starts to lead way on clean energy

Australia's neighbours in Asia - especially China - are emerging as the countries best placed to prosper from moves to cut greenhouse gas emissions, an international study has found.

In their second study of the ''low carbon competitiveness'' of the world's largest economies, multinational GE and the Climate Institute found the momentum for action on climate change had shifted from Europe and the United States towards emerging Asian economies.

World landmarks go dark for Earth Hour

Iconic landmarks and skylines were plunged into darkness on Saturday as the "Earth Hour" switch-off of lights around the world got under way to raise awareness of climate change.

Sydney kicked off the event at 8.30 pm (0930 GMT), cutting lights to cheers and applause from a small crowd who had gathered to see the skyline dim and Sydney Opera House turn a deep green to symbolise renewable energy.

Organisers expect hundreds of millions of people across more than 150 countries to turn off their lights for 60 minutes on Saturday night -- at 8:30 pm local time -- in a symbolic show of support for the planet.

PROMISES, PROMISES: Hopes on climate change action may fall short again in Obama’s new term

The issue:

Slowing the buildup of greenhouse gases responsible for warming the planet is one of the biggest challenges the United States and President Barack Obama face. The effects of rising global temperatures are widespread and costly: more severe storms, rising seas, species extinctions, and changes in weather patterns that will alter food production and the spread of disease.

Politically, the stakes are huge.

What Drought? Just Don’t Tread on Our Green Grass

In big Texas cities, the state’s water shortage can seem like someone else’s problem.

Drought has been in the news a long time, but rates haven’t gone up. Water still comes out when you turn on the tap. The golf courses are still green, and so are the lawns.

Prof Sir John Beddington warns of floods, droughts and storms

The government's chief scientist has said that there is already enough CO2 in the atmosphere for there to be more floods and droughts over the next 25 years.

Prof Sir John Beddington said there was a "need for urgency" in tackling climate change.

Why Russian doomsday climate predictions may prove prophetic

Climate change was back in the spotlight for the Russian media last week, with doomsday-style predictions of more extreme weather events, rapidly warming Arctic and growing global average temperatures.

Commentary: Texas and Eagle Ford – Where the Action Is

Jean Laherrere has the Bakken peaking in 2013 and Roger Blanchard has Eagle Ford peaking in 2014. If either of these guys are close then the dream of American energy independence is about to turn into a nightmare.

Eagle Ford Production
Figure II

In this article Roger also brings up an interesting point about the difference between what the EIA says Texas is producing and what the Texas RR Commission says Texas is producing. That difference was 0 in 2008, -1,000 bp/d/d in 2009, 4,000 bp/d in 2010, 52,000 bp/d in 2011 but a whopping 354,000 kb/d in 2012. What gives?

An interesting aspect of oil production data for Texas is that there is a wide discrepancy between the data from the Texas Railroad Commission (TRC) and that from the US DOE/EIA over the last few years, illustrated in Table III. The oil production data in Table III is as of 2/28/13 for both agencies.

Ron P.

This fitted curve is really just one scenario and should be interpreted with caution. I've only looked at a few production histories at the region level, but I would expect a plateau of at least a few years, rather than the big drop off he shows. OTOH, he acknowledges using EIA's generous 330 Gb ultimate recovery -- if that value turns out to be smaller the decline could be pretty steep.

Again, recognizing that Blanchard doesn't intend for this curve to be a rigorous projection, I feel skeptical about curves that show a sharp drop off. It appears that a plateau can persist in part due to the peak oil dynamic: at peak, production costs begin to escalate (increasing investment meets lower throughput). If those costs can translate to market prices, more marginal wells are brought on as the most lucrative/productive wells decline. It's not sustainable, of course, but it keeps things going for a few years...

I've only looked at a few production histories at the region level, but I would expect a plateau of at least a few years, rather than the big drop off he shows.

Well I also expect the decline to not be nearly as steep as Roger shows here, but rather steep nevertheless. And I do not expect a plateau. Looking at histories at histories from conventional fields will not give you a clue as to how steep the decline will be here. There are no histories of shale production at this level. The Bakken and Eagle Ford are the very first ones.

And from the rest of your post it seems obvious that you are comparing Eagle Ford to conventional wells in conventional fields. This is impossible since each well pulls oil from its own private little reservoir, created by fracking, and not from a large reservoir with many wells. And each well has a decline rate of from 40 to over 60 percent the very first year.

Ron P.

It's a fair point, that I have conventional fields close to mind since we don't have much else to go from (i.e., some good production data on individuals wells, but short history at a regional level). As such it is just a hunch on my part that we'll see a plateau of a few years.

I have seen so many headlines of the variety "Wow the Energy Boom in the US is Permanent and Powerful!!" and I recall that just a few years ago (way back in 2006 or 2007 and the years leading up to them) I would see headlines "Wow the Housing Boom in the US is Permanent and Powerful!"

It is pretty easy to draw conclusions, therefore, and even to see, through the mists, how the situation now also tumbles into a crash....(hopefully slow)

We need (and indeed we have) continuing failures in the financial world, including Europe. Currency problems, debt crises, ongoing structural deleveraging. Discontinuities pile up......and finally there is just no wherewithal to pay the people who would love to drill if only they could.

And then it is possible to imagine things getting rather quiet, I mean the machines we are so used to. Not all of them, not all at once....slowly, little by little, and everywhere, however.

It is already happening, of course. But you already knew that, didn't you?

Google "in the beginning was the plan"


I am thinking this discrepency that Blanchard is concerned about is the same discrepency that Westexas was concerned with a while back, and he may want to comment, but I believe he finally concluded that the difference is due to (1) differences in what each considers "crude oil" , and (2) slow reporting by the RRC (the RRC numbers actually increase with time as late reporters are added).

Roger found a Texas RRC data source for condensate, so he is comparing apples to apples, and I suspect that most of the RRC/EIA discrepancy is due to production data that the RRC has on wells which have not yet been assigned a RRC number.

Here is an interesting RRC question: Since the RRC has clearly been schnookered by most of the oil companies in the Eagle Ford who reported their production as crude when in fact it was condensate--will they require them to change their reporting, and if so, will they require them to go back and change their reports for the last few years? And will there be any penalties levied? (I know that Texans like to think the RRC is the last word in oil production reporting, but in the case of Eagle Ford, self reporting seems to have been more akin to self serving).

And of course, the whole thing brings up the question of: how much credance can you give to any of this data, EIA data included, when most of it is self reporting?

Elmo – No one snookered the TRRC. It determines whether a liquid hydrocarbon is classified as oil or condensate…not the companies. Essential whether the liquid hydrocarbons produced from a well are classified as oil or condensate isn’t determined by the gravity of that liquid but by the classification of the well. Two wells may produce a liquid hydrocarbon of the save gravity but if one well is classified as an oil well then tit’s liquid production is classified as oil. If it’s a gas well then it’s classified as condensate. From an official TRRC hearing:

“There is no statewide rule with a specific definition of “crude petroleum oil”, apart from the explanation of what shall not be construed as “crude petroleum oil.” According to the Texas Natural Resources Code § 86.002(1) “ ‘Oil’ means crude petroleum oil.” If a well produces less than one barrel of oil per 100,000 cubic feet of gas the Commission classifies it as a gas well. If the well produces more than one barrel of oil per 100,000 cubic feet of gas the Commission classifies it as an oil well and the gas produced from it is considered casing head gas under Rule 79.”

And to cloud the issue more: BTW a PVT is a pressure vs. volume vs. temp analysis:

“If a well fails the requirements on Form G-5 to be considered a gas well, an operator may present evidence from a PVT (pressure, volume, temperature) test conducted on the produced hydrocarbons. If the PVT test shows that the hydrocarbons in a reservoir at that time comprise more than 100,000 cubic feet of gas per barrel of hydrocarbon liquid, the Commission may administratively classify the well as a gas well for a certain period of time. If, due to pressure depletion, the reservoir later contains less than 100,000 cubic feet of gas per barrel of liquid, the Commission will administratively reclassify the well as an oil well.” So for part of a well’s life it’s producing condensate but years later it’s producing oil…in the eyes of the TRRC.

The Eagle Ford wells are classified as either oil or gas wells depending on the gas/oil ratio. While some wells may be classified as oil wells and thus their production counted as “oil” they may have the same gravity as wells classified as gas wells and thus producing condensate. Understanding how the TRRC works is not simple. There are consulting companies in Austin make a good living helping even experienced operators to work their way through the TRRC regs. The classification of a well as an oil well vs. a NG well is not a trivial matter. It has very significant implications I won’t go into right now. Understand that 70% of EOG's EFS production may be classified at condensate but another operator's EFS wells may only be producing 30% condensate and 70% "oil". All depends on how those wells are classified.

Hey Rockman--great, your post showed up again.

In any case, thanks for replying—I was hoping you would. Please understand that I don’t have a dog in this fight, only trying to understand the oil patch. And sometimes you only learn by asking a question, and sometimes the sharper the question, the more you learn. ;-)

If you read the RBN article, you know that EOG commissioned a study by IHS, (which as I understand it has the largest oil field data base in the world) and that study (which EOG presented at their earnings conference call) looked at 10 of the largest oil companies producing in the Eagle Ford and concluded that 7 of the 10 weren’t producing oil at all, they were only producing condensate (and with EOG being one of the 3 that were only producing oil, which of course is what they wanted the world to know).

The conclusion from the study was that 70% of the liquid being produced in the Eagle Ford is condensate (to the right of the API 45 line) rather than oil. Yet at the same time the RRC has been reporting that only 18% of those liquids are condensate.

Is this discrepancy important? I don’t know. As you said, “The classification of a well as an oil well vs. a NG well is not a trivial matter. It has very significant implications”. And as the RBN article says , “If the IHS study that EOG presented last week is accurate then the volume of condensate on its way to the Gulf will overwhelm existing refining capacity sooner rather than later”.

And off course, if investors found out that their oil company wasn’t getting the high bucks for crude they were lead to believe was the case, but only getting lower bucks for condensate, they might be less inclined to buy more stock.

Me, I don’t really care, since I have to assume that the producers know what they are producing and the refiners know what they are buying, and as for the average American, he doesn’t seems to give a damn either way. Meanwhile, Peak Oil is almost here and nothing is going to change that.

Elmo – And here’s the root cause of the confusion: 30 API liquid hydrocarbons is oil. And so is 55 API liquid hydrocarbon. It’s all oil regardless of how the liquid hydrocarbon is classified. Different gravities, different sales price and different energy content. But the same can be said for liquid hydrocarbon at the other end of the spectrum say at 15 API. But it’s all oil in a general sense. The problem could be resolved by simply calling all the production LH…liquid hydrocarbon. But that doesn’t roll of the tongue as easy as oil or condensate. And there's no need to point out that the lighter LH’s sell for less than the middle grade LH’s because there are heavy oils that sell for less than the lighter oil. And there are even middle grade oils that sell for less than some light oils due to high deductions for sulfur and other problems.

Though there’s a rough correlation the distinction, in the eyes of some like the TRRC, is based upon the classification of a well and not the gravity of the oil. All well and fine for IHS to say X% of companies are producing condensate but the question is how do they define a company’s production of liquid hydrocarbon? If it uses different methodology then the TRRC you’ll always have two stats that differ from each other. I suspect some fols are comparing apples to oranges and don't realize it. For instance a well producing 48 API liquid will be classified as oil if the TRRC regs classify that well as an oil well based upon the gas/oil ratio. If another well producing the identical 48 API liquid is classified as a gas well then its production will be accounted for in the TRRC stats as condensate. But it is true that many wells producing light liquids tend to be classified as gas wells and thus accounted as condensate. But not all of them. But I gather that IHS classifies all LH production above 45 API as condensate. The TRRC doesn't.

There’s also another complication when characterizing past and future trends in the EFS. There is an oil window and a separate gas window in the EFS. The difference is spatial but that also includes a depth variation. In general the deep EFS reservoirs tend to be gassier and thus more likely to be classified as gas/condensate by the TRRC. The oil window tends to be shallower (i.e. not as hot). But there are exceptions.

As far as valuing a company’s stock based upon what price they are getting for the liquid hydrocarbons that’s a poor metric IMHO. Company A may be selling all its oil production at a higher oil price while Company B is selling all its condensate production at a lower price. But Company A goes insolvent due to bad management decisions and the stock would be used for toilet paper. And the stock of Company B doubles in 12 months because they were lucky enough to lease a sweet spot. In the oil patch a company’s profitability has never been determined solely by what price it sells its production for. The key has always been and always will be is what they spent to get it out of the ground. Selling $80 condensate that cost you $60 to develop is good. Selling oil for $100 that cost you $110 to develop is baddddddddd. LOL.

“…and as for the average American, he doesn’t seem to give a damn either way.” And to a degree that doesn’t matter. We are likely trending towards a lighter gravity LH over time. The energy content and gasoline/diesel yields will shift. But it’s all still oil. PO, be it Peak 30 API or peak 55 API, doesn't really matter a great deal in the Big Picture IMHO. It's still a peak in our ability to produce motor fuels. As the day progresses I will try to research more details on the condensate/oil distinction by the different players.

The oil window tends to be shallower (i.e. not as hot). But there are exceptions.

I once read that there is more heat energy than chemical energy in produced oil.

A 2-part question:
How hot is this stuff when it reaches the surface?
With the interest in hot-rock geothermal (eg in Australia) could the two industries get together and either share oil heat or "dry" wells?


There is definitely not more heat energy than chemical energy in produced oil.

One bbl of oil is ~6e9 J.

Taking a bbl of oil from 300 C (very good geothermal resource) to 0 C (basically impossible in a real power cycle, but makes the math easy) is
Q = m*Cp*DelT = 300 lbs * 1000 J/lbs C * 300 C = 1e8 J (rounding up)

So it's more than an order of magnitude difference, even with some generous assumptions.

What you may have read is that the rock from which the oil was extracted has more heat energy than the oil contained within it. That may be true, but effectively mining the heat is a tough proposition.

Hello Rockman,

For my laymans mind surely if its liquid at room temp (68F ) and 1 atmosphere when extracted then would that help in classify it as oil - after all a gas is a gas...

And for the other end of the scale for tar I think some kind of viscosity measure , hmm, tars vary a lot
but perhaps above 400C to make them liquid ?

call them waxes if above 45C they are liquid

tough I think


Condensate is defined as hydrocarbons which are in the gaseous state under reservoir conditions, but condense to liquids under atmospheric conditions.

This means that, chemically speaking, condensate is a liquid the same as oil under atmospheric conditions, and the phase only differed under reservoir conditions. The only fundamental difference at the surface is its origin - condensate comes from gas wells, oil comes from oil wells. The difference is a bit arbitrary, but normally government regulators tell oil companies which type of well they have, not vice versa. It's a legal rather than a production issue.

From a practical standpoint, condensate is usually a less dense, less viscous liquid than oil, but some crude oils are nearly as light as some condensates. However, from the oil refinery perspective, the product mix they can get out of condensate will be different from that of most oil, so they will pay a different price depending on market conditions.

At the moment, as a result of the increased production from the Eagle Ford and other condensate-rich gas plays there is too much condensate on the US market, and as a result it is getting a lower price than oil. Fortunately for producers there is a strong demand from Canada for condensate to dilute heavy oil and bitumen to allow it to flow though pipelines, so much of the condensate is being exported to Canada, and immediately reimported as diluted bitumen (dilbit).

Thanks, Guy, for the best job of explaining condensate yet, at least in TOD. Appreciate it! The side comment on dilbit was informative and interesting as well. This is the sort of thing that makes TOD the best site for energy information I have found.


And my point is that if we back out condensate from the C+C measurement, it appears that the the global supply of "Black Gold, Texas Tea*" in 2012 was probably flat to down, versus 2005, despite a doubling in global crude oil prices.

*e.g., the surface seep that Jed Clampett found, i.e., 45 or lower API crude

Jed hasn't done so well ever since Drysdale's recommendation of Greek bonds as a way to recover from his Reno housing development investments. Especially since he canned Drysdale and moved his money to Cyprus.

Hi Ron,

The difference between the Railroad Commission's numbers and the EIA is because smaller producers often report late and sometimes there are corrections that take time to process. The EIA avoids this by surveying the larger companies that produce about 80 to 90 % of total output and then assuming that the proportion produced by thes companies has not changed when doing their estimates. If you look back about 18 months the EIA and RRC numbers match very closely, but the most recent production is probably closer to the EIA numbers (unless the proportion of total output by the surveyed companies has changed significantly.) To estimate Eagle Ford output you need to adjust the RRC numbers by assuming that the ratio of Eagle Ford to total statewide production is similar to the RRC reported numbers and then adjust by the ratio between the RRC statewide numbers and the EIA estimates.

As a simple example using round numbers, if Eagle ford output was 400 kB/d and statewide production was 1600 kB/d according to the RRC of TX, but the EIA data suggests 2000 kB/d for TX, then the appropriate estimate for the Eagle Ford would be 500 kB/d. Bottom line, the RRC numbers for recent production will tend to understate the actual output.


Ron et al – When I see such a chart I don’t see the decline of an oil field predicted. I primarily see a prediction of future drilling activity. And obvious such a prediction will be heavily influenced by price expectations. Some folks say PO is wrong because no one predicted the uptick from the shales. Of course not: how many folks were predicting $100 oil back when it was selling for less than half that amount? Same thing with the shale gas play: we all knew that NG was there and knew how to get it out. But there was little interest until NG prices started to boom.

Back to the chart. If I asked you to model Eagle Ford oil production in 2015 AND stipulated that oil would drop to $40/bbl tomorrow I suspect your projection would be very different than if you modeled with oil rising to $120/bbl tomorrow and holding there for the next 5 years. But the chart is a combination of two trends: the additional production from wells yet drilled and the declining production of existing wells. Wells coming on in the last year would skew that number up high. But wells drilled 3 or 4 years ago would be contributing little due to those well-known high decline rates. But the older wells would contribute low volume but low decline rate steady base.

Consider the boundary limit of such a chart. If no more EFS wells were drilled tomorrow then you would see a very sharp drop off over 2 or 3 years and then a rather low decline rate period. OTOH if oil jumped to $120/bbl tomorrow they would be trying to drill even more EFS wells then they did in the last 12 months. But again there’s another obvious boundary limit: regardless of how high oil prices get there are a limited number of EFS locations that can be drilled. As pointed out before the horizontal drilling and frac’ng of the Austin Chalk in Texas was the hottest play in the country back in the early 90s’s. But you don’t hear much about it now even with the higher oil prices: the great majority of the viable locations have been drilled.

So the chart: how accurate it proves to be in the next few years will depend more on drilling activity than individual well decline rates. A better way to imagine the dynamic IMHO is to think of the EFS as thousands of potential individual fields that, once drilled, have a very high decline rate. How high the production from this trend of fields goes and how long it stays there will depend on how quickly new fields (wells) are developed.

Rockman, of course economics, that is the price of crude oil, will have everything to do with future oil drilling and production. But when we are making predictions they must all be made with the caveat that they only apply if oil prices stay pretty close to what they are today. If the bottom falls out of oil prices, because the economy collapses, then decline rates will be a lot steeper. On the other hand, if prices go even higher then that will make more marginal fields economical and we will either see production rise or decline rates slowed considerably.

On the other hand there is just no way to get around geological constraints. So there is a limit to what price changes can actually do.

Looking at the chart again, the decline rate Roger Blanchard predicts is not really that steep. Those little diamonds on the chart are years, not months. He says the Eagle Ford will be at 600,000 barrels per day when it peaks in 2014. Then three years later, in 2017, it will still be at 500,000 barrels per day. That is only about a 6 percent decline. This is shale, I expect the decline rate to be a lot higher than that, especially if they start pulling rigs out.

Ron P.

Does the action of the Federal Reserve have any influence on the price of oil? Seems to me that when they pull back their buying of mortgage backed securities there will be a big fall in the price of oil. But maybe they can keep doing what they are doing until they want...at least that is what they tell us..."everything is just fine you just sit back and leave the flying to us"

Sparky: When the Fed stops purchasing securities (mortgage backed and/or the QE purchases), the cost of money will go up. That means interest rates rise, bond values fall, and what is left of the banking industry drops into the hole thus created.

At least that is my opinion... and that the Fed cannot, for that reason, stop. Especially the QE part. I mean, if the Fed isn't buying Treasuries for no interest at all, then the auction will turn to people who will demand interest commensurate with risk. You could at that time see value of the dollar drop, prices rise, and inflation take off.

Or not. Given the present situation it is as likely to fall in either direction, IMO. And, neither particulary pleasant.


Hi Ron,

As I mentioned upthread, the RRCT (Railroad Commission of Texas) numbers need to be adjusted upwards, especially for recent months. If we assume the EIA numbers are better estimates than recent estimates by the RRCT we get the following for the Eagle Ford:


Note that the output in Dec 2012 is close to the peak in Mr. Blanchard’s chart in 2014. As Rockman points out, (and you agree), the future will depend both on the future price of oil, the rate that new wells are drilled and completed (which will be influenced by the price of oil), and by how productive the new wells are (which is a function of how large the sweet spots are). If we want to create a future scenario, we need to explicitly state our assumptions about how we think these factors will develop over time.

I have recently updated a future scenario for the Eagle Ford (crude only) with the following assumptions:

-Real oil prices will rise by about 12 % per year (they will roughly triple over a 10 year period)

-The average well profile of new wells will remain the same for 2 more years (until Jan 2015) and will then decrease by 1 % per month, this results in wells starting production in Jan 2020 producing roughly half the output of wells starting production in Jan 2015 and earlier over similar time frames (i.e. 5 year cumulative output 204,000 b vs 117,000 b).

-The rate that new wells are added increases from 139 new wells per month in Jan 2013 to 187 new wells/month in Jan 2015 (an increase of 2 wells per month over 24 months) this acceleration continues out to Jan 2018 (258 new wells/month) then slows to half (increase by 1 extra well per month), the peak is reached in Feb 2019 at 1.3 MMb/d with 17817 wells producing and it is assumed the trend is completely drilled up at 40000 wells in Dec 2026.


Just a different take from Roger Blanchard.

Note that the first chart is C+C and the second is crude only (I was unsure how to model the condensate production.)

Also the cumulative output from April 2009 to July 2051 is about 7 billion barrels.


I repeat - please don't re-post comments that are blocked by the spam filter. They'll only be blocked again.

And don't edit comments that have been blocked, then approved by a mod. That only gets them blocked again.

Has there been a change in what type of comments are "prefered", or are the preferences just more enforced now?

The spam filter is new. We got attacked by spammers last week. It was unmanageable. Like, 10 spam comments for every real one. Super G purged 70,000 accounts and blocked new people from registering, and that solved the problem temporarily. The spam filter is so we can open up to new registrations again. But it's got problems of its own.

Is it possible to set up a test to clear new account registrations?

Basic math questions, or such:
How many gallons are in a blue barrel?

If you run a 100 watt lightbulb for 10 hours how many Watt-hours have you used?

Word questions:
Are you human?
A) I'm a meat popsicle!
B) Why yes, I am a member of the Homosapiens!

Who proposed the theory of Peak Oil and predicted the US peak in production?
A) L. Ron Hubbard
B) Marion King Hubbert
C) Edwin Powell Hubble

Probably wouldn't want to make it too onerous as to drive everyone off. Do spammers have the ability to jump a hurdle like this?

Sorry Leanan,

I wasn't aware of the new moderation. Are all comments now moderated or only comments with links? I will be sure not to re-post in the future while my comment is being moderated, I realized my mistake after the fact. Thanks for all you do.


Near as I can tell, the spam filter tries to block comments that likely to be spam, personal attacks, "low quality," or obscene/profane. It looks like comments with images or a lot of links are the ones that tend to get caught in the filter.

Originally, comments that were filtered were deleted. Super G changed the settings so they are hidden, giving me the option of un-hiding them if they are not spam. He's trying to lower the aggressiveness of the filtering, because it's catching a lot of legitimate comments.

Not sure if your package can do it, but I'd suggest a whitelist of known contributors (eg the usual suspects), which don't get blocked. That way the only ones that go via the algorithm are those from new posters - increasing the spam/signal ratio of blocked posts.

Easiest way of populating that would be to take everyone with a first posting date at least two years in the past, and add them to the whitelist.

I guess I got cought by the ""low quality," or obscene/profane" last week during a discussion of UK gas storage level and politicans going the pond I could not resist and posted a link to a diver going into an icy pond.

DC, I think your chart and predictions are wildly optimistic. Eagle Ford, like the Bakken, is already showing signs of slowing down. Two out of the last four months show a declines. And where do you get the data that says new wells will increase at the rate of two per month for the next two years? Or for that matter why do you think the average profile of new wells will remain the same for the next two years, and after that only decline at 1 percent per month? Are they two years away from drilling all the sweet spots in Eagle Ford?

And looking at your chart, it looks like the current number of wells to be about 300. Is that right? The Bakken already has over 5,000 wells. If Eagle Ford is producing that much oil from so few wells, then there is something fundamentally different between the Bakken and Eagle Ford.

Ron P.

The current number of wells is around 2000, but that is only an estimate, there is not an easy way to track the number of wells in the Eagle Ford. I have looked at the data for the eagle ford for individual wells and there has not been a pronounced decrease in new well productivity from 2010 to 2011.

My modelling work on the Bakken suggested that holding the "average well" profile constant from Jan 2008 to Dec 2012, yields a model which agrees well with the data from NDDMR. The eagle ford trend started to ramp up in 2010 and by now we are 2 years into development, in the Bakken case 4 years of a steady well profile worked well so I assumed 4 years might work for the Eagle Ford as well, Dec 2014 is the 4 year point for the Eagle Ford and that was the basis of leaving the well profile unchanged until Jan 2015.

The 1 % per month works out to about 12 % per year, Rune Likvern's analysis shows about a 20 % decline in the well profile over 1 year, so the estimate is somewhat optimistic as I have the well profile declining less aggressively than in the Bakken.

The two well increase per month is simply a guess, there is no future data I can point to, if you find some it would be interesting however ;). In the case of the Bakken if we start in Dec 2010 at 2064 wells and add 3 wells to the 48 new wells of that month for every month after for 24 months we get 4041 wells after 24 months, which is less than the 5062 wells in Dec 2012. So at a similar level of development (about 2000 wells) I have added 2 new wells per month in the Eagle Ford rather than the 3 wells per month seen in the Bakken (and the three wells is actually too low, we end up a 1000 wells short.) So either I am wildly optimistic or maybe wildly conservative, I think it is about right.

Based only on area and a well spacing similar to that proposed by James Mason in his article about the Bakken, the Eagle Ford might allow 60000 wells, I used 40000 to be conservative, but the peak is reached at only 17,800 wells, I have no idea what number will be reached.

I would point out that anyone proposing that the Bakken would reach 669 kb/day two years ago would have been considered wildly optimistic, and I would have agreed.

Time will tell if my scenario proves to be too optimistic, too conservative, or not too far off.


In the case of the Bakken if we start in Dec 2010 at 2064 wells and add 3 wells to the 48 new wells of that month for every month after for 24 months we get 4041 wells after 24 months, which is less than the 5062 wells in Dec 2012.

No, no, no, it did not work that way at all. All those new wells were added suddenly, in one month. Bakken additional wells jumped from 60 to 159 in one month. From June 11 to July 11.

I label them "New Wells' because that is what I thought they were. But no, that number, 159, is simply new wells minus wells in the Bakken shut down that month. And they have been shutting down wells at a rate of perhaps 50 per month. So it is likely the number of wells jumped, in July 11, by more than 150. And notice that the number jumped to 192 in March 12 and May 12 but has since declined to just 113 in January of this year.

Bakken additional wells per month. (New wells minus wells shut down.)

Bakken New Wells photo BakkenNewWells_zpsd1f9a4e2.jpg

So there never has been a smooth additional number of wells added per month in the Bakken, and I doubt that there has been, or ever will be, in the Eagle Ford either.

As I said, your Eagle Ford production estimation is wildly optimistic.

And a gradual 2 per month increase won't work for Eagle Ford either. In fact the Eagle Ford rig count has been decreasing.

(click to enlarge)

Ron P.

Hi Ron,

You are correct that the Bakken did not ramp up smoothly. My point was that we do not know what the future will look like.

I will attempt to lay this out more clearly. We know in late 2010 there were about 2000 wells producing in the Bakken, and in late 2012 there were about 5000. Now let us imagine that we do not have the number of wells for every month between (which is exactly the case for the Eagle Ford). I propose that in such a situation we assume a smooth ramp up because we don't have any data, if we had done so for the Bakken we would have needed about 2 extra "additional" wells per month. I would be interested in where you get 50 wells being shut down each month. We only have data on the number of producing wells, you are correct that there are some wells shut down every month, but we can only guess how many that is.

I agree there will not be smooth ramp up, it does not really matter, it is the trend that is important.

The trend I have proposed for the Eagle Ford is very similar to the trend we have seen in the Bakken, the smoothness is of little consequence and has little effect on overall production. Does the trend seem wildly optimistic, is there some reason the Eagle Ford could not repeat what has already been accomplished in the Bakken? It seems to me that Texas is all about oil and that it would be easier there, also the winters are a little milder so 12 months of production may be easier to accomplish.

Note that in Jan 2005 there were 188 wells producing in the Bakken, there was a short term peak in number of producing wells in Aug 1994 at 256 producing wells so at least 68 wells were shut down over this period (some new wells may have been added as well, hard to know how many). For simplicity let's assume no new wells were added (prices too low maybe). Let us also assume older wells will tend to be shut down as they deplete.

In Aug 1984 there were 68 producing wells and in Aug 1994 there were 256, an increase of 188 producing wells, of the 68 old wells from 1984 at least 57 had been added since Aug 1979 when there were 14 producing wells so by Jan 2005 if these 68 wells were producing they were 20 to 25 years old (they were probably shut down over the Aug 1994 and Jan 2005 period at the age of 15 to 20 years). This leaves the 188 wells from Jan 2005 which probably were between 11 and 21 years old (started production between Sept 1984 and Aug 1994). If these wells were being shut down at 50 wells/month, it would not make much sense, maybe you meant 50 wells per year, but it has been 8 years since Jan 2005 so if we assume the same number shut down per year we would get about 24 old wells shut down per year or 2 per month.

Another way to approach this is to assume on average that wells get shut down after 15 years. The chart below adjusts the delta prod wells (change in # of producing wells each month) by increasing the delta prod wells by the delta prod wells from 15 years earlier if it is a positive change. I am assuming these wells are shut sown after 15 years on average and a new well must be added to replace it (if the number of producing wells is unchanged). I also show the linear trend from Jan 2008 to Dec 2012. Finally I add the linear increase in delta producing wells by 2 per month (as in my wildly optimistic Eagle Ford scenario), this is labelled as
"+2 wells/mo". Note that I agree with you about starting at 48 in Dec 2010 and instead start at 94 (on the linear trendline) and increase by 2 each month, this still falls at 4872 producing wells in Dec 2012, well short of the 5044 wells from NDDMR.


On the rig counts, the oil rigs are the important part of that chart and they have been flat since Feb 2012 with little effect on output, note that the oil rig count tripled in 2011, it may fall in the future or it may rise, time will tell us.

Edited to add what follows:

Just for kicks, I updated my Eagle Ford Scenario so that it is only "mildly optimistic" ;)



DC - According to my DrillingInfo data base there have been 3,842 Eagle Ford completions since June 2008 when the boom began. Those wells were drilled on 2,793 leases. Production in Texas is reported by lease and not by the well. Thru Jan 2013 those leases have produced 257.3 million bbls of C+C and 711.6 bcf according to the data derived from production reports submitted to the TRRC. But understand the DI data base charts the liquid hydrocarbon production as “oil”…it doesn’t break it out into oil and condensate. The spam filter blocked some of my response yesterday so in case you missed the main point: As far as the TRRC goes the distinction between oil and condensate isn’t based upon the gravity or composition of the liquid hydrocarbons. If the TRRC classifies a well as a gas well all the liquids from that well are classified as condensate. If it’s classified as an oil well then all the liquids are classified as oil. The distinction between and oil well and gas well is based upon the GOR…gas/oil ratio. And that may be the GOR at atmospheric conditions or, if an operator makes a special application, at reservoir pressure conditions.

So if a well is producing 300 bbls of 40 API liquids and it’s classified as a gas well then 300 bbls per day of CONDENSATE is reported. If a well making 300 bbls of 40 API liquids is classified as an oil well then 300 bbls per day of OIL production is reported. The classification of a well as an oil or NG produce has huge impact on the different regulatory rules on unitization, well spacing, royalty distribution, etc., etc. Just to make it more complicated the reservoir pressures can change significantly over time and it’s possible for a gas well to be reclassified as an oil well after producing a number of years. So in the records the well may have X thousands of bbls of condensate produced during the first portion of its life an Y thousands of bbls of oil produced over the last portion of its life. And this is where confusion may come in from different reporting agencies. If one group is looking only looking at Eagle Ford condensate production as reported by the TRRC then they are missing Eagle Ford oil production. The GOR varies greatly across the trend. The deeper wells tend to be classified as gas wells and the shallower ones as oil wells. Thus you’ll see references to the EFS ”oil window”.

In a few days I’ll be able to give some indication of any changes in the production character of wells (leases, actually) over time. The best metric available would be the cumulative production over the first 12 months. Thus this stat will be only for those leases coming on line in Jan 2012 and earlier. Again, leases and not wells. If a lease started producing on 1 Jan but multiple wells were drilled during the next 11 months the later wells will not have contributed for a full 12 months.

The reason Texas long ago required operators to just report lease production and not by well was practicality. Several wells may be producing into the same oil tanks on the lease. So typically oil production was never measured per well. As an operator it’s critical for us to know how individual wells are doing so we’ll periodically catch samples from all the producing wells and then allocate the total production per well. But those numbers aren’t given to the TRRC.

Hi Rockman,

Thank you for that information. Are those completions only oil wells or does it include both oil and gas, if it is both do you have the gas/oil breakdown for number of completions? Also do you know how many of those completions are producing? I noticed that there are often leases which are on the schedule but are not producing yet.

I realize that only the leases get reported and that there are often several wells per lease, this makes modelling difficult, one can get an idea of the number of wells per lease by using the map viewer and putting in the lease ID# and district #, then you can dig further and find when the wells were completed, but it is a huge pain and that was the source of my "there is not an easy way to find the number of wells". I tried to determine an "average well profile" by focussing on thos leases with a single well in eagle ford 2 and on multiple well leases that had several wells completed at about the same time, but there is too much guesswork when wells get added later so those leases I did not use.

The problem with the 12 month metric that you use is that for those leases that have new wells come on line over the 12 month period (at say 6 months and 9 months along with the initial wells at month 1) will look better than they would if we were looking at a lease with only wells producing for a full 12 months. I am not sure there is a good way around this problem without a lot of work. For 136 wells from 125 leases in the Eagle Ford 2 field I get an average of 109,174 barrels of oil for the first 12 months of production, the wells started production between August 2010 and Jan 2012.

For condensate vs oil I used what the RRCT gives in various fields of the Eagle Ford Trend. In my model I used crude only because I was not sure how to deal with condensate.



I have discovered some of the answers to my questions at http://www.rrc.state.tx.us/eagleford/

As of 3/29/2013, the Map shows (click twice to enlarge it) well completions and drilling permits as of March 7, 2013 in the Eagle Ford play(it is updated monthly). Currently we have 5458 permits (both oil and gas), 2874 oil completions on schedule, and 1073 gas well completions on schedule. Note that sometimes a lease is on the schedule (lease # is reported for a field) but is not yet producing, so not all of these wells are producing. When we look at data from the online production query for oil leases in the Eagleville fields of district 1 and 2, we tend to find 75 to 80 % of leases on the schedule for any given month are not producing any oil. So for March 7 we are likely have about 2230 producing oil wells in the Eagle Ford.

Also at the Eagle Ford info page we find that there were 1262 producing oil leases at the end of 2012 in the Eagle Ford, so the average oil lease has about 2230/1262= 1.77 wells, at the end of 2012, this number will change over time, this makes attempt to model what is happening quite tricky.


There was a story on Saturday's WaPo that the US Senate had passed a bill in support of the Keystone XL pipeline project.

Senate endorses construction of Keystone XL oil pipeline from Canada to Texas

There was a mention of this vote in Saturday's Drumbeat, but no comments about it. The vote was "nonbinding", but it did pass 62-37 with some support from the Democrats...

E. Swanson

Dog – “They expect a presidential veto to be an important symbolic victory in the larger fight against global climate change.” So for the moment we have two symbolic “victories” to focus on: The victory against global climate change by the POTUS not signing the permit (so far) and the victory of Canadian oil sand producers to export more oil to the US during 2012, on President Obama’s watch, than ever before in history.

So, wonder whose symbolic victory is more powerful? Even more important: which one will still exist a year from now? And there are some other more than symbolic victories the MSM hasn’t been focusing upon. Like more than 400 “victorious” drilling permits in the offshore GOM fed leases since the BP oil spill. And like the more than 15 “victorious” current oil production projects in the GOM approved by the POTUS. And like the “victorious” offering of 100 million acres of offshore leases by the PTUS in the last 12 months. And like the “victorious” increase of US coal exports that haven't been blocked by the POTUS. And, last but not least, the “victorious” success of the other 98% of the Keystone PL that doesn’t require approval from the POTUS.

Just adding up those few victories and comparing them to the environmentalists’ victory on that one very short section of Keystone it looks like a rather one-sided battle of the presidential symbols. Honestly, I am sympathetic with the plight of the environmentalists even if I don’t agree with every one of their positions. Today all they have are a few mostly symbolic victories that will be short lived IMHO. And I'm sure their chances of other successes will decline even more as we stumble down the PO path. It looks like Goliath vs. David. But all David has is a symbolic sling. And I strongly suspect the POTUS will take even that one away from him in the coming months.

The Senate and the President have spoken loud and clear. They have no intention of doing anything to stop or slow down fossil fuel production. I agree there are no victories for those who care about carbon, symbolic or otherwise.

Meanwhile, back in the real world: Scientists link frozen spring to dramatic Arctic sea ice loss http://www.guardian.co.uk/environment/2013/mar/25/frozen-spring-arctic-s...

In the UK many people's attitude to "Global Warming" is "Bring it on, I'm all in favour of a Mediterranean climate in [insert name of home town]". A lot of these do not even question the science, i.e. they're prepared to believe that it is anthropegenic, but don't care...

Recently, I've been asking individuals whether their attitude would change if the science showed that Global Warming (or Climate Change as I prefer to refer to it) would generally mean wetter summers and colder winters, with only the occasional short-lived heat wave. Almost 100% said this would change their attitude towards the issue...

I can only hope that a lot of people read the article.....

In the UK many people's attitude to "Global Warming" is "Bring it on, I'm all in favour of a Mediterranean climate in [insert name of home town]".

There gas storage is almost empty and the weather is cold so it make sense for the moment.

Don't worry about us being out of NG just yet; the big boat from Quatar has arrived.

This is the nexus between climate change and peak oil. So far, peak oil is primarily driving us to use dirtier fossil fuels with decreasing returns on investment. Instead of moving toward renewables full throttle, we are putting the accelerator to the floor for deep water and oil sands, following the path of least resistance. We're not very good at adding the externalities into our economic calculus, choosing the least monetary cost today without considering the future environmental, long-term economic, and health costs.

Hi Rockman,

I know that you are sympathetic to the ends that many environmentalists seek, but are quite dubious about the means in many cases (Keystone XL for example).

I think your assessment is spot on. My hope is that rising oil prices, followed by rising natural gas prices, and eventually rising coal prices coupled with pollution enforcement on old coal electrical generation will allow market forces to turn things in the right direction.

This is probably an overly optimistic scenario, but if prices rise enough then public transport, electric cars, wind power, solar power, and a better grid (more HVDC transmission) all start to make sense from an economic perspective. I think this will require a tripling or maybe more in the real price of oil, natural gas, and coal. Maybe in 10 years or so we will be there (note that real price of Brent crude roughly tripled from 2002 to 2012.)


Talk today on the BBC that us Brits are going to buy Nat gas from the States - no mention of price either

can it be done ?

will we be able to afford the pipeline over the Atlantic ? ;-)

( shipping terminal and compression ,storage tanks , none build so far ?? )

why not just build a tunnel - A Transatlantic Tunnel, Hurrah! http://en.wikipedia.org/wiki/Tunnel_Through_the_Deeps

Aye perchance a time to sleep and dream ......

Gas ELM anyone - sister web site "the Gas Tank " oops perhaps that doesn't work so well for Amerikans ! "the methane burp": dunno , help me out here guys !


Would seem to be a logical place to export some of the US LNG. I'm surprised it's taken this long for it to start to make traction. Maybe the brits are finally realizing they're in deep trouble WRT to natural gas? Now it seems they've all ticked off the Russians, so they better have a backup plan in place.

I believe they already have import terminals over there, I doubt there'd be much additional infrastructure to be added.

Edit: looks like this is the reference -


“It’s a nice contract to have if the fundamentals that exist today are there in five years time,” Iain Turner, a utilities analyst at Exane BNP Paribas in London, said by phone.

A 20-year supply deal, starting 5 years in the future? I will be interested to see how this holds up....

Well LNG facilities take a number of years to build, so it makes sense. I think he was referring to the hope that the pricing arbitrage that exists today will *hopefully* exist 5 years from now. Naturally 5 years ago they were almost certainly singing a different tune regarding US exports, so time will tell.

Yes, we already import LNG from Qatar so we're well set up for imports...


Will there be any shale gas to spare in the US in 2018 when this starts? Let alone 20 years down the line?

I see much here on depletion rates...

And won't export push US LNG prices up?

Centrica press release here: http://www.centrica.com/index.asp?pageid=1041&newsid=2693&goback=%2Egmr_...

At the bottom of the release are the pricing details, based on Free On Board at the Sabine Pass facility.

The price is $3.00 + (115% x Henry Hub NG price). Last price for 2018 NG at Henry Hub was $4.76 per mmbtu. Using an exchange rate of 1.52 for $/£ (I can't find a rate for 2018, so I used the spot rate), the price Centrica/Cheniere have agreed is approximately 56 pence per therm ($8.50/mmbtu) FOB Sabine Pass.

I guess shipping and regasification would cost in the region of 6 pence / therm (anyone with more accurate numbers please feel free to chime in - I've used 3.5 p/therm [$0.53/mmbtu] for freight and 2.5 p/therm [$0.38/mmbtu]for regas).

Total cost to Centrica delivered at the NBP in the UK would therefore (at today's prices) theoretically be in the region of 62 pence/therm ($9.40/mmbtu), which looks relatively cheap compared to the 2018 NBP forward price of roughly 65.50 pence/therm ($9.95/mmbtu).

Of course, if Centrica wanted to "lock in" all the various elements (Henry Hub, NBP, £/$ rate, etc) for even just the first year of the term, I'd expect them to have to take a pretty significant hair-cut on the UK pricing and to pay a reasonable hefty premium for the Henry Hub pricing....

What is the ratio between metric tonnes and cu feet ? I suspect that this is <<1% of US methane production.


It's not a huge deal - just over 91 BCF/year (using 1,000 btus per cu foot). Roughly 0.5% of US production if I got all my numbers right....

1 metric tonne equals about 48,700 cu feet. http://www.bp.com/conversionfactors.jsp.

1.0 Metric Ton = 46.7 Mcf

Meanwhile, the EIA shows that US dry monthly natural gas production has basically been flat, generally between 1.9 and 2.0 TCF per month, since early 2011.

That's only because it's really cheap, though. If prices go up, so will production, for a while anyway.

That's why you get a 20 year firm contract if you're an exporter...who cares what the prices are, you still get paid the same whether you load 10 ships a month or 10 ships a year.

Talking of the Utica shales in Ohio, does anyone have some hard information on the Utica shales in the St. Lawrence valley, in Anticosti and and Gaspesia (all in the province of Quebec). Citizens are promised untold riches, but I've seen no numbers at all for the St. Lawrence Valley shales (supposedly gas rich), for the Anticosti shales (the current estimate of 30 billions of barrels looks like a wild guess based on rock morphology, they cannot even tell if it's gas or oil) and the Haldimand #4 well, about to be drilled close to downtown Gaspé even though the city actually opposes the projet, is trying to tap a meagre 8 million barrels reservoir. Hardly a tight oil revolution.

Does anyone know about the real potential of the area? My feeling now is that oil companies promise a lot more than they can deliver in an effort to get subsidies or to lift some environmental rules. You know, the old «it's a small sacrifice for a huge return» hoax.

From Stuart Staniford's blog: Why Did Saudi Arabia Reduce Oil Production?

I'm a bit slow in getting to this, but there now seems to be a bit of a mystery about Saudi oil production (latest data shown above). In mid 2011 through mid 2012, Saudi production was hovering a little below 10mbd (averaging all data sources). It started to drop a little bit last fall, but then in November and December it took a really sharp dive, and now seems to have stabilized at or a little above 9mbd...

In this case, the fall is very abrupt, which is more characteristic of an intentional cut. On the other hand, it comes amidst a generally rising rig count (signaling more work is being done to maintain or expand capacity). If it was voluntary, it's not immediately obvious why from the spot price chart:

While watching some old ASPO videos over the weekend, I think I may have stumbled upon the answer to Stuart's question. Some of the reduction may have been due to natural decline but most of it was likely intentional but for a very important reason. It was what Robert Hirsch calls "Oil Exporting Whithholding Scenario". His explanation starts at about 21:26 into this video: Robert Hirsch - Peak Oil: Exploring the Risk Factors ASPO 2007

Saudi is now realizing that their production is finite and will soon start to seriously decline, along with the rest of the world, they have decided to deliberately cut production in order to save it for their own future use. They realize that they must export oil for revenue to run their country but also must ration what they have left. It will be a delicate balance, export enough to support their budget but save enough to run their country for a few years into the future as well.

And if this is the case, and I believe it is, Saudi oil production is not likely to increase in the future. In fact it will likely continue decline further as they must cut production even further in order to maintain this delicate balance.

Ron P.

Of course, a better question is, "Why did Saudi net oil exports fall for seven straight years (relative to 2005), as global annual crude oil prices doubled?"

The Saudi ECI ratio (ratio of total petroleum liquids production to liquids consumption), through 2011:

The above extrapolation suggests that Saudi Arabia, through 2011, had already shipped about 38% of their post-2005 CNE (Cumulative Net Exports), but there is a critically important point about this extrapolation.

The above extrapolation assumes a slight, but perpetual, increase in production, since it is based on the 2005 to 2011 production rate of change (11.0 to 11.2 mbpd). An inevitable production decline, even with a reduction in the rate of increase in consumption, means that the 38% post-2005 CNE depletion estimate is probably too optimistic.

I still think Saudi Arabia has some aces in the hole to stem the export declines. Declines will continue but the current trend will be less steep because of measures such as:
1) More refineries will be built to handle the crappy heavy-sour crude that they have. They are not selling much of it because most of the refineries are built to handle better quality oil. But as the price of oil continues to go up, eventually people will build refineries to handle the heavy-sour crude because it will be sold at a good discount from the high-grade oil.
2) Saudi Arabia can phase out the current ridiculous oil subsidies that encourage wasteful domestic usage of gasoline/diesel. People will drive less, buy more efficient cars, use public transport, etc. . . . like the rest of the world is doing.
3) They can stop burning so much valuable crude oil to create electricity. With the reduced prices of solar & wind systems, it is crazy for them to burn up crude that they could be exporting just to create electricity. Raise electricity prices and move to non-oil based generation systems like everyone else. Nukes, solar, wind, natural gas, etc.

And when we see them start doing these things . . . then we know they are starting to sweat.

Raise electricity prices and move to non-oil based generation systems like everyone else.

speculawyer, is Saudi Arabia subsidizing the price of electricity like they are with gasoline?

Electricity is very heavily subsidized in KSA.

And power outages in August are not acceptable.


Spec, nothing happens very fast in Saudi Arabia. All the stuff you are talking about is either already happening or will not happen at all. The oil Saudi is producing right now is not really crappy, most of is is quite light. It is the stuff from Manifa that will come on line in about a year, more or less, that is really crappy. However two new refineries will soon be completed and both will be able to handle the oil from Manifa.

They are looking at Solar, Wind and Nuclear but it will be years before they have anything along these lines comes on line. I doubt if they will ever have nuclear power. Their hope right now is more gas. They are drilling like crazy for gas and that will likely lower their internal crude consumption somewhat.

But they don't have anything coming down the pike that can slow declines down. In fact I think they are seeing rising decline rates right now and that is why they are cutting back. And those decline rates can only rise as water starts to hit those new horizontal infill wells that they started drilling about a decade ago to stem their 8% decline rate. They say they got it down almost to 2% but that could not possibly last. All they were doing is pulling the oil out faster, dramatically increasing their depletion rate.

Ron P.

Oh I agree things happen slow there . . . and that is why I say that when you see these things happening, you'll know they are starting to sweat.

But all of those things WILL happen . . . it is only a matter of time. They will procrastinate though, like all humans do. But when push comes to shove . . . well, Iran did it.

They've been searching for gas for over a decade now. And they even invited all the IOCs to come in and help with that (something they won't do with oil). But I don't think they've had enough success with gas alone such that they'll need to do solar, wind, nukes, etc.

Not quite the KSA, but the UAE just provisioned the worlds largest solar thermal plant:


The KSA has a long term plan for renewables (mostly solar), aiming for 24GW by 2020 and 52GW by 2032.


An interesting pic on oil and gas reserves (in USD) per capita :

Thanks. This goes to my graph collection.

The UK, at #44, does not look too good.


What happens to them if the price of oil falls a lot to say about $40 a barrel.

Spec,disagree with you on all three .
1.You can't build a refinery with a click of your fingers . It takes years and most important (like NG pipelines) a continuous sure shot supply source over the next minimum 10 years . The only people who are ever going to build a refinery to process the real crap quality of crude oil coming in the future will be the Saudi's and no one else.
2. Cut subsidies ? You might as well cut off the head of King Abdullah and the House of Saud.
3.Solar and wind to replace oil for electric generation ; the problems associated with both the sources and exra problems in a desert environment have been often posted on this forum .They can assist but cannot be the solution .
They are already sweating , I am looking to see when do they start pissing in their pants .

China will build refineries to process very low quality crude. Perhaps the Indians as well.


Chinese maybe ??? Indians no chance .The refineries(owned by the state) are in a bad economic state due to the subsidy policy of the govt as they have to bear the major brunt . They have enough problems maintaining cash flow for day to day operations .Forget about new refineries . As to the private sector , the only big world player is Reliance but most of their operation is export based .Maybe rpt maybe they tweak their operation to process the crap stuff if Saudi or other make a buy back agreement .All other private refiners are minnows.

I was thinking of Reliance as "maybe India".


Chinese maybe ??? Indians no chance .The refineries(owned by the state) are in a bad economic state due to the subsidy policy of the govt as they have to bear the major brunt

Not true. MRPL processes about 400kbopd, Reliance processes 1.2mbopd. If you take the total refining capacity in India it's about 12mbopd. So it's clear that Public Sector refineries dominate the picture. As far as subsidies go, they are going slowly. There is no subsidy on gasoline and for diesel subsidies are slowly coming down. I think you need to wait and watch this sector.

Sort of like a pre-emptive ELM effect...

Further increasing the Saudi trade surplus by pumping more only increases their problem with what to do with the excess petrodollars. There are few assets available to them which would appreciate faster than reserves in the ground. Depositing more petrodollars in accounts at Cyprus-like banks would be a bad idea.

Besides, as cost of extraction goes up, they need to get increased prices for current production in order to protect their profit margin per barrel. They can influence prices so long as Iraq, Iran, and Venezuela can't make up the difference when the Saudi's cut.

They started raising the price spread for del to the US back in Jul/12.
Sure enough, imports started declining.From 1.7m bl/da in Aug to 1.0m bl/da by Dec/12.
At the same time they lowered the spread for their far east customers.What didn't go to the US, went east.
The spread is a good indicator of how much oil they want you to buy!
In Jan/13 they brought forward the start-up date to late 2013 from 2017 for Manifia.
Despite lower prod, they said they were maintaining exports by del 200m bl/da from inventories.
From these last two statements,I'd say they are having prob in their fields.
They will prob increase prod(400-500?) this summer for their own power plants.

Good trading to everyone.

If you are correct, I give them a great deal of credit for caring about the future just a little bit. More than I can say about this country.


...or trying to avoid their Arab Spring; keep their heads and Rolls Royces as long as possible. The House of Saud is a one ring circus.

The top story "Life After Oil and Gas" is the standard media misleading trick. It quickly morphs from do we need fossil fuels to talking about the percentage of renewables in electricity supply in some select countries.

Some inconvenient facts are that the world had primary energy use of 143,000 Twh in 2008 from here...


Fossil fuels provided over 81%. Nuclear, hydro and biomass most of the rest.

New renewables constitute ~3% of electricity production or about 607 Twh.

The growth rate of both wind and solar has fallen recently, due to the winding back of incentives from governments around the world.

Wiki is hopelessly out of date, yet the numbers seem to hold from those presented here..


World primary energy use has been growing at ~2%pa since 1990. The renewables make up about 12.7% of the total, the same percentage as 1990. The largest component of renewables are biomass (mainly wood for heating) and hydro-electricity.

The current declining growth rate of new renewables in the context of high oil prices is precisely the wrong direction to make predictions of them "saving us".

Yes, they really should be given some big posters such as below to put on their office walls maybe :

It's all a bit wooly. Talking about oil, gas, fossil fuels and electricity. Not so much oil used for electricity these days. I don't have exact figures but electricity is only about 25-30% of energy use, so if you had 30% of electricity produced by renewables, ceretis paribus, you would be reducing FF use by maybe 20% given a 50% conversion efficiency of FF to electricity, which may be on the high side, but close enough for this commentor.

So we have an article proclaiming we don't need FF, then with some back of the envelope calculations, quickly realise it's all just hot air.

As an aside, EROEI's being what they are, the production of renewables requires an upfront EI, which seems to require an increase in power generation, and in 20-30 years again ceretis paribus we would likely need to be burning more FF then we are now even if renewabls were 30% of the mix. Simply because of the required growth in energy production/consumption.

So yes we do need FF to have some kind of BAU, where a house is a constant temperature all year round, and homeowners clubs force residents to use electric clothes dries, another example of the madness on planet stupid.

Prof Sir John Beddington warns of floods, droughts and storms

I saw his interview on BBC this morning. Basically the presenter played down his warnings and made him look alarmist. When in fact Sir John was already presenting the facts in a low key and measured way. I think most people will miss the message completely which is a shame because what he was trying to rely really is alarming.

"The [current] variation we are seeing in temperature or rainfall is double the rate of the average. That suggests that we are going to have more droughts, we are going to have more floods, we are going to have more sea surges and we are going to have more storms.

"These are the sort of changes that are going to affect us in quite a short timescale," he warned.

It's the shortened timescale that alarmed me a couple of weeks ago and the wide ranging effects it was going to have on us. Basically I think we'll be in deep trouble by 2020 if not before. What's happening in the UK right now is quite amazing (snow, blizzards, cold, flooding).

Sounds about right.
A farmer I saw on TV this evening who was pulling the few sheep remaining alive from a big drift said that his dad (77) could not remember a Spring event like this. Ruinous. He also mentioned while he got his breath that this time last year he was in shorts and the sheep were trying to get shade under the trees.
Call it Climate Chaos. We had a "100 year flood" in our district 5 or 6 years ago and 2 more since then that were short of that but bigger than I had seen in the previous 25 years. Last year we had a cool very dry Spring followed by a record wet summer. Without large machinery it would not have been possible to use the very brief time-windows for sowing and harvesting and even then yields were well down. Good job the UK still imports most of its food??


I believe that interview occured at just the right time, many more people in the British Isles now accept that our climate has changed than at any time over the last 20 years.

The last three years have certainly been extremely weird, cold and wet.

Burgundy: sounds about right. Pat: I hope so
A farmer I saw on TV last evening who was pulling the few sheep remaining alive from a big drift said that his dad (77) could not remember a Spring event like this. Ruinous. He also mentioned while he got his breath that this time last year he was in shorts and the sheep were trying to get shade under the trees.
Call it Climate Chaos. We had a "100 year flood" in our district 5 or 6 years ago and 2 more since then that were short of that but bigger than I had seen in the previous 25 years. Last year we follwed the heat wave with a cool very dry Spring followed by a record wet summer. Without large machinery it would not have been possible to use the very brief time-windows for sowing and / or harvesting and even then yields were well down. Good job the UK still imports most of its food??

I see that Jennifer Francis at Rutgers forecast something like this back last September.

With these large loops in the jet stream, climate wise it is as if one is randomly jumping +/-1000mi north $ south, with similarly large random jumps in precipitation. And it may stay that way for months on end, or shift drastically in short time spans. Truly climate chaos. One cannot infer from present hot/cool/dry/wet conditions anything about tomorrow.

That is why I started using the term "Climate Chaos" a couple (or 3) years ago.

Best Hopes for Better Understanding,


One thing we can know - - - the climate change deniers will be all over the record cold weather! "There is record cold... therefore there must be no Global Warming."

And they will be strnagely absent come Summer when things really heat up.

Best Hopes for Reality Checks.


I like the term "Global Wierding" which some others have started using independently. Like the freak Halloween Blizzard New Jersey got in 2011 sandwiched between 2 Hurricanes...

What jet stream? All that the Environment Canada weather maps have been showing for the last few weeks is a small disjoint section of jet stream in the southern US. Something certainly has changed from the days when you would usually see a contiguous jet stream flowing from west to east.

Better route planning cuts fuel use in freight sector

Some of the simplest ways to save fuel involve changing driver behaviour. Many firms in the Environmental Protection Agency's "Smartway" fuel saving programme have banned engine idling at loading and unloading facilities, as well as truck stops along the road. Others have instructed drivers to reduce speeds (driving at 55 miles per hour uses up to 7 percent less fuel than at 65 miles per hour).
Driver retraining has been backed up by engine-monitoring software which can detect fuel-wasting aggressive acceleration and violations of idling bans.

Widespread use of GPS, engine monitoring, and telecommunications for real time reporting are probably a big part of the savings. It also ensures that the routes planned by the optimization software are followed.

I was really impressed a couple of years ago taking an airport "limosine" to a hotel. The driver loaded each riders destination into his GPS device as we got on. When the vehicle was full (about 8 passengers)he punched a button on the device and it gave him the most economical route to drive. I'm sure that technology has spread significantly since then.

My son serves as a substitute school bus driver for a district here in upstate NY. We were chatting about his work and he mentioned that it can be frustrating when the regular drivers don’t keep their route logs up to date, resulting in the substitute driver occasionally either missing a stop or stopping where they don’t need to. Then he mentioned that the district has been experimenting with an on-board system that integrates route information with GPS and control over the bus acceleration. When a stop is being approached, the bus automatically begins to decelerate at the optimum distance before the stop, and then limits the rate of acceleration when leaving the stop. There is feedback so that the system initially “learns” the route from the driver and then works on optimizing the approach and departure. They have found that this saves ‘a lot’ of fuel. Just a ‘silver BB’ during the transition, but still, an auto-hyper-miling school bus... How cool is that?

Egypt increases duties on food imports, luxury goods - media

CAIRO (Reuters) - Egypt, struggling with economic and political turmoil, is increasing custom duties for expensive food items such as shrimps as well as luxury consumer products, local media said on Sunday.
President Mohamed Mursi signed a decree to increase custom duties by up to 40 percent on food items such as shrimps, caviar, pineapples, avocados and melons, the al-Shuruq newspaper said on its website. ... Duties would also be raised on luxury products such as sun glasses or boats, the al-Masry al-Youm newspaper said on its website.
The weak Egyptian pound has pushed up the cost of wheat and other food imports paid for in dollars. The pound has fallen more than 8 percent since the end of last year as concerns deepen about the state of the country, hit by political infighting and unrest.

Egypt is a G-20 member, member of the WTO and a number of multilateral trade liberalization treaty organizations.

They need to eliminate the petrol/diesel subsidy. Pronto. That is not going to be popular but it has to be done.

Mursi has the awful task to keep quiet 80M citizens in that narrow strip along the Nile, while the country became net oil importer (so the trade balance turned over from positive to negative). The revolution is just about to begin...

They are creamed. The only thing Egypt has is tourism and how well is that going?

According to Austrian Economics theory, they should sell the Pyramids and the Sphinx to private enterprise... oh, and sell water rights for the Nile to the same investors.

Then, a bit of austerity, and shucks, there might be a buck to be made there yet.


China pulls 1,000 dead ducks from Sichuan river

Around 1,000 dead ducks have been pulled from a river in southwest China, local officials say.

Residents found the dead ducks in Nanhe river in Pengshan county, Sichuan province, and alerted the environmental department, they said.

Local residents and livestock were not at risk as the river was not used for drinking water, officials added....

...Officials discovered over 50 woven bags which contained the carcasses of around 1,000 ducks in the river....

..."The dead ducks in Pengshan river present us with a very practical problem, and show how society's bottom line is getting lower and lower," weibo user If So said.

The news came as Shanghai's municipal government confirmed that over 16,000 pigs corpses had been pulled from Huangpu river, which supplies drinking water to Shanghai.

Stocks give up gains on renewed Europe worry

The initial euphoria that Cyprus reached a deal with EU negotiators to secure a €10 billion bailout of its banking system gave way to broader fears over the health of the banking systems in other countries, notably Spain and Italy.

"Once you deal with the banking system in Cyprus, you need to address the rest of the periphery in Europe," said Paul Powers, a managing director at Raymond James. "It reminds people how fragile the rest of the system can be."

Investors had largely dismissed Cyprus' bailout as unique to the tiny island nation. But investors got spooked after the head of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, told news outlets that what happened in Cyprus could be a model for bailouts throughout the EU.

BBC: Stock markets fall despite Cyprus deal

European and US stock markets have fallen despite the agreement of a bailout deal for Cyprus.

Earlier, European markets had risen sharply following news of the deal, which was agreed late on Sunday.

But comments by one European finance minister, suggesting that the Cyprus deal could form the template for future bailouts, damaged market sentiment.

[bolds mine]

Steve from VA ties it back to oil and energy:

Default in Europe

...What is underway is beyond the reach of language to adequately describe. Not only have best practices for deposit banking for 200 years been undone but so has long-standing management policy of money-capital flows across national boundaries. It can be inferred that every euro sent to Russia since 2000 has been a fraudulent instrument. Why would Russia sell more fuels to Europe under current uncertain circumstances? If the Russians do not accept euros, why would Saudi Arabia or any other oil producer?...

...The entire euro-as-energy-hedge is undone in an instant. By stiffing bank depositors, the EU has defaulted. There are no two ways around it.

The Chinese bosses are reaching for those Maalox bottles right now. China holds a trillion in euro-denominated debt instruments, so does Japan. Germany appears not to have thought this through. Regardless of what happens in/with the eurozone, Germany is on the hook for the overseas euro-trillions. Germany is the only EU country with money: it is responsible for all those Target 2 liabilities as well — this is another trillion euros. If not Germany, who picks up the tab?

Germany is declaring that overseas holders of euro currency are going to pick it up —...

...Export of petroleum consumption is the real reason behind the onrushing European default. When countries fail, their allotment of petroleum is exportable. There is no substantial difference between the thievery underway in Cyprus and that in Libya or Egypt. Ultimately, all of Europe’s petroleum consumption is exportable leaving the various citizens in distress. The hope is to default on the small scale and hive Cyprus’ petroleum consumption toward the rest of Europe. With luck the default is contained and the losses in Cyprus can be offset by more affordable fuel elsewhere.

Cyprus is a test case. If the Cypriots can be jettisoned from the EU energy hedge then other countries can be safely ejected such as Spain and Italy. These countries can fend for themselves in the fuel-for-dollar market while the ‘core’ uses the hard euro to gain that fuel price discount and a guaranteed supply.

... When things get tough, how do you destroy your enemy's competitors' neighbors' ability to consume critical resources? At the point of a financial gun...

This is almost surreal, Ghung. Not so long ago, there were actually people considering why we would be switching to the Euro in making oil purchases.


I don't see that the dollar is much better, and wonder where things are headed.


'Funny money' has officially entered the real world

Last week, new U.S. government rules regulating online currencies affirmed the value of what was previously passed off as funny money. Now companies that issue or exchange online cash would have new bookkeeping requirements. For instance, transactions of more than $10,000 would have to be reported.

While one of the big draws of virtual currencies is that they're independent and generally sheltered from the government's watch, the new rules are unlikely to ruin their allure. If anything, they effectively pull the currencies offline and into the mainstream world of finance, making them infinitely more valuable.

Maybe the PIIGS and Cyprus need to create their own online currency; the "Periphero", or something.

I only posted the above once. I promise :-0

... you need to address the rest of the periphery in Europe

Code for "Not France".

Where, overall French fuel (gasoline & diesel) consumption is down -3.5% y-o-y.

Better to jump than be pushed.


I find this utterly stunning if it is true. Due to various loopholes the Russians may have transferred all their money out of the banks while they where closed.

Have The Russians Already Quietly Withdrawn All Their Cash From Cyprus?

In other words, by now any big Russian funds in Cyprus are long gone, and the only damage accrues to the locals: for one reason because their money over the critical EUR100K threshold has been "vaporized", and for another because the marginal driving force and loan demand creator in Cyprus, the Russians, are gone and are never coming back again.

on the other hand why should they have needed any loopholes? the problems of cyprus were well known already a year ago.
last march moody's downgraded cyprus to junk status:


so russians and everyone else have had plenty of time to make arrangements.

Quoted from Reuters by Tyler Durden of Zero Hedge:
The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.

If the bank branches in London allowed withdrawals, then the wealthy in UK who had deposits larger than the insurance limit withdrew their funds. Wealthy Russians might have had an opportunity, but may not have known about the branches in London unless they were tipped off by the banksters. How fast can wealthy Russians get visas to travel to the UK? For the average Russian getting approval for international travel is time consuming. A week is not enough. They would need online accounts with the branches in the UK. Can Russians get online accounts at banks in the UK? The Bank of Cyprus owning 80% of the Uniastrum Bank in Russia does not mean that Uniastrum can access funds from banks in Cyprus.

Bank of Cyprus UK

Because their interest rates range from .10% to 2.02%, I do not think this branch would have attracted the foreign deposits. I am doubtful that funds deposited in Cyprus could be withdrawn through this branch. International banking is not the same as banking at a branch across town.

British savers could face loss on Cyprus bank deal, The Telegraph, Andrew Oxlade, March 22, 2013:

This means British savers in Laiki will get the same deal as their Cypriot counterparts – meaning any deposits more than €100,000 could take a devastating hit of as much as 40pc.

The island’s largest deposit taker, the Bank of Cyprus, has a UK offshoot with around 50,000 savers holding £910m. Bank of Cyprus UK has operated on these shores for half a century, but until last year was not part of Britain’s savings protection scheme.

Each European country runs its own compensation scheme and each must guarantee the first €100,000 that savers hold.

UK branches of Cypriot banks reassure savers, City AM, Elizabeth Fournier, March 26, 2013:

The Bank of Cyprus UK, which has three branches in London and another in Birmingham, said there would be “no effect on deposits” for its UK account holders, describing itself as a “separately capitalised UK incorporated bank ... subject to UK financial regulation”.

But unlike Cypriot banks, which have placed a €100-per-day on ATM withdrawals, a Laiki Bank spokesperson said yesterday that the bank’s London branches were open as normal and there were no limits on withdrawals and no change to conditions.

It said no taxes or measures to bail out the Bank of Cyprus will be applied to Uniastrum.

I do not think Tyler Durden at Zero Hedge researched his innuendo carefully. I do not think Russians withdrew funds deposited in Cyprus through these UK banks. Citizens of UK probably withdrew their funds from the Laiki branches to avoid the taking.

Python-esque at best....

Cyprus bailout: Dijsselbloem's U-turn creates chaos in the markets
The island has been left in a near-impossible situation by the terms of its rescue, and is likely to require another bailout

For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.

Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.


And, for those who think holding physical gold is the answer, maybe not so much...


This was the first article from ZeroHedge where they discovered money was leaving the Cypriot banking system.

Meanwhile, Cash Exodus From Cyprus Surges Despite Bank Closures, Capital Controls

Seemingly they picked it up from a German website FAZ.

From FAZ, google translation edited:

Despite the closed banks and a lock for payments in the past week, more money flowed out of Cyprus than in previous weeks, Frankfurter experts report for payments. Prior to the escalation of the crisis in Cyprus accruing on the payment system Target liabilities of Cypriot central bank to the European Central Bank (ECB) had increased daily at approximately 100 to 200 million euros. In recent days was after Parliament the stabilization program initially had to fail, the daily has risen to more than double. Just in the last week so could cash assets have been withdrawn from Cyprus in the billions, although the Cypriot central bank has actually issued a lock.

Part of the money being withdrawn is the 400 euro/day limit on withdrawals at ATM's in Cyprus. Zero Hedge does not bother to mention that is one of the sources of the 100 to 200 million euros per day being withdrawn.

Cyprus population: 1,155,403 (2013)

If half the population has money in their local banks and are withdrawing it, that would account for 231 million euros / day.

Three days ago the limit for ATM withdrawals was reduced to 100 euros/day which would put the total in the area of 58 million euros/day for the past few days.

As far as I know the ATM withdrawals are not being extended to Russians or other foreigners, so there definitely is a bias for the people of Cyprus. Unless they get some specific information on who is withdrawing the money, Zero Hedge is being ridiculous by ignoring the obvious that has be published in the media for the last week and a half.

Just as the stone-age did not end when there were no more stones, the oil and gas era will not end when we run out.

I'm so sick of this silly trope. First of all, there was no "stone age" as in a time when we just used stone tools. I'm sure we used wood tools too . . . but wood tools don't survive thousands of years years of decay.

And the reason we switched from stone to metal is because we figured out how to use to more useful material. It has been 150+ years since we started using petroleum during a time when more scientists and engineers existed than during the entire history of the planet. Yet despite that 150+ of looking, we still haven't found a better source of energy for transportation. Perhaps we can now conclude that THERE IS NO BETTER SOURCE OF ENERGY FOR TRANSPORTATION? Do people really think there is some magic energy source soon to be discovered? Wake up! No, we are going to be pushed kicking & screaming away from oil as it becomes too expensive. It is happening right now.

The trope IS LARGELY WRONG. It is correct that it is not ending because we are 'running out'. It is beginning to end because the price of oil is going up out the reach of many. Score one for the economists. But it is wrong in that oil will be replaced by a better material that we discover. After 150+ years of looking, WE GOT NOTHING. We will move to less desirable sources such as batteries, CNG, biofuels, etc.

In nature die-off functions as a market mechanism. Is man part of nature. If so, score another one for the economists.

We may not find a better way to propel personal mobility vehicles otherwise known as automobiles although some would debate that electricity may ultimately prove to be a better approach.

However, we may find a better way to get around. In fact, we already have better ways of getting around, it is just that oil is still cheap enough that we are not interested in getting serious about those better ways. And it is not just about getting around, it is about living in places where the distances required to go about our day to day business, recreation, and shopping are significantly reduced.

The fossil fuel driven personal mobility vehicle may, in the future, just be scene as a temporary artifact of the temporary oil age. No doubt the vast majority of people will see this as a major tragedy. There are some of us, however, will see this as a marvelous opportunity to forge a better, quieter, less stressful, healthier, and more pleasant way of life.

Now we are in an indeterminate period where we pretend that things will just go along as before without thought of the morrow and without any responsibility to construct living arrangements more suitable to the future reality. Those cities which have retained many of their medieval characterists will have a head start.

I was hoping that when I get crippled and decrepit I was going to get one of those nice motorized wheelchairs from Ford or GM. Unfortunately it looks like I'll be riding my bike until I die. And since vegetarian cyclists live longer that means a bigger carbon footprint than the fat people currently smoking in stationary traffic jams. Which make bicycles faster than cars in many places.

In the winter I'm always warm on my bike & freeze if I get a ride in a car that hasn't warmed up because of the short trip.

It's all just so weirdly ironic.


"Which make bicycles faster than cars in many places."


Miami traffic was so bad this weekend that Serena Williams didn't know if she'd be able to get to her Sony Open match in time.
"So I asked for a golf cart, and the hotel didn't have a golf cart. Then they were like, `We have a motor bike.' I'm like, `I don't do motor bikes.' They said, `We have a bicycle.' I said, `I really don't do bicycles, but I will today."

Great story. And there's more! From tennis.com:

"It was fun," she said. "It was probably one of my best memories I think ever, riding a bike to a match. That's pretty cool."

She beat her opponent 6-3,6-3.

sick of the silly meme - well I 'm tired of it as well

Of course there were resource issues in the "Stone Age" - Antler pick axes were used and broke often - the deer hunter pressure .....

you find that mines can be found getting deeper and deeper until abandoned as the mines collapsed

"the stone-age did not end when there were no more stones"

Good job those "stones" are still around ..... oh wait we've used lots of machines to dig them out to make roads and the like....

So no oil AND no stones

Actually the saying is daft for another reason - what stones? the stone tools were flint

we still build with stone - perhaps we're still in the stone age

the ages usually refer to the type of material used for weapons and tools - makes us the concrete and steel age ?

makes you think


Good point. Concrete, bricks, flint, paving stones, granite countertops, gravel roads, etc. . . . we use far more stones than they did in the 'stone age'!

Perhaps these 'ages' are determine by what we use for military weaponry? And that is a pretty sad way to denote our 'progress' . . . how efficiently we became at killing each other.

We are now in the Electron Age.

Soon we will enter the Photon Age. No stone, no iron, no electrons, and far too many photons as we bake in the sun.

The amount of stone used today must be at least a million times more than in the Stone Age, so the comparison is halting a bit.

True, we use more stone for construction than ever before. Mostly it is crushed aggregate, not walls, but our consumption has continued to go up.

Don't forget paper. Those glossy magazines where ladies read the latest gossip about celebs. How do you think they make the paper so shiny? The stone age has not ended. It only got more advanced.

The new spam filter is rather aggressive. It's removing some posts which are not spam.

I think it's supposed get better as you "train" it, but in the mean time...posts with a lot of links are likely to be flagged as spam. Also, posting duplicates will get you flagged as a spammer.

Please, please, please be careful when you post. Duplicates are a big pain for all concerned. Just be patient. Banging away on the "save" button is not going to make your comment post any faster.

Pretty strange--I responded to a post by Rockman (a reply to my post), and after saving it--both my post AND Rockman's post were gone. Pretty discouraging. I wonder if this one will show up--or disappear along with yours. Here goes . . .

Elmo - I think it's as Leanan says: the anti spam software is trying to learn

Or it's the government trying to make me crazy.

Before saving, make certain your tinfoil hat is securely on your head. Check carefully for unintended duplicated words - maybe pre-screen using thesaurus. And, finally, pray.

Everything is fine in this, the best of all possible blogs.


Don't worry, it was developed in Brussels. What could possibly go wrong (:

"I'm sorry, Dave, I can't do that"

I'm seeing the number of new posts going way, way down. Not been hassled by the filters after the first time I commented after the change. Maybe I shouldn't have said that. Nice chatting with you guys if I get nommed.


After not being bugged by the no-spam verification screen all day (I assumed the system tagged my account as OK) I'm now getting "Your comment has been queued for moderation by site administrators and will be published after approval."... as if Leanan isn't busy enough.

Ditto :(

If you get this message, don't keep posting your comment. (I assume some of you are doing that - not you, Ghung, but some others) because there are multiple copies of some messages appearing.

If it doesn't get through the first time, it won't get through the second or third or fourth. When I see it's been hidden, I'll unhide it (the comments show up for me as new but hidden). If it doesn't show up in a few hours, e-mail me; I might have missed it.

Super G is trying to find out if the aggressiveness of the filter can be lowered.

Wouldn't it be better to have an approved list of id's who can comment ? New id's must get their comments reviewed for a post to have it added to the approved list of id's. Should take care of spam much more effectively.

That doesn't appear to be technically possible.

Too bad. 99% of spammers seem to have registered in the last 24 hours. You could probably get away with only scanning new accounts.

That's not true. Many of the spammers registered days, weeks, months, even years ago. That's the problem, really. We block the accounts of spammers after they spam, but they have dozens of other accounts, and just switch to them.

It's better now, because Super G blocked all accounts where the user has not logged in since creating the account. There were 70,000. (That's the magnitude of the problem we're facing.)

But those who did activate their accounts as soon as they were created are still free to spam.

Leanan, how many TOD accounts are there in total?

I'm not sure. I could ask Super G.

Is it possible to create a list of approved user ids? The spam filter could allow those user ids to post without checking anything. This is similar to the "permit" list of IP addresses that is usually configured with a router ACL (Access Control List).

Filters tend to be heuristic or access list but not both. From Leanan's comments it appears to be the former so unlikely to be able to use ACLs. However, they tend to do quite well on learning and can nail new types they haven't seen before but it does take a little while for the training to sink in. The one on my email is now quite proficient.


This morning I'm seeing posts in the "wire rope" article dated yesterday that I don't remember seeing. Not marked as new. Is that possible?

Urrr, so it's not just my imagination.


It had to happen sometime. We've enjoyed relatively unencumbered discourse for years, here on TOD. It's just another example of humanity getting in its own way. One wonders what the energy/resource overhead is for this sort of thing.

[remembers to copy before hitting save, expecting to get some message which, while well intended, supplants one form of hindrance with another, remembering one's futile vows to decomplexify so as to avoid this sort of thing ]

[edit: gets the dreaded Drupal Drop – Site Off-line]

jeeeez... Hang in there, Super G, Leanan, et al.

This came out a few hours ago: Iraq sees oil production capacity rising to 4.5 million b/s by 2014

Iraq is targeting oil production capacity of 4.5 million b/d by 2014 as it considers a longer term strategy to take capacity beyond that level by 2025, a senior Iraqi official said Monday.

Then this (Link up top:) came out a few hours later Iraq to Fall Short of 2014 Target for Oil Output, Lawmaker Says

“I don’t think we can reach 4.5 million barrels a day next year,” said al-Janabi, the lawmaker.
Iraq has boosted output after inviting international oil companies such as Royal Dutch Shell Plc (RDSA), Total SA (FP) and BP Plc (BP/) to bid in oil and gas licensing rounds starting in 2009.

Back in 2009 everybody and their brother were expecting Iraqi production to hit 12 million barrels per day by 2017. And now excuse after excuse is being made to explain why Iraqi oil production has increased by only about half a million barrels per day since then, from about 2.5 mb/d to around 3 mb/d. And why did everyone think 12 million barrels per day was possible. Because they actually believed that Iraq was actually floating on oil. And even though this article says, in effect, Iraq just ain't gonna be producing very much more oil any way soon, they still perpetuate the myth that Iraq is floating on oil. In fact the story gets more wild all the time.

Iraq may have 300 billion barrels of crude reserves, more than double its declared 143.1 billion, al-Janabi said today.

Ron P.

Sigh. How many people had to die for this lie? May they rest in peace.

Back in 2009 everybody and their brother were expecting Iraqi production to hit 12 million barrels per day by 2017. And now excuse after excuse is being made to explain why Iraqi oil production has increased by only about half a million barrels per day since then, from about 2.5 mb/d to around 3 mb/d.

That's a remarkable difference between a reality based 'actual' .5 million more to what was cornucopianly projected at the time of 9.5 million more. That means so far they were only 1/19th correct, or 18/19th inaccurate.

I remember one of the repeated comments coming out of the Bush jr. admin. was that in time we would come to realize the importance of the Iraq war. I took that to mean there was an incredible amount of oil there to tap into, and I'm now wondering if in part that's where the over-exhuberant projections originated from.

Or, possibly the cornucopian fever is breaching as stronger indications that oil is peaking come to the fore, and all it takes are fantasy hints of what could be, like Iraq or the Bakken, to light up those over-exhuberant projections.

A month or two ago I posted a link that took me 5 minutes to google up. According to that link, 10 of the 12 million barrels are supposed to come from the southern production area. That trend geologicly speaking continues into Iran, wich have the bigger part of the trend. They peaked out nationally at around 7 million barrels, IIRC. They never made 10 million on the Iranian side of the fence. Those who believed in the 12 million barrels from Iraq idea never cared to look at a map.

This link bth: the first hit you get if you google "iraqi oil production statistics".

Based on BP + EIA data, the average annual increase in Iraq's net oil exports from 2008 to 2011 was 45,000 bpd per year, to 2.0 mbpd in 2011. I estimate that their 2012 net exports were probably about 2.1 mbpd.

Interesting enough, Iraq's ECI ratio (ratio of total petroleum liquids production to liquids consumption) fell from 4.15 in 2008 to 3.42 in 2011. If we extrapolate this rate of decline, Iraq would approach zero net exports around 2031.

We see something similar in the GNE/CNI ratio (ratio of Global Net Exports to Chindia's Net Imports). I define Available Net Exports (ANE) as GNE less CNI. ANE increased from 2002 to 2005, and then started declining but the GNE/CNI ratio has been declining since 2002.

In other words, the falling GNE/CNI ratio from 2002 to 2005 was forecasting future problems with the ANE supply:


ANE (GNE less CNI):

Iraq may have 70 billion barrels of crude reserves, less than half its declared 143.1 billion, Seaharvester said today.

It's amazing how a "would" or a "may" or a "could" reduces believability for me, after years of reading science and pharmaceutical press releases disguised as news. The majority of science news out there, describing the latest earth shaking breakthrough, really is looking to gain publicity to help raise grant or investor dollars, and has relatively little impact. I've found that usually the "would" or "may" can be replaced with "won't" and accuracy of the article will be enhanced.

This from the people that bring you practically indestructable Toyotas, Nikons, etc. I just don't believe humans are up to this kind of risky technology:


Please don't tell me how wonderful Thorium is. I worked on Thorium reactor fuel over 35 years ago.

And the list of immediate threats grows longer. I mean, we've even been hit by a meteorite, it's as if any sense of security is being slowly chipped away to reveal our approaching denouement.

Some of these fuel pools have lost containment, and are arguably the top short-term threat to humanity … and America’s national security.

Threats that were once theoretical or far off on the horizon with a timescale of decades, centuries or more seem to be suddenly turning up on our doorstep.

The writer of that Washington blog is trying to connect the sea lion deaths in California to Fukushima. You may not have noticed that part. The writer may not understand the science, or may not care, but does know how to appeal to emotion. This relatively small part of his story leaves me questioning the veracity of the rest of his message.

Radiation is easily detectible in quantities far, far below normal background levels. Heck, a cloud chamber detector made as an at home high school science project will track a single atomic event. Don't mistake radiation that is detectable thousands of miles away with something that must have a measurable effect biologically.

Fukushima is a very serious event for the ocean near it. Plenty to write about, plenty to research and learn. Yet so many writers feel the need to add spurious info about some supposed long distance connection.

Obama moves to mine tar sands on U.S. soil.

"The Record of Decision and plan amendments make nearly 700,000 acres in Colorado, Utah and Wyoming available for potential oil shale leasing and about 130,000 acres available for potential tar sands leasing in Utah. In November 2012, the BLM signed two additional leases for RD&D oil shale proposals to encourage industry to develop and test technologies aimed at developing oil shale resources on a commercial scale."

"This plan maintains a strong focus on research and development to promote new technologies that may eventually lead to safe and responsible commercial development of these domestic energy resources,” Secretary Salazar said. “It will help ensure that we acquire critically important information about these technologies and their potential effects on the landscape, especially our scarce water resources in the West."

This sounds like the 1970's all over again and the results of the R&D back then were not exactly promising.

Thanks to Climatewatch for the tip.

Salazar uses a more sophisticated tone in his language that a certain Secretary of The Interior years ago but the result seems to be the same. Colorado water is scarce and getting scarcer with climate change. This summer could be a disaster.

No this summer will not be a disaster. Well it might be but not because oil companies decide to mine these "tar sands". These are not tar sands at all, this is the Green River Shale that has been discussed here many times before.

Today, the U.S. Bureau of Land Management (BLM) announced a revised plan to open western U.S. land to tar sands and oil shale mining. The area proposed is about 1,000 square miles, or roughly twice the size of all the land within the Washington, D.C., Beltway, and it's located in Utah, Colorado, and Wyoming.

This is simply a move to silence the critics who blame the Obama Administration, and every previous administration, for not letting oil companies exploit the Green River Shale. A large portion of this area is already on private land and the oil companies have free reign on that. Shell is trying their in situ project there already, with very little success.

But this means nothing. There will be no mad rush to develop this new area released from public land. It will make no difference whatsoever. As is usual in the media these days, the author of this piece had not a clue to what he was talking about.

Ron P.

Ron, check the link. It seems that it's aimed at the Utah tar sands as well as the Green River formation.

Did not mean to imply summer would be a disaster because of this. I was just emphasizing that water is scarce and getting scarcer. In my little town in Colorado, we may literally run out of water this summer because of the lack of snow. In addition, the snows melt earlier every year and we are starting to get rain when we should be getting snow because of earlier warming.

Hi Ron P,
I'm the author who you say has no clue what I'm talking about, in reference to tar sands and oil shale mining going forward in the U.S.

According to this site: http://ostseis.anl.gov/about/index.cfm

the following is true:

More than 70% of the total oil shale acreage in the Green River Formation, including the richest and thickest oil shale deposits, is under federally owned and managed lands. Thus, the federal government directly controls access to the most commercially attractive portions of the oil shale resource base.

Before anyone comes here and talks about the Green River Formation, I suspect it would be wise for them to educate themselves a bit.

#1 - Does the U.S. Really Have More Oil than Saudi Arabia?

The Difference Between Oil Shale and Oil-Bearing Shale


But when some people speak of hundreds of billions or trillions of barrels of U.S. oil, they are most likely talking about the oil shale in the Green River Formation in Colorado, Utah, and Wyoming. Since the shale in North Dakota and Texas is producing oil, some have assumed that the Green River Formation and its roughly 2 trillion barrels of oil resources will be developed next because they think it is a similar type of resource. But it is not.

Without a doubt, these two formations are a major factor in the current resurgence of U.S. oil production. But the Green River formation is the source of talk of those enormous oil resources -- larger than those of Saudi Arabia -- and it is a very different prospect than the tight oil being produced in North Dakota and Texas. The oil shale in the Green River looks like rock. Unlike the hydrocarbons in the tight oil formations, the oil shale (kerogen) consists of very heavy hydrocarbons that are solid. In that way, oil shale more resembles coal than oil. Oil shale is essentially oil that Mother Nature did not finish cooking, and thus to convert it into oil, heat has to be added. The energy requirements -- plus the fact that oil shale production requires a lot of water in a very dry environment -- have kept oil shale commercialization out of reach for over 100 years.

According to this site:(your link) the following is true:

More than 70% of the total oil shale acreage in the Green River Formation, including the richest and thickest oil shale deposits, is under federally owned and managed lands.

Well I read every word of your link and it didn't say any such thing. I have no doubt that the 70 percent of the Green River Shale is on government land. But there is nothing in that article which says that the other 30 percent is inferior to to what is on government land. And there is certainly nothing in the article that says Exxon, or anyone else, is chewing at the bit to get in there.

There is no indication that any oil company has been clamoring for the government to open up the part of the Green River Shale, or the tar sands area that is under government control.

I am really glad that the Obama Administration has agreed to open this land to developers. Now there is even more land for the oil companies to ignore because they know it will never be profitable to try to squeeze a few barrels of oil from this wasteland.

Ron P.

Hey, Ron! I hear there is a lot of Methane and hydrocarbons on Titan. I propose they open up Titan to development.

How much do you bid?


Sorry, Matt, but equating kerogen bearing shale to oil deposits won't fly here, and doing so with the gullible masses, even calling it "oil shale", seems almost fraudulent. The ROI of mining and refining kerogen shales is so inferior to drilling for crude oil, even the discussion smacks of peak oil; pure desperation (or an attempt to bilk investors). We welcome honest discussion of things here, though misrepresenting potential energy sources as "the next big thing" will require one to show the energy math. We'll be glad to consider whatever you have. It matters little who owns how much of what if it's a crappy, uneconomic energy resource.

And NO ONE is mining the 20+% in private hands. *WAY* more than enough to feed a large scale plant (say average size tar sands operation). And no one is taking any of the federal incentives, etc.

Both engineering logic and marketplace logic support the conclusion that there is nothing economic there to mine.


Back in the late '70s and early '80s I worked for awhile in Denver, doing conventional exploration in WY and MT. Through social connections, I got to casually know a ranching familly in Western Colorado (friends of a friend). These folks had dreams of getting rich from the (then current) oil shale boom. I think they invested some of their own money in expectaion of the oil shale development.

The whole Green River oil shale thing went completely bust about 1982, and needless to say they didn't get rich. Lost touch with them a few years later, and I have no idea how things turned out for them.

Any oil/energy production west of the Rocky's that requires lots of water is doomed to failure. Between ranching, farming, and human consumption, pretty much every drop is claimed already.

This is why California is considering a ban on fracking, even though there are potential tight oil formations in California, there is not enough water to spare in its production. Oil sands in Utah, or even worse oil shale in Dinosaur National Monument will require lots of non-existent water.

Wow--thanks SO MUCH for this link. The Energy Watch Group is famous for their report about 5 years ago about world oil production, but this thing is even more comprehensive--incredible amount of info on fossil fuel production, sliced and diced in so many different ways.

I am printing the whole thing out right now (all 178 pages), even though it is going to suck my printing cartridges dry. This is about the ultimate if one likes graphs.

The article is titled: Fossil and Nuclear Fuels - the Supply Outlook by the German Energy Watch Group.

Jim Hansen sent me the article this morning. There is so much there it will take ma a few days to digest it all. But there should be a special thread on TOD about this report. This report covers everything and should be digested by all. Here are two paragraphs of the 178 pages.

Saudi Aramco stated in 2004 that the natural decline rate of aging fields in Saudi Arabia amounts to around 8 percent per year, but that the decline rate is reduced to 2 percent by infill drilling. But this will work only for a limited time. Therefore, eventually the decline of the big aging fields has to be compensated by developing new fields in a timely manner. However, the last remaining large onshore discovery, Manifa, will start production late in 2013 or 2014. If no further significant new fields come on stream in the next years, Saudi Arabia’s oil production is expected to decline significantly.

The huge exploration efforts undertaken by Saudi Aramco, notably the offshore exploration in the Red Sea, are indicators of a situation where new discoveries are needed to replace produced volumes. [Khawaia 2012]. The latest increase of production from January 2009 until July 2012 was based on several workovers in elder known fields, among them the fields Khurais [Burn 2012], Shaybah and Nuayyim (Powers 2012). Other not yet developed large discoveries are missing. Therefore, some observers expect Saudi Arabia’s output to already decline in 2013 by 4.5 per cent [Carey 2013].

Well they are already down by that much. But this implies that it is a natural decline rather than a deliberate cut. And if this continues then it means, without a shadow of doubt, that 2013 is the year we fell off the plateau. Anyway this article supports my previous claim that Saudi has been able to keep production from slipping only by bringing old previously mothballed fields on line.

Ron P.

Funny how the world works. On Facebook, Richard Heinberg from the PCC posted the EWG document. I download the pdf and send it to my Energy Transitions Northwest network (including Jim Hansen). Jim sends it to you... awesome how small the world is. Now Ron, send me $50 for hooking you up :)

David S

The executive summary has a few statements I think are worth quoting:

Empirical data shows that world oil production has not increased anymore but has
entered a plateau since about 2005. The production of conventional oil is already in
slight decline since about 2008.


According to our analysis, it is quite likely that in 2030 world oil production will have
declined by 40 percent compared to 2012.

Decreasing by 40% during a 17 year period is a 3% annual decline (.9717 = .6). At that rate in 90 years world C+C production would be 6.4% of today's or 4.8 Mb/d. Canadian tar sands could be producing that much syncrude in the year 2103 ignoring every other possible source. Barring catastrophe, they are projecting the peak too soon and are too pessimistic about the decline rate. I suspect the global decline rate will be closer to 2%.

I suspect the global decline rate will be closer to 2%.

Naw, that will be close to the decline rate the first two or three years then it will accelerate. What has kept oil on a plateau since 2005 has been the discovery of a lot of much smaller fields, deepwater production, tight oil and infill drilling in the old giants. All four of these things have a very high decline rate. All that infill drilling decreased the decline rate but will cause those old fields to crash very fast in the end.

No, I expect, about four or five years into the decline, for the decline rate to hit 6 percent. Then OEWS will cause the decline rate to hit 10 percent or more. (OEWS - Oil Exporters Withholding Scenario)

Ron P.

Tesco staff forced to wear arm monitors that track work rate

Anne-Marie Walsh Industry Correspondent – 11 February 2013

STAFF at a Tesco warehouse have to wear digital arm-band devices that constantly monitor their performance.

Workers at the distribution centre in Donabate in Dublin claim they got lower scores on the rating system if they keyed in that they went to the toilet or took a break. Tesco said there was a 'break' function on the devices that was used to log stoppages, but denied it had any impact on productivity scores. Known as arm-mounted terminals (AMTs), workers said that the Motorola devices were used to monitor the performance of 'order pickers', who load supplies, and forklift drivers.

They are not used by managers, administrative workers or security staff. They said the device instructs employees how to pick their orders by scanning barcodes and stacking goods on a trolley.

Work becomes more like prison

The human body, with its need for rest, nutrition and hydration, is such an inefficient tool for capitalist production. But while machines are unlikely to replace human workers anytime soon, new technologies can deftly strip workers of their humanity!

The Irish Independent reports that grocery giant TESCO has strapped electronic armbands to their warehouse workers to measure their productivity, tracking their actions so closely that management knows when they briefly pause to drink from a water fountain or take a bathroom break. These unforgivable lapses in productivity impact workers’ performance score, which management then apparently uses to terrify them into working faster.
“The devices give a set amount of time for a task, such as 20 minutes to load packets of soft drinks. If they did it in 20 minutes, they would get 100pc, but would get 200pc if they were twice as fast,” writes the Independent. Although TESCO denied that bathroom breaks impact productivity scores, one former staffer the Independent spoke with said he got a “surprisingly lower” score when he took a bathroom break.

Peak Happiness anybody ?

In big grocery stores here in Canada I see manager types standing at the heads of checkout lines monitoring the rates of scanning. Of course they have tried to solve this by offering self-checkout tills. When I flew float planes on the coast I scrupulously? (sp) wrote down the times of my trips. I was also the ops manager and figured correct data was important for costs tracking, etc. My owner kept arguing with me about what it should take to go from A to B....but of course there are fog banks, winds, etc. all factors. The games people play imho. A job takes what it takes and I have found that most people want to do their best if you give them a chance to do so.

Are the arm bands locked on like an Arnold film that will explode and blow your arm off if you remove them? Years ago I worked in a sawmill and no matter how hard we pushed out production the foreman would yell and scream and bang a picaroon on the steel railings. We dealt with it by tossing out empties and garbage on his lawn every night, and would take turns shutting down the mill (stop buttons) until he would come running down three flights of stairs to see what was wrong. Magically, the chains started up just before arrival. I suppose with CCTV this would no longer work but there are ways for workers to retain their dignity and self-worth.

Such behaviours by companies belong in another century and should be fought against. That's why we have Unions. That is why there is workplace vandalism. It is a barbaric way to manage and should be dealt with accordingly.


"That's why we havehad Unions."
Global capitalism is discovering how to exploit the peons to the max. Allowing unions to continue to exist is not on the plan.

If you can't have AI then let's turn humans into machines, that seems to be the long term objective.

Amazon buys warehouse robotics company for $775M (Video)
Robots are considerably superior to humans.

Customers Flee Wal-Mart Empty Shelves for Target, Costco

It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers.

At the Kenosha, Wisconsin, Wal-Mart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room -- an area so full that “no passable aisles” remain, she said. Meanwhile, the front of the store is increasingly barren, Tifft said. That landscape has worsened over the past several years as workers who leave aren’t replaced, she said.

“There’s a lot of voids out there, a lot of voids,” said Tifft, 58, who oversees grocery deliveries and is a member of OUR Walmart, a union-backed group seeking to improve working conditions at the discount chain. “Customers come in, they can’t find what they’re looking for, and they’re leaving.”

Years ago, supervisors drilled a message into employees’ heads: “In the door and to the floor,” Tifft said. That mantra now seems impossible to execute.

‘No Manpower’

“There’s no manpower in the store to get the merchandise moving,” she said.

For years the "markets" have been training US Corporations that if they cut payroll, their profits will improve for the next quarter, and their stock prices will advance. Rinse and repeat, and you get what is described here. Not enough workers => work not done. Now, in order to continue to have sales, WM is going to have to add workers to payroll. Oops, there goes the stock price!

The bodies are out there, WalMart. You just need to pay them and they will work.

Hey! Maybe as a side-benefit they might have a bit of money to purchase some of your Chinese made plastic and lead crap merchandise.


Really glad to finally know what was causing this problem. Last time there I couldn't even get Ivory soap.

Guess there is a limit to just how humiliated a corp. can make it's employees feel, then they leave for something less humiliating and the merchandise piles up. I overheard a Walmart employee this past winter say to the other employee, "Well, if you're sick then take a sick day, go home an rest." The other employee said, "I can't, they'll add a demerit to my records and I'll never get that pay raise." That's really sick stuff to treat people with so little dignity they can't even go home while they have the flu!

Walmart is now getting many vendors to stock their products, instead of using Walmart trucks, warehouses & employees. HORRIBLY inefficient in labor & energy.

Vans or small delivery trucks travel from Walmart to Walmart with, say, Nabisco crackers.

Worst Hopes for Bad Business Models,


That is how the supermarket shelves are filled down here and during shopping hours. Some of the reps block the isles up with their goods and one got really shirty when I bulldozed his stuff out of the way to get my cart through. Can't figure why the Unilever guy is the only one I ever see wearing a hard hat. As for the store rooms being blocked by stock, someone needs to make a fire safety report on that.


that jogged a memory cell;



Thanks for the link. It would have been good fiction if it wasn't so close to reality.

Wow, too trierd to read it all but it certainly pings some ideas I've been mulling over the last couple of years. Will read more later


You just gotta read this. Will academia learn from the annihilation of the Peak Oil Theory

There are two stories in an article by Mark J. Perry in AEIdeas.com about peak oil.

The first is about the debunking of the Peak Oil Theory... SNIP

But the second story may be even more interesting, if not more important. The second story is how the academic community is going to react to the annihilation of the Theory. If their reaction is anything like their reaction to the annihilation of the "Man-made Global Warming" Theory then we'll waste a lot of time developing a viable 21st Century Energy Policy.

And here is the story that got this guy so excited: Has ‘peak oil’ gone the way of the Flat Earth Society? Yes.

There's one big problem: Those behind the theory appear to have been dead wrong, at least in terms of when the peak would hit, having not anticipated the rapid shift in technology that led to exploding oil and natural gas production in new plays and areas long since dismissed as dried up.

A much-quoted study released by Harvard University's Kennedy School last summer tells a tale that directly counters the peak-oil concept. According to Harvard, the current decade is likely to witness the most significant worldwide oil production increase since the 1980s....

Bottom Line: “It’s a hallmark of academic integrity that, when the facts contradict your hypothesis, that you admit you were wrong,” said UCLA’s Michael Ross of peak oil. “Scholars make wrong predictions all the time, and those who are good scientists admit it when their predictions turn out to be inaccurate.”

A double whammy has killed the peak oil theory they say. The first is tight oil and the second is this study by Leonardo Maugeri of the Harvard Kennedy School. So all academia should now admit that they were wrong. Well at least the ones who bought into that silly peak oil theory in the first place. They should feel foolish now, just like those guys who bought into that silly "Man-made Global Warming" Theory.

An excerpt from the above article appeared in the Beaufort Observer with a lot of very interesting comments from readers.

Ron P.

Colin Sullivan wrote the "Flat Earth" article. I sent him quite a bit of material before his article was published. He did use some of the material I sent him, but he chose to completely ignore the net export data I sent him. My guess is that he chose not to address net oil exports because it didn't fit his preconceived notion that there were no signs of any oil supply problems.

Following is the post-publication email I sent him:


I think that the title "Has 'peak oil' gone the way of the Flat Earth Society?" is a little ironic, given that you compare a self-evident fact--that a finite earth has finite fossil fuel resources--to a physical impossibility, a flat earth. In reality, the more appropriate comparison would be to compare the Flat Earth Society to the "Infiinite Earth Society," which appears to be believe in a virtually infinite rate of increase in our consumption of a finite fossil fuel resource base.

In any case, from the point of view US consumers, clearly Peak Oil is here, in the sense that US consumers are faced with having to make do with a declining share of a declining volume of Global Net Exports of oil (GNE), as global crude oil prices doubled in the past seven years.

If we break down the 2002 to 2011, 9 year, decline in the GNE/CNI ratio (ratio of GNE to Chindia's Net Imports) into three segments, it looks like this:

2002 to 2005: 11.0 to 8.9, rate of change of -7.1%/year

2005 to 2008: 8.9 to 7.0, rate of change of -8.0%/year

2008 to 2011: 7.0 to 5.3, rate of change of -9.3%/year

At the 2005 to 2011 rate of decline in the ratio of Global Net Exports of oil (GNE) to Chindia’s Net Imports (CNI), in about 17 years, around 2030, the GNE/CNI ratio would approach 1.0, and China & India alone would theoretically consume 100% of Global Net Exports of oil, leaving zero net exports available to about 155 net oil importing countries.

While we all agree this scenario--GNE equals CNI--can’t actually happen, the brutal fact remains that the rate of decline in the GNE/CNI ratio has accelerated in recent years. In other words, we are headed (so far at least), at an accelerating rate of decline, toward an economically non-survivable point of impact. It’s as if the passengers on a commercial airliner were calmly discussing dinner plans, oblivious to the fact that the pilot is steadily pushing the stick forward, putting the aircraft into an ever steepening dive.


Jeffrey Brown

The site is 'open' to comments, though I attempted to post one over an hour ago, suggesting they plot prices with production on their little proof-chart. My comment was "double the price of any commodity and someone will find a way to produce more of it,, at least for a while". Perhaps the folks down in Beaufort are having trouble formulating a snarky, misleading 'editor's response' as they have to other comments. I haven't seen my comment yet....

...yep, confirmation. A more recent comment has appeared (entitled "More Oil Is A Good Thing"). Seems that simple, irrefutable facts that challenge their propaganda aren't allowed. No surprize there.


I commented using the name "Jim" there. My first comment, titled "Misleading Article" was posted, but my second one has not been:

Alert! Your comment has been successfully submitted. This is a preview. Your submission will not appear on our web site until reviewed and approved by our staff.

Re: Peak Oil means that production can never increase
March 26, 2013 | 11:21 AM

"Editor's response: if the Peak Oil Theory were correct there would be no surge in production in recent years."

That is not true. Peak oil is not a theory in the first place. It's a fact. Ask honest and experienced oil workers, the ones who've been there for decades, and hear them talk about it happening again and again.

Individual small oil fields peak, and larger conglomerations of fields and total production peaks because of this.

The vast majority of oil fields roughly follow a bell curve in output. They start off slow, increase dramatically, and then reach a point where they start to slow down (the peak), as the high pressure easy oil has already been extracted, and the heavier, dirtier stuff remains at the bottom of the barrel.

That happens for every oil field out there, large and small. When people talk of whole countries peaking, or the whole world peaking, they are speaking in general terms about the sum of all fields in that region.

The fact of peak oil does not mean that production can never increase. It means that, over time, the production will eventually slow and become very expensive, with diminishing returns.

The recent uptick has been from drilling new areas that were previously written off as too dirty, too difficult, and too expensive. Yes, as the price goes up, more of these places will begin to open up, as has been occurring. But it's a short-term, temporary phenomenon.

If zooming the charts out to 1970, or 1900, one can easily see that the US peaked in the early 70s, and that the world is peaking around now. The recent spikes are not sustainable, and many oil companies are hiding this fact from the public. Looking at their reports, and some insiders who are not fully perpetuating the lie, one sees that this blip won't last very long. And it's not sustainable.

In the long term, the global peak becomes more apparent every year.

My comment finally went up, after I emailed the editor questioning their first amendment support (not sure that's why). Good on them. I see westexas' comments went through as well.


Well, a whole slew of new comments appear to have been approved on that site since I just posted my previous comment.

Peak oil (production) isn't even a theory, it's an observation... Even if we found that the earth had a chocolatey oil filling there would be a finite amount of oil. Just more than we could ever use. There would still be a peak of production, probably after the effects of using all that oil caught up to us and we started dying wholesale.

Claiming peak oil is like a "flat earth" theory is projection. Nothing is infinite on a sphere, and believing it can be is literally as crazy as thinking the earth is flat. Peak oil is inarguable, we are only arguing about timing.

A sure way to make your head explode is to read stuff from the American Enterprise Institute (AEI).

Engaging or even thinking at the level this stuff is written is beyond useless. It will make your head explode.

One must step back. Exercise boundaries. Then ask - why?

Today these groups exist. They are given millions and millions of dollars by their rich donors. The information they spew is not effectively countered by our MSM or in popular discourse. How come? Why wouldn't FOX news or NBC CBS ABC simply say these folks are nuts? What does this say about our society? What about politicians - how come people elected to federal office can spout such nonsense? What does this say about our political process?

To simply read the article and fight back is utterly worthless. It's the whole teaching a pig to dance thing ROCKMAN references...

What about our system allows/fosters this? Can one do anything about it?

How nice is it to just detach and get on with one's life?

A double whammy has killed the peak oil theory they say. The first is tight oil and the second is this study by Leonardo Maugeri of the Harvard Kennedy School.

I suppose Maugeri missed the point that tight oil is being extracted via fracking because of peak oil. As new sources for the easy to get stuff dwindle the more expensive to extract with a lower EROEI like tight oil (DW & tar sands) are sought. The idea of a peak is the idea that production reaches a peak, after which the flow reduces. How is the flow going to keep going up if the resources being extracted cost more as we scrape the bottom of the barrel?

With fracking, you can squeeze the sponge a little harder. But you're not finding new sponges.

A Helium reserves update, vital to experimental physics and medical research and care. A bill to prevent a global helium shortage just passed the House a few days ago:

Key point to remember here is that helium was easily extracted as a by-product of conventional natural gas reserves, but with the advent of hydro-fractured unconventional supplies, a traditional source of helium has disappeared. Helium has no place to accumulate in tight shale, and the large fields of natural gas supply are depleting, and with that the helium. That is what has caused current and pending shortages.

The Federal Helium Reserve is scheduled to close this year, which was located in huge underground salt caverns (containing more than a billion cubic feet of storage). The feds probably want to clean their hands and let the market be accountable.

Was that one of the cuts induced by republican Sen. Wm Proxmire of the Golden Fleece Award? How a bad decision many years ago can haunt us.
I wonder if our government is still insisting on disposing of its U233 supply.

I repeat, folks...do not re-post a comment if it's blocked by the spam filter. If it didn't get through the first time, it won't get through if you try again. Wait for me to approve it.

Also, if it was held for moderation when you submitted it, it's probably best if you don't try to edit it. It will be held for moderation again when you do that.

Sorry Leanan, it's my fault. I posted the article above and it appeared almost immediately. Then I saw all those clever replies in the Beaufort Observer and decided to edit my post and add that link. Then the whole thing disappeared. So I thought, "Oh crap, too many links so the spam detector deleted it". (You warned us about too many links.)

So naturally I thought that if I just deleted that last edit inserted link that would fix it. So I did but nothing happened for some time until the whole thing appeared again, with my edited link.

We are learning also as we go along, so I now know not to make that mistake again... sorry.


Hopefully Super G can find a way to tone it down a little, 'cause as it is, it's pretty obnoxious.

Though it is doing a good job of preventing spammers from registering accounts. I wonder if we can keep just that part.


I'd like to suggest that you or someone put up a key post of what's going on, the parameters for posting/editing, etc. Not everyone comes or posts on TOD every day.



'Aluminum-Air Battery to power EV's for 1,000 miles'

An intriguing idea ! Use regular, rechargeable batteries for everyday use - and a single use Al-air battery for occasional extended range.

A MUCH better solution that the Volt, where an entire ICE engine (plus accoutrements) is taken along as a range extender. Once that 1,000 miles is burned, install another one :-)

Best Hopes !


Don't know. It is not really a battery and is it more efficient than having a engine with gasoline? Aluminium panels need to be replaced so whether or not that is better than replacing gasoline I don't know. Sounded pretty exciting until I realized it is not really a battery.

Anyway, would like to see range extended in the form of long distance transit in the form of trains, electrified or otherwise.

Al-air is a one use battery (like old carbon-zinc batteries) and not a rechargeable battery. But still a "battery".


Here is another story about that company. The idea of a range extender has some merit.


Alan. I like that! Way better than my battery boost trailer loaded with batteries/IC engine for the occasional long trip.

My wife didn't feel confident about backing a trailer, so, with my usual brilliance in cases like this, I suggested we simply design the trailer to crawl up on top of the car when it went into reverse. Her response:

"Great! Will make it easy to spot our car in a crowded parking lot- it'll be the one lying on its side attached to a big weight that has tipped over and crushed a lawyer's sports car."

And set it on fire. The smoke plume will lead us right to it.

Will be interesting to see how big the "battery" itself will be, not counting the plates. This also solve the out-of-charge-on-the-side-of-the-road problem.

This energy density is high enough that one can consider other uses. Should be interesting.

Other question is of course, cost.

Find a couple beer cans on the side of the road, and make it to the next town.

I remember an old suggestion a tar burning car that scrapes the tar off the road as it travels....

So for all practical purposes, the energy is stored during the manufacture of the aluminum, which is essentially "burned" during the discharge of the battery. I am curious about how efficient this process is from start to finish - somehow the idea of switching from burning fossil fuels to burning aluminum to make our cars go seems like it might have some issues.

In theory the efficiency could approach 100%, using 6kWh/kg to reduce the metal and getting that back during oxidation in a battery. But the current efficiency of electrolytic reduction cells is around 60%, and oxidizing batteries around 25%, so current round trip efficiency is only 15%.

Only if you start your analysis at the 6kWh. That electricity has to be generated (yes, it could be generated by renewables), with losses, and the batteries must be transported to the end user.

You have to look at what it costs per cycle. Rechargeable cells may cost $20,000 but $20 to recharge. What does this cost? Let's say equivalent range costs $2000, but costs $200 to recycle for 100 mile range.


Thanks for the link, I have been following this for a while. One idea is to have a "slurry" that can be pumped out and a new solution pumped in according to how much you use. Zinc Air has been gaining ground also.

One idea is to have a "slurry" that can be pumped out and a new solution pumped in according to how much you use.

Interesting idea having a slurry. One thing I wanted to add to the original post but was in a hurry to get somewhere is whether an idea like this has merit or not of course has to do with cost, which is avoided in the article. As we all know from rising oil prices, it has to be economically feasible, at least for the masses to be a game changer.

The slurry idea came from zinc air, you can expand the range with larger tanks. If this costs $1 per mile range to recycle, I don't think it would be popular. You are buying range extender insurance, so it would depend on the usage patterns, which have not been clearly established yet.

Unfortunately, aluminum production (from alumina) is a continuous process. About 60% efficient. And no power for X hours (say 6) results in an alumicile. Either scrap or sawzall the solid metal out.


Do you think this could be any sort of major contributor to sustainable solutions in transportation? I am thinking small auto to mass transit type application, with the occassional trip to grandma's house?


Walking (a well established technology), bikes, eBikes & eTrikes are the best choices for local trips and trips to Urban rail. Urban rail for longer distances.

In our plans for tripling Washington DC urban rail pax-miles, we avoided parking garages. $30,000/space for Park & Ride is just not viable.

I see Al-air as a good, rarely used range extender. The hassle factor of exchange makes it "not so good" for daily use and weekly recharging.


Tomorrow I am going to do a short post on what Paris announced earlier this month. By 2030, 90% of Greater Parisians will be within 2 km of an urban rail station (Metro, tram, RER).

Interesting. Can the process simply be slowed and accelerated to match available power costs?

60% isn't great, but if the inefficiency is on the "regen" side, with an efficient battery feeding an electric motor, that's not a deal breaker. Transportability and high energy density have a lot of value.

It is my understanding that efficiency drops <100% and a significant amount of electricity is needed to just keep the metal molten.

None-the-less, at Peak, some smelters will curtail operations to sell their power at Peak rates.


hmm, I found a price for ali at about $11 per kg , 55 kg needed = approx $600 for 1000 miles travel

thats just the metal cost - might be more economical here in the UK , 137p per ltr US gallon is 3.75 ltr and a 1.52 exchange rate $7.65. now what mpg ?

15 say ? thats $510 ..... so yes given theres other losses and items , back of fag packet costs is better than some alternates - and if only used for an EV for extended journeys

and if that ali slush refill method works

mind you theres still a lot of electricity going to be needed , so how about KSA using solar in their deserts to make ali ?

so quadiple the current US gas price and double European - but we're getting nearer 60mpg on cars over here

still looks a better bet - because oil is finite


"approx $600 for 1000 miles travel "
Thats comparable to the price of having the car shipped via truck!

The base calculation is off. The article calls for 55 pounds of aluminum, not 55 kg.
The price for a processed and charged battery might be a lot higher.
Would there be a discount for returning the spent battery or an environmental fee?
I don't think this idea can be reasonably assessed until the costs are properly detailed, but a battery like that may have some emergency use applications.

It's not so much the cost of Al, but the cost to regenerate the Al from AlO2 or whatever the oxidation state will be. The Al should be "reused", but with some significant input of energy.

Might be a perfectly fine way to store excess wind or something though.

Long storage life (indefinite?) would be of value as well.

Might be a perfectly fine way to store excess wind or something though.

Wind, solar, hydro. Whatever electrical input is created in exess during peak hours of production, this would seem a fairly benign method of storage, and one that is quite protable. I like it!


This is not a rechargeable secondary cell, it is a non rechargeable primary cell, so it can not store wind nor solar energy.

It comes from the factory ready to go as a chemical device. The aluminum metal becomes aluminum hydroxide which has to be removed and the aluminum metal replaced to continue providing energy.

Isn't a large portion of the primary input from electrical sources? IIRCC, aluminum processing uses electricity, and from what has been said perhaps we are negleting this aspect? I mean, there must be an energy input in order to have the nice energy output. If it comes from electric, then we are fine. If it comes from some other source, maybe not so much.


That was my point -- remove the hydroxide and regenerate it to new Al. Not "recharging" in the typical sense, but still "recycling" the Al. But at what cost?

This might be more practical for grid storage.

A sodium–sulfur battery[1] is a type of molten-salt battery[2] constructed from liquid sodium (Na) and sulfur (S). This type of battery has a high energy density, high efficiency of charge/discharge (89–92%) and long cycle life, and is fabricated from inexpensive materials. However, because of the operating temperatures of 300 to 350 °C and the highly corrosive nature of the sodium polysulfides, such cells are primarily suitable for large-scale non-mobile applications such as grid energy storage.


The article states:

The basic chemical equation is four aluminum atoms, three oxygen molecules, and six water molecules combining to produce four molecules of hydrated aluminum oxide plus energy.

4Al + 3O2 + 6H2O --> 4Al(OH)3 + energy

If this is correct, then hydrated aluminum oxide is aluminum hydroxide which is already used to manufacture aluminum oxide (Al2O3 aka alumina) which is used to manufacture aluminum. All About Aluminium: How Is It Produced?:

Bauxite consist of 40-60% alumina, as well as earth silicon, ferrous oxide, and titanium dioxide. To separate pure alumina, the Bayer process is applied. First, the ore is heated in an autoclave with caustic soda. It is then cooled and a solid residue — «red mud» — is separated from the liquid. Aluminium hydroxide is then extracted from this solution and calcined to produce pure alumina.

Recycling aluminum hydroxide to aluminum would be the same as manufacturing aluminum with the step of purifying bauxite removed.

The final stage is the reduction of aluminium through the Hall-Heroult process. It is based on the following principle: when the alumina solution is electrolyzed in molten cryolite (Na3AlF6), pure aluminium is produced. The reduction cell bottom serves as a cathode, and coal bars immersed in cryolite serve as anodes. Molten aluminium is deposited under a cryolite solution with 3-5% alumina. During this process, temperatures reach 950°C, considerably higher than the melting point of the metal itself, which is 660°C.

The coal bars are consumed.

EIA: Energy needed to produce aluminum:

After alumina is extracted from bauxite ore, further processing called smelting is necessary to convert it into aluminum. In this process, alumina is dissolved in a solution and a strong electric current is applied. This process has generally remained unchanged since its invention in 1886.

Because smelting requires significant amounts of electricity....

How much energy is needed to convert aluminum hydroxide into alumina, and how much is needed to smelt it into aluminum?
From the EIA link, assuming smelting in primary production uses all of the electricity in the chart (minus the electricity used to make foil, extrusions, etc.), 140 trillion BTU in the U.S. in 2006, and 2.2 million metric tonnes of primary production of aluminum occurred in the U.S. in 2006:

140 trillion BTU * 1,055 joules/BTU = 148 PJ
2.2 million metric tonnes = 2.2 Tg of Al
67.3 kJ/(g of Al)

The article claims the battery has 50 aluminum plates, weights 25 kilograms, one plate powers a car for 20 miles and the author guesses it generates 7 kWh. Assuming the case weighs 1 kg. and they ignore the weight of the water, each plate weights 480 g which required 32.3 MJ to manufacture. 7 kWh = 25.2 MJ which is an efficiency of 78% not counting the energy used to calcine aluminum hydroxide to aluminum oxide, to transport the aluminum plates nor to return the aluminum hydroxide for recycling. Because there is a lot of uncertainty in this estimate, it could be rather inaccurate.

Aluminum has a rather low melting point, 660°C, and requires only 26 kJ/mol to melt. To reduce a mole of Al from Al2O3 requires over 780 kJ.


The total fuel efficiency during the cycle process in Al/air electric vehicles (EVs) can be 15% (present stage) or 20% (projected) comparable to that of internal combustion engine vehicles (ICEs) (13%). The design battery energy density is 1300 Wh/kg (present) or 2000 Wh/kg (projected). The cost of battery system chosen to evaluate is US$ 30/kW (present) or US$ 29/kW (projected).


So the aluminum hydroxide is turned into aluminum oxide which is made back into aluminum using considerable energy. It seems like rechargeable Lithium-Air would be a better route. IBM and universities have been making progress on this for years.

Again, since the Al2O3 is reducible to aluminum to reform the battery, it could be considered a storage battery, and the question is whether the cost of the electrical power exceeds the value. If it comes from what might otherwise be "lost" or never generated power, no problem. If it takes from necessary power, then it could not be considered. Or should not.

From what I have seen, one of the disadvantages of solar/wind power is that it is not available 24/7; there are times when it can be produced well beyond need, and other times when need is greater than possible generative resource. If this is a way to even out the flow, to 'save' power that might otherwise be either wasted or never produced, then I am in favor. Especially since it would be recycling the aluminum. And it sounds like it might be a better fit to need than hydrogen power (Al is easier to transport, does not leak, etc.), which after all is a power storage system based on recycling Hydrogen through dissasociation of water, and later back to water when it is used.

So long as no hydrocarbons are involved in the process, we are getting closer to a sustainable solution that is not going to destroy the planet. A good thing, IMO.


When you have a primary battery with 15% round trip efficiency versus a 90% with rechargeable lithium, you don't have much of a "storage" battery.

You could recycle alkaline batteries at some energy cost, but they don't do that for obvious reasons. Since it takes the same energy to turn aluminum hydroxide back into aluminum as making new aluminum, there is not much storage efficiency.

They have a collection point for used batteries at our local supermarket though I don't know their fate after they are dropped off.


Forbin -
All the aluminum is still there - after its used up in the cell, perhaps as Al2O3. I wonder if it would have much salvage value? Perhaps some of the cost could be offset.

Alumina is an intermediate product between bauxite & Al metal.


This is a critique of the idea that we can do without fossil fuels. Certainly, one can make a good case that the capital costs are too high in a time frame of a couple of decades. However, it would be interesting to see what sort of progress could be made by diverting capital currently devoted to fossil fuels to renewable energy. Those touting renewable energy talk about the percentage of "new" energy coming from renewables. That means, of course, that a certain percentage is coming from fossil fuels which means a greater carbon load which means we're doomed.

Instead we have an "all of the above" strategy even from Obama who clearly states that something must be done about carbon emissions. But his actions demonstrate he doesn't truly take global warming seriously.

As long as you are committed to all of the above, it is obvious you won't have enough capital to have renewables make a serious dent in the energy supply.

As most TOD'ers know, the key is to REDUCE consumption which is going to happen sooner or later
no matter what. That means stopping the $1 Trillion per year wasted on endless Wars and Corporate Welfare to Lockheed et al, stopping Auto Addiction and moving towards Green Transit,
insulating all houses and buildings and reducing heat waste, and also transforming from endless growth in production of planned obsolescent consumer goods to repairable long term goods.
What I found most interesting is that this view is finally coming up in traditional leftwing media like Counterpunch.org which usually push the argument that we can return to the New Deal days promoting economic growth by simply taking money from the banksters and plutocrats.
Here is a very interesting article pointing out the first principle of Ecology is REDUCE
(not RECYCLE) and challenging the need for endless material growth of mostly cheap junk:


Confronting the Urge to Grow
Reducing Production

The question is not should we advocate reducing production within capitalist society but rather: How do we best relate to those struggles that are already occurring? Activists across the globe are challenging the uncontrollable dynamic of economic expansion which threatens the survival of humanity. It has never been more urgent to provide a vision of a new society that can pull these efforts together.

Climate change is justifiably the focus of concern in the early 21st century. The Earth is approaching the level of 450 parts per million (ppm) of atmospheric carbon, a level which must be averted if humans are to avoid a cataclysmic turning point when climate change will loop into itself and increase even without additional industrial activity. Sanity dictates that humanity do everything in its power to roll back carbon levels to at least 350 ppm.

Yet corporate politicians shriek blindly that the only solution to economic crisis is increasing production. Incessant economic growth is causing an extinction rate unseen since the last huge meteor hit Earth. It is not limited to terrestrial Life—oceanic Life is threatened by acidification.