Author Topic: Remember the Libs Cry "Peak Oil"?  (Read 644 times)

Offline Solar

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Remember the Libs Cry "Peak Oil"?
« on: January 02, 2017, 09:32:56 AM »
US oil reserves top both Saudi Arabia and Russia

The US holds more oil reserves than Saudi Arabia and Russia, the first time it has surpassed those held by the world’s biggest exporting nations, according to a new study.
Rystad Energy estimates recoverable oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264bn barrels. The figure surpasses Saudi Arabia’s 212bn and Russia’s 256bn in reserves.

The analysis of 60,000 fields worldwide, conducted over a three-year period by the Oslo-based group, shows total global oil reserves at 2.1tn barrels. This is 70 times the current production rate of about 30bn barrels of crude oil a year, Rystad Energy said on Monday.

http://www.cnbc.com/2016/07/05/us-oil-reserves-surpass-those-of-saudi-arabia-and-russia.html
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Offline zewazir

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #1 on: January 04, 2017, 02:10:27 PM »
What I thought was obvious was the cost of extraction remains the same, dependent on new tech lowering the cost further.
What influences mkt price the most is the unknowns of Federal restrictions, be it drilling permits, EPA restrictions or shuttering a refinery, these are the cost that is virtually impossible to predict and why a lot of price fluctuations occurred in the past.
Of course, fracking has put a huge damper in all of that, and why?
Because most fracking has been confined to private land. The one thing that drives the Fed nuts and why America has become the leader in Ng export and why the price of oil is as low as it is.

But I did start a thread in Finance to avoid further derailing this thread.
The thing about most .gov intervention is they have the consistent tendency to increase the price people pay for a product, whether that product is in the form of raw materials (in this case, crude oil) or finished, such as gasoline and diesel fuel.  As such, the fewer regs and taxes we have, the lower the consumer price, which also lowers the target production cost.

For instance, a significant number of well heads established in the Bakken Oil Fields have been capped off due to falling oil prices all but eliminating their profitability. (http://insideenergy.org/2016/05/12/road-tripping-along-north-dakotas-oil-bust-alley/) And while this example has nothing to due with regulation, it is an hearty example of how prices affect the ability to produce. We may have about 1/9 of the total world's estimated petroleum under our feet, but unless we can find cheaper ways of getting it out, it will stay under our feet. The more expensive the production method, the faster it will succumb to falling prices. In fact, the fall of oil prices world wide has hit the U.S. oil production industry rather hard, even while the refining industry flourishes. (http://insideenergy.org/series/the-fallout-from-falling-oil-prices/)

Offline 17 Oaks

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #2 on: January 04, 2017, 02:52:21 PM »
No, I was merely setting the record straight. This forum is about facts, not "Feelings".
I retired as an expert in the field of alternative energies, and the above statement made absolutely no sense whatsoever, just a bunch of rambling opinion of yesteryear.
The problem with the cost of energy has little to do with recovery cost, and nearly everything to do with govt interference in the free mkt.
Not all, but a huge portion is redtape.

"What I thought was obvious was the cost of extraction remains the same"

"I did start a thread in Finance"

Really, just facts?  Then where are yours?

'Expert in alternative energy'...that sez it all IMO!  I think, SOLAR a set of Ray Bans will fix that for ya.

Cost of extraction remains the same?  While I fully agree the Feds are a huge burden on all businesses and in fact add to its market price, but this capitalist can assure you the cost of goods sold is extremely variable, there is nothing fixed.  The oil business is global and chasing shale in Karnes County vs the Permian Basin vs Off Shore in the Gulf of Mexico or the North Sea or the sands of Saudi Arabian varies extremely from well to well, pool to field and everwhere in between.  As stated the Mexicans can't drill below 9000 ft due lack of tech, exploration and tools.  My X was a Petro Engineer, she was 3rd generation and mom and dad were both Petro Eng both practicing with their family company and Professors at one of the top schools in Petro engineering in the world.

You created a thread...don't wait on me sunshine  :cool:
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Offline Solar

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #3 on: January 04, 2017, 07:31:17 PM »
Really, just facts?  Then where are yours?
Facts? You mean like:
We have more oil now in the world than any time in the past and new fields are still being found the world over.
Were I KING:  We know oil is finite, most of my contacts feel IF the govt gets out of the way we have ample supplies for the world for 75-100 years based upon current tech and known potential.

I was merely correcting you, that oil is not finite, never has been and never will be, there has always been more oil than the mantle can hold, which is why we have oil coming to the surface of the ocean, why we have tar pits, oil sands etc.

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'Expert in alternative energy'...that sez it all IMO!  I think, SOLAR a set of Ray Bans will fix that for ya.
Do you always insult people you don't know?

Quote
Cost of extraction remains the same?  While I fully agree the Feds are a huge burden on all businesses and in fact add to its market price, but this capitalist can assure you the cost of goods sold is extremely variable, there is nothing fixed.  The oil business is global and chasing shale in Karnes County vs the Permian Basin vs Off Shore in the Gulf of Mexico or the North Sea or the sands of Saudi Arabian varies extremely from well to well, pool to field and everwhere in between.  As stated the Mexicans can't drill below 9000 ft due lack of tech, exploration and tools.  My X was a Petro Engineer, she was 3rd generation and mom and dad were both Petro Eng both practicing with their family company and Professors at one of the top schools in Petro engineering in the world.

OK, let's try it this way, shall we?
How much has the cost of extraction varied in the last 5 years in the US?
Now in that same timeframe, how much has the price of oil varied?

I answer for you. "How much has the cost of extraction varied in the last 5 years in the US?" Negligible in the big picture.
"how much has the price of oil varied?" All over the map, and guess why? Two factors at play, govt and OPEC, and all OPEC can do is lower the price, they no longer have any effect on the high end of the price of a barrel, all because of US fracking.

Quote
You created a thread...don't wait on me sunshine  :cool:

Do you really want to go down that road?
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Offline zewazir

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #4 on: January 04, 2017, 09:59:05 PM »
I answer for you. "How much has the cost of extraction varied in the last 5 years in the US?" Negligible in the big picture.
I think we are talking about different types of variance.  You are talking about changes in cost of total production over time.  I am talking about variances in the cost of production due to factors such as depth, type of trap, dry or offshore, etc.  Heck, the price of production can vary between drill rigs on different ends of the same field.  My point being the more expensive types of extraction are vulnerable to falling prices. There are already fields being capped and put on hold due to falling prices.

The good news is those fields are known, surveyed, and in some cases already drilled. Should the price of oil rise, or the cost of production decrease (deregulation, anyone?) they could be back online with a minimum of additional investment.

Offline supsalemgr

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #5 on: January 05, 2017, 04:50:41 AM »
I think we are talking about different types of variance.  You are talking about changes in cost of total production over time.  I am talking about variances in the cost of production due to factors such as depth, type of trap, dry or offshore, etc.  Heck, the price of production can vary between drill rigs on different ends of the same field.  My point being the more expensive types of extraction are vulnerable to falling prices. There are already fields being capped and put on hold due to falling prices.

The good news is those fields are known, surveyed, and in some cases already drilled. Should the price of oil rise, or the cost of production decrease (deregulation, anyone?) they could be back online with a minimum of additional investment.

Once a well has been drilled the cost of that drilling has been paid. Maintenance and extraction is another layer of costs. If the world market determines that the well is no longer profitable it can be "capped" until the market price deems it profitable to return the well to active. There is no problem in that scenario and that is why oil producers continue that practice. It is part of the business.
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Offline Solar

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #6 on: January 05, 2017, 05:21:04 AM »
I think we are talking about different types of variance.  You are talking about changes in cost of total production over time.  I am talking about variances in the cost of production due to factors such as depth, type of trap, dry or offshore, etc.  Heck, the price of production can vary between drill rigs on different ends of the same field.  My point being the more expensive types of extraction are vulnerable to falling prices. There are already fields being capped and put on hold due to falling prices.

The good news is those fields are known, surveyed, and in some cases already drilled. Should the price of oil rise, or the cost of production decrease (deregulation, anyone?) they could be back online with a minimum of additional investment.
Yes, I was using a broad approach, because God knows it's easy to sit down in accountant mode and go nuts, from processing to transportation.
Yeah, I was only referring to tapping a hole to extraction, that cost only varies in depth without getting into minutiae like weather, the age of rig etc.
My entire point is, Govt is usually the biggest mitigating factor in price, and getting rid of the EPA as DOE would go a long way in stabilizing the price of oil.
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Offline zewazir

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #7 on: January 05, 2017, 11:49:05 AM »
Yes, I was using a broad approach, because God knows it's easy to sit down in accountant mode and go nuts, from processing to transportation.
Yeah, I was only referring to tapping a hole to extraction, that cost only varies in depth without getting into minutiae like weather, the age of rig etc.
My entire point is, Govt is usually the biggest mitigating factor in price, and getting rid of the EPA as DOE would go a long way in stabilizing the price of oil.
I agree that .gov intervention plays a large role in oil price fluctuations. But there are other factors in play, to include the fact that our U.S. government is not the only regulatory governing body which targets oil prices for domestic advantage. Then there is that age-old economic force which plays its hand in both free markets and controlled markets: Demand. For instance U.S. crude oil use has been relatively steady for the past 16 years, and in fact has dropped slightly since 2014.  When compared to the Annual Energy Outlook from 2003, the U.S. is using almost 30% less oil than predicted. (https://www.weforum.org/agenda/2015/07/the-surprising-decline-in-us-petroleum-consumption/) Of course, figures such as the AEO are both traditionally pessimistic (carrying forward the panic ridden cries of the mid-1970s doomsayers) as well as characteristically incapable of anticipating the influence of newer technologies.

In the U.S. average fuel efficiency for passenger cars has increased a full 30% since 1990, while our "gas guzzling" SUVs and pick-em-up trucks have seen a 25% increase in fuel efficiency. (https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_04_23.html) When talking about supply/demand, the increase in fuel efficiency alone would allow for a 25-30% increase in total light passenger vehicle miles traveled with zero increase in gasoline consumption. Then there are other aspects, such as the vast increase in the use of artificial lubricants, easing another load on our demand for crude oil. There are no tables for heavy truck fuel efficiency, since load factors cause way too much variance, but I would confidently estimate fuel efficiency on a per-ton of cargo basis has also risen significantly.

I believe we are on the same page with respect to the doom-sayer's continual cries of eventually running out of crude oil.  My opinion is newer technologies will both increase available sources and decrease demand until technology ends up moving us away from petroleum products entirely - all without the need for government to intervene on the behalf of non-petroleum technologies.

In the meantime, we should also be aware of the affects fluctuating oil prices have on local economies, such as the Bakken oil field and surrounding communities. I gotta feel for towns like Williston and Watford City - from small town to boom town, to (partial) ghost town in less than 5 years.....


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« Last Edit: January 05, 2017, 11:57:15 AM by walkstall »

Offline Solar

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #8 on: January 05, 2017, 12:15:47 PM »
I agree that .gov intervention plays a large role in oil price fluctuations. But there are other factors in play, to include the fact that our U.S. government is not the only regulatory governing body which targets oil prices for domestic advantage. Then there is that age-old economic force which plays its hand in both free markets and controlled markets: Demand. For instance U.S. crude oil use has been relatively steady for the past 16 years, and in fact has dropped slightly since 2014.  When compared to the Annual Energy Outlook from 2003, the U.S. is using almost 30% less oil than predicted. (https://www.weforum.org/agenda/2015/07/the-surprising-decline-in-us-petroleum-consumption/) Of course, figures such as the AEO are both traditionally pessimistic (carrying forward the panic ridden cries of the mid-1970s doomsayers) as well as characteristically incapable of anticipating the influence of newer technologies.

In the U.S. average fuel efficiency for passenger cars has increased a full 30% since 1990, while our "gas guzzling" SUVs and pick-em-up trucks have seen a 25% increase in fuel efficiency. (https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_04_23.html) When talking about supply/demand, the increase in fuel efficiency alone would allow for a 25-30% increase in total light passenger vehicle miles traveled with zero increase in gasoline consumption. Then there are other aspects, such as the vast increase in the use of artificial lubricants, easing another load on our demand for crude oil. There are no tables for heavy truck fuel efficiency, since load factors cause way too much variance, but I would confidently estimate fuel efficiency on a per-ton of cargo basis has also risen significantly.

I believe we are on the same page with respect to the doom-sayer's continual cries of eventually running out of crude oil.  My opinion is newer technologies will both increase available sources and decrease demand until technology ends up moving us away from petroleum products entirely - all without the need for government to intervene on the behalf of non-petroleum technologies.

In the meantime, we should also be aware of the affects fluctuating oil prices have on local economies, such as the Bakken oil field and surrounding communities. I gotta feel for towns like Williston and Watford City - from small town to boom town, to (partial) ghost town in less than 5 years.....


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walks
I'm a firm believer in the concept of a free mkt doing what it does best, and it will always function with the idea making winners while finding an equilibrium between price and profit and everyone winning.
Govt is just a leech on the back of the host and everyone suffers.

It's funny you'd mention that about ghost towns. As a businessman, I would never go and set up a brick and mortar business in a boomtown situation, and I'm always dumbfounded when people do. Sure, there is always the guy that opens a storefront for the sole purpose of selling it for a quick buck, but I always question the intelligence of those willing to part with their hard earned money in such a fragile environment.
I wonder if this is some sort of record for the life span of a soon to be ghost town?
I just happened to be looking for land and stumbled across Burke Idaho, a silver mine boomtown, and for all intents and purposes, a ghost town today.

And no, I have no interest in buying land in a 300;' wide canyon that spends much of its winters below zero.

http://silvervalleystories.blogspot.com/2014/01/burke-idaho.html
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Online taxed

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #9 on: January 05, 2017, 08:11:07 PM »
'Expert in alternative energy'...that sez it all IMO!  I think, SOLAR a set of Ray Bans will fix that for ya.

Good stuff.  You should hop on an open mic somewhere... you'll kill...
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Offline ralfy

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #10 on: May 16, 2017, 07:22:41 AM »
Looking at reserves isn't helpful because much of it is too expensive to extract. That's why we've been resorting to shale oil even though there's a lot of crude oil available.

What we should look at is the extraction and processing cost of oil, especially reserves that are much deeper and in the case of shale, etc., require more processing, plus the expected ROI of investors, vs. what the world population can afford.

That's why capex has been rising considerably, together with debt, in exchange for decreasing amounts of new oil found each time. This is part of diminishing returns, and which very much defines peak oil, which is a scientific phenomenon and not a "lib" opinion.

Offline Solar

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #11 on: May 16, 2017, 10:09:26 AM »
Looking at reserves isn't helpful because much of it is too expensive to extract. That's why we've been resorting to shale oil even though there's a lot of crude oil available.

What we should look at is the extraction and processing cost of oil, especially reserves that are much deeper and in the case of shale, etc., require more processing, plus the expected ROI of investors, vs. what the world population can afford.

That's why capex has been rising considerably, together with debt, in exchange for decreasing amounts of new oil found each time. This is part of diminishing returns, and which very much defines peak oil, which is a scientific phenomenon and not a "lib" opinion.
Problem is, the lib definition has absolutely nothing to do with ROI. The left defines "peak oil" as more oil being used than the planet makes, which is ludicrous on so many levels.
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Offline supsalemgr

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Re: Remember the Libs Cry "Peak Oil"?
« Reply #12 on: May 16, 2017, 10:53:56 AM »
Looking at reserves isn't helpful because much of it is too expensive to extract. That's why we've been resorting to shale oil even though there's a lot of crude oil available.

What we should look at is the extraction and processing cost of oil, especially reserves that are much deeper and in the case of shale, etc., require more processing, plus the expected ROI of investors, vs. what the world population can afford.

That's why capex has been rising considerably, together with debt, in exchange for decreasing amounts of new oil found each time. This is part of diminishing returns, and which very much defines peak oil, which is a scientific phenomenon and not a "lib" opinion.

You are correct. It is called market forces. If the cost of extraction becomes too high another source will fill the void. Until then fossil fuels are still the most cost efficient way to generate energy.
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