Can U.S. Add "Another Russia" to Oil Supply?

"The analysis shows oil consumption growing in coming decades, due to rising petrochemicals, trucking and aviation demand. But meeting this growth in the near term means that approvals of conventional oil projects need to double from their current low levels. Without such a pick-up in investment, US shale production, which has already been expanding at record pace, would have to add more than 10 million barrels a day from today to 2025, the equivalent of adding another Russia to global supply in seven years – which would be an historically unprecedented feat."

From IEA's World Energy Outlook. So, can it "add another Russia" in seven years, what do you think?

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1 hour ago, Marina Schwarz said:

"The analysis shows oil consumption growing in coming decades, due to rising petrochemicals, trucking and aviation demand. But meeting this growth in the near term means that approvals of conventional oil projects need to double from their current low levels. Without such a pick-up in investment, US shale production, which has already been expanding at record pace, would have to add more than 10 million barrels a day from today to 2025, the equivalent of adding another Russia to global supply in seven years – which would be an historically unprecedented feat."

From IEA's World Energy Outlook. So, can it "add another Russia" in seven years, what do you think?

I think IEA is usually wrong with the forecasts. They always underestimate the growth of renewables and EV's and overestimate the growth of oil demand. My advise would be to take this IEA analysis with caution. This kind of long term bullish prediction is made to  maintain the flow of investments towards the US shale industry and  grow the shale bubble. But this unsustainable bubble could burst before 2025.

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Assuming that a good chunk of that consumption is slated for truck diesel, the analysis would not seem to incorporate the logical extension of recent developments in rail.  Those developments in turn were driven by one man, E. Hunter Harrison, the formidable President of first the Illinois Central, then the Canadian National,then the Canadian Pacific, and finally the CSX  (formerly the Chesapeake and Ohio).  

What Harrison did was change RR management thinking from running trains after the Yard got enough rail cars together to make up a big train, to "precision railroading," where the locomotive had a schedule for departure and it went, regardless of how many railcars were hooked up to the train.  the difference in thinking was that a scheduled departure meant that the railcar would move through the system on a predictable timetable, instead of just sitting in one place waiting around for more railcars to show up. In that sense he made a railroad run much like a bus company (such as Greyhound) or an airline:  it leaves on schedule. Part of that idea was to take freight away from the trucking companies.

Meanwhile the truckers are losing out, due in large part to not being able to find drivers.  A truck company needs two drivers to more one truck: one driver to drive, another to sleep in the bunk compartment to be rested for his shift.  A railroad can easily run the equivalent of 300 trucks in one train with two crew.  That is a huge labor difference.  And that ruck needs lots of fuel; trucks are inefficient, needing about 10 Hp. per ton.  A typical railroad runs on about one Hp per ton of freight. 

In his eight months at CSX,  Harrison transformed the RR into running with only half the locomotives and railcars to haul almost the same amount of freight, and using about 3,000 less men.  That made the CSX vastly more profitable - using the formulas he developed at the CN and CP, the result being that the CN is today the most efficient rail carrier in North America. Equally, the running of rail on scheduled service implies that rail can take market share away from trucks for "general merchandise" carriage;  You can load a truck trailer on a flatcar and haul it non-stop right across America with no driver, along with another 300 trailers.  If those trailers are designed the same as sea-freight box containers,  then rail can even double-stack them and dramatically increase the haul per train. 

What all this implies is that diesel fuel use will drop, not increase.  And that is before new steam locomotives running on coal come back into play.  Which they eventually will. 

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Ummm IEA "forecasts", more like fairy stories. They didn't see the OECD countries demand for fossil fuels peaking the same for the rest of the world. They totally ignore the rapid trend of increasing EV's and especially ignore the fact that EV's aren't just cars. We are seeing a rapid up take of electric busses and light good vehicles and laughing at Tesla's semi is probably a little bit foolish considering past "impossible" targets been meet. Planes, short haul makes up the bulk of flights. We may have only some small single prop electric planes at the moment but that market will be cut into. Also we should expect more nonfossil fuel sources for more conventional jets coming on line.

Trains, love the idea but as shown by the Australian government's idea of a line in from the east coast it doesn't really make much sense for most applications. Get rid of the drivers in the truck and make it EV.

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1 hour ago, Guillaume Albasini said:

I think IEA is usually wrong with the forecasts. They always underestimate the growth of renewables and EV's and overestimate the growth of oil demand. My advise would be to take this IEA analysis with caution. This kind of long term bullish prediction is made to  maintain the flow of investments towards the US shale industry and  grow the shale bubble. But this unsustainable bubble could burst before 2025.

Wishful thinking on the part of the IEA aside, I wondered how realistic such a production boost is. Interestingly, the IEA notes it would require double the approval rate for new conventional oil projects. This is interesting in light of all the focus on shale.

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45 minutes ago, Marina Schwarz said:

Wishful thinking on the part of the IEA aside, I wondered how realistic such a production boost is. Interestingly, the IEA notes it would require double the approval rate for new conventional oil projects. This is interesting in light of all the focus on shale.

You could possibly do it (double conventional oil) if you were to drill off the coast of California, specifically in the Santa Barbara Channel and off Santa Catalina Island. 

Hey, it's "conventional oil."  Should be an interesting project. Don't forget to duck.

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But they banned drilling there.

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I think what the report is saying is that if there is not an uptick in investments in conventional oil projects then US shale will need to add another Russia. The background being that currently Shale is the only thing oil play seeing real growth and investment at the moment.

 

I am no expert on Shale, but from what I hear from friends Shale could likely add another 10 mio barrels per day if the oil price was high enough. But if the oilprice is high enough then there will be more conventional projects. Supply and demand.  

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11 minutes ago, Jan van Eck said:

You could possibly do it (double conventional oil) if you were to drill off the coast of California, specifically in the Santa Barbara Channel and off Santa Catalina Island. 

Hey, it's "conventional oil."  Should be an interesting project. Don't forget to duck.

Or maybe drill off the coast of Florida, I here theres a property owner down there that's all into fossil fuel, sure he wouldn't mind a few dozen rigs just of the coast from his place.

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12 minutes ago, Jan van Eck said:

You could possibly do it (double conventional oil) if you were to drill off the coast of California, specifically in the Santa Barbara Channel and off Santa Catalina Island. 

Hey, it's "conventional oil."  Should be an interesting project. Don't forget to duck.

See my below. I am 100 % confident that the IEA report is making an argument as to why there must be more global investments in conventional oil projects. 

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Just now, Rasmus Jorgensen said:

See my below. I am 100 % confident that the IEA report is making an argument as to why there must be more global investments in conventional oil projects. 

Why must there be more investment, go the cheaper more cleaner route and go renewable.

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1 hour ago, Jan van Eck said:

Assuming that a good chunk of that consumption is slated for truck diesel, the analysis would not seem to incorporate the logical extension of recent developments in rail.  Those developments in turn were driven by one man, E. Hunter Harrison, the formidable President of first the Illinois Central, then the Canadian National,then the Canadian Pacific, and finally the CSX  (formerly the Chesapeake and Ohio).  

What Harrison did was change RR management thinking from running trains after the Yard got enough rail cars together to make up a big train, to "precision railroading," where the locomotive had a schedule for departure and it went, regardless of how many railcars were hooked up to the train.  the difference in thinking was that a scheduled departure meant that the railcar would move through the system on a predictable timetable, instead of just sitting in one place waiting around for more railcars to show up. In that sense he made a railroad run much like a bus company (such as Greyhound) or an airline:  it leaves on schedule. Part of that idea was to take freight away from the trucking companies.

Meanwhile the truckers are losing out, due in large part to not being able to find drivers.  A truck company needs two drivers to more one truck: one driver to drive, another to sleep in the bunk compartment to be rested for his shift.  A railroad can easily run the equivalent of 300 trucks in one train with two crew.  That is a huge labor difference.  And that ruck needs lots of fuel; trucks are inefficient, needing about 10 Hp. per ton.  A typical railroad runs on about one Hp per ton of freight. 

In his eight months at CSX,  Harrison transformed the RR into running with only half the locomotives and railcars to haul almost the same amount of freight, and using about 3,000 less men.  That made the CSX vastly more profitable - using the formulas he developed at the CN and CP, the result being that the CN is today the most efficient rail carrier in North America. Equally, the running of rail on scheduled service implies that rail can take market share away from trucks for "general merchandise" carriage;  You can load a truck trailer on a flatcar and haul it non-stop right across America with no driver, along with another 300 trailers.  If those trailers are designed the same as sea-freight box containers,  then rail can even double-stack them and dramatically increase the haul per train. 

What all this implies is that diesel fuel use will drop, not increase.  And that is before new steam locomotives running on coal come back into play.  Which they eventually will. 

My very simple understanding of demand for oil is that this is largely driven by Asia, Africa and South America. It is what they do that make a real difference to future oil demand. 

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1 minute ago, DA? said:
3 minutes ago, Rasmus Jorgensen said:

See my below. I am 100 % confident that the IEA report is making an argument as to why there must be more global investments in conventional oil projects. 

Why must there be more investment, go the cheaper more cleaner route and go renewable.

All I am saying is that the report is making that argument. Although I have not read it in detail the standard IEA narrative is that there is a natural decline oil production (nature takes care of this) and an increase in the demand for energy. This gap needs to be filled either by renewables, oil, Natural gas, nuclear or something else. IEA then says Shale can't possibly fill this gap, so all you oil producers must invest more if you want to keep market share. 

Personally I think the gap will be filled by a mix of energy sources. 

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From an aviation perspective: EV airplanes, even short haul ones, are forecasted to be at least 20 years away from feasibility, and that comes from the most promising developers that we were all introduced to recently in another thread (sorry, I'm not going to search for it).

As far as demand is concerned, have a read of Boeing's forecast for aircraft needed over the next 20 years:

Boeing Forecasts $15 Trillion Commercial Airplanes and Services Market

Boeing is one of the two dominant OEMs, so they will have a pinch of optimism built into their numbers, but Airbus has similar guesstimates.  

excerpt:

FARNBOROUGH, United Kingdom, July 17, 2018 /PRNewswire/ -- Boeing [NYSE: BA] lifted its long-term forecast for commercial airplanes as rising passenger traffic and upcoming airplane retirements drive the need for 42,730 new jets – valued at $6.3 trillion – over the next 20 years. The global airplane fleet will also sustain growing demand for commercial aviation services, leading to a total market opportunity of $15 trillion.

The company's annual forecast, renamed the Commercial Market Outlook (CMO) to include detailed analysis of the dynamic aviation services market, was presented today at the Farnborough International Airshow. Recognized as an industry benchmark for global air travel forecasting, the 2018 CMO projects the total number of airplanes increasing 4.1 percent over the previous forecast.

"For the first time in years, we are seeing economies growing in every region of the world. This synchronized growth is providing more stimulus for global air travel. We are seeing strong traffic trends not only in the emerging markets of China and India, but also the mature markets of Europe and North America," said Randy Tinseth, vice president of Commercial Marketing for The Boeing Company. "Along with continued traffic expansion, the data show a big retirement wave approaching as older airplanes age out of the global fleet."

According to fleet data, there are more than 900 airplanes today that are over 25 years old. By the mid 2020's, more than 500 airplanes a year will reach 25 years of age – double the current rate – fueling the retirement wave. Tinseth said the data explain why 44 percent of the new airplanes will be needed to cover replacement alone, while the rest will support future growth.

Including airplanes that will be retained, the global fleet is projected to essentially double in size to 48,540 by 2037.

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At least 20 yrs away, umm sounds like I heard this one a few years back about EV's with a 200 mile range, even the IEA was at it if I remember correctly. Next year we should see a prototype 9 seater flying. And from just up the road from me I hear things are moving swiftly forward. Remember just because something is repeated over and over again doesn't make it any more true, this site often seems to become an echo chamber.  

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12 minutes ago, DA? said:

At least 20 yrs away, umm sounds like I heard this one a few years back about EV's with a 200 mile range, even the IEA was at it if I remember correctly. Next year we should see a prototype 9 seater flying. And from just up the road from me I hear things are moving swiftly forward. Remember just because something is repeated over and over again doesn't make it any more true, this site often seems to become an echo chamber.  

Quoting the article that was posted on this site and discussed sometime in the last couple of weeks, if I remember correctly.  In fact, I seem to remember you bringing it up and posting about it.  Maybe I'm wrong on that, but I do recall saying I was all for it since deregulation in the U.S. had all but killed off regional air transport and I would be extremely happy to see it come back.

In any case, when they can get the necessary FAA approvals and start flying profitably I will be happy to see it.  Here's an article from a simple search, it says something might be available in 12 years.

https://www.theverge.com/2018/8/14/17686706/electric-airplane-flying-car-battery-weight-green-energy-travel

Anyway, the point of my post was that we're going to be seeing over 40,000 new planes built in the next 20 years to meet demand in passenger loads.  That number is based almost entirely on large commercial airliners so, while EV may expand the market, if they don't make it to replace large commercial airliners then we're probably going to get those jets, and they burn a lot of fuel.

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The limiting factor for electric aircrafts is battery storage. But there is a major difference between electric cars and electric planes. The decreasing cost of batteries will give in the coming years a competitive advantage for EV's over ICE's . But to be competitive for air transport the batteries will have to overcome another challenge : the weight.

Current lithium-ion batteries have a maximum energy density of 1 million joules /kg.

Kerozen has an energy density of 43 million joules / kg

With the current technology the weight of the batteries would be more than 43 times the weight of the kerozen needed for the flight. And the weight of the battery will remain constant from take over to landing instead of having a weight reduction during the flight as the kerozene is burnt.

So I think some technological breakthrough is still needed to shift air travel to electric power.

https://www.iflscience.com/technology/electric-aircraft-future-aviation-or-just-wishful-thinking/

https://en.wikipedia.org/wiki/Energy_density

 

Another option for switching towards sustainable air travel could be hydrogen.

https://phys.org/news/2017-02-liquid-hydrogen-sustainable-air.html

https://www.greencarreports.com/news/1109041_why-liquid-hydrogen-may-make-sense-for-airplanes-replacing-jet-fuel

The first experimental aircraft in the world operating on liquid hydrogen was the soviet Tupolev Tu-155 in 1988 just before the end of the Soviet Union.

https://en.wikipedia.org/wiki/Tupolev_Tu-155

https://web.archive.org/web/20130218231656/http://www.tupolev.ru/English/Show.asp?SectionID=82

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34 minutes ago, Guillaume Albasini said:

With the current technology the weight of the batteries would be more than 43 times the weight of the kerozen needed for the flight. And the weight of the battery will remain constant from take over to landing instead of having a weight reduction during the flight as the kerozene is burnt.

So I think some technological breakthrough is still needed to shift air travel to electric power.

You've hit the nail on the head, Guillaume.  Unfortunately.

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(edited)

52 minutes ago, Guillaume Albasini said:

So I think some technological breakthrough is still needed to shift air travel to electric power.

How about this for one:

https://www.sciencedaily.com/releases/2018/11/181108142402.htm

it's such a fast evolving tech that they may just fly over your head.

But yes maybe hydrogen, that's going to be a great way to use excess electricity from renewables. Although plenty of other contenders. Frankly I think hydrogen would be great for shipping.

Edited by DA?
pressed return to quick

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A different view from the IET on the same report I read today.

https://eandt.theiet.org/content/articles/2018/11/fossil-fuels-and-renewables-both-under-pressure-from-soaring-energy-demands/?utm_source=Adestra&utm_campaign=New EandT News - Automation FINAL - MEMBER&utm_medium=Newsletters - E%26T News&utm_content=E%26T News - Members&utm_term=https%3A%2F%2Feandt.theiet.org%2Fcontent%2Farticles%2F2018%2F11%2Ffossil-fuels-and-renewables-both-under-pressure-from-soaring-energy-demands%2F

A few quotes...

The global demand for energy is expected to grow by 25 per cent by 2040, according to a new report which warns that energy grids will need to expand their supply considerably over the coming years......

“Governments will have a critical influence in the direction of the future energy system,” the report states. “Under current and planned policies, energy demand is set to grow by more than 25 per cent to 2040, requiring more than $2tr a year of investment in new energy supply.”

The IEA said that energy demand would grow by more than a quarter between 2017 and 2040 assuming improvements in energy efficiency usage. Without such improvements the increase in demand could rise by twice that much.......

The United States would account for 40 per cent of total gas production growth to 2025, the IEA said, while other sources would take over as US shale gas output flattened and other nations started turning to unconventional methods of gas production, such as hydraulic fracturing or fracking.

Global electricity demand will grow 2.1 per cent a year, mostly driven by rising use in developing economies. Electricity will account for a quarter of energy used by end users such as consumers and industry by 2040, it said.

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6 minutes ago, DA? said:

How about this for one:

https://www.sciencedaily.com/releases/2018/11/181108142402.htm

it's such a fast evolving tech that they may just fly over your head.

 

It could be a promising solution to overcome the energy density challenge but some technological challenges should be addressed until metal-air batteries commercially replace lithium-ion batteries.

 

image.png.5359d4d3c1c979c6c474d3e0b4671671.png

chart from an old aritcle (2010) : https://onlinelibrary.wiley.com/doi/full/10.1002/aenm.201000010

         
         
         
         
         
         
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12 minutes ago, Guillaume Albasini said:

 

It could be a promising solution to overcome the energy density challenge but some technological challenges should be addressed until metal-air batteries commercially replace lithium-ion batteries.

 

image.png.5359d4d3c1c979c6c474d3e0b4671671.png

chart from an old aritcle (2010) : https://onlinelibrary.wiley.com/doi/full/10.1002/aenm.201000010

         
         
         
         
         
         

It pretty much does seem to over come one of the major challenges.

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On ‎11‎/‎13‎/‎2018 at 7:43 AM, Guillaume Albasini said:

I think IEA is usually wrong with the forecasts. They always underestimate the growth of renewables and EV's and overestimate the growth of oil demand. My advise would be to take this IEA analysis with caution. This kind of long term bullish prediction is made to  maintain the flow of investments towards the US shale industry and  grow the shale bubble. But this unsustainable bubble could burst before 2025.

I agree that IEA seems rely on linear forecasting. In the short term, current consumption is boosted by buying for storage: countries like China, India etc.,  are buying oil for storage when the price declines and market players and speculator are doing the same whenever price forward curve is in contango. Lots of oil is stored and this makes it hard to forecast real demand for comsumption. It is also true that futur oil demand will be affected the decline of Diesel oil and the rise of Electric energy demand and production. It is clear now that diesel oil demand is doomed to decline considerably in next 5 years as a result of many countries committing  to reducing it. The question is what will be used to produce electricity. For the several year to come it seems that Natural gas and solar will provide the source. This means that oil demand will decline accordingly. In the long run, demand for oil and energy in general will depend on economic and demographic conditions. Recent trends seem to indicate that world economic growth is declining in response to  generational demographic changes which are behind the commodities super cycle. This cycle is still around as evidenced by the current decline of most commodities prices. Oil si one of them and despite some time lags, long term oil price follows the same trend as the trend for other commodities. Since the down trend of this super cycle lasts 13 to 15 years and is currently only 5 years old (assuming start from the 2013 peak), it may have more down years to come...

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On 11/13/2018 at 2:29 AM, Jan van Eck said:

Assuming that a good chunk of that consumption is slated for truck diesel, the analysis would not seem to incorporate the logical extension of recent developments in rail.  Those developments in turn were driven by one man, E. Hunter Harrison, the formidable President of first the Illinois Central, then the Canadian National,then the Canadian Pacific, and finally the CSX  (formerly the Chesapeake and Ohio).  

What Harrison did was change RR management thinking from running trains after the Yard got enough rail cars together to make up a big train, to "precision railroading," where the locomotive had a schedule for departure and it went, regardless of how many railcars were hooked up to the train.  the difference in thinking was that a scheduled departure meant that the railcar would move through the system on a predictable timetable, instead of just sitting in one place waiting around for more railcars to show up. In that sense he made a railroad run much like a bus company (such as Greyhound) or an airline:  it leaves on schedule. Part of that idea was to take freight away from the trucking companies.

Meanwhile the truckers are losing out, due in large part to not being able to find drivers.  A truck company needs two drivers to more one truck: one driver to drive, another to sleep in the bunk compartment to be rested for his shift.  A railroad can easily run the equivalent of 300 trucks in one train with two crew.  That is a huge labor difference.  And that ruck needs lots of fuel; trucks are inefficient, needing about 10 Hp. per ton.  A typical railroad runs on about one Hp per ton of freight. 

In his eight months at CSX,  Harrison transformed the RR into running with only half the locomotives and railcars to haul almost the same amount of freight, and using about 3,000 less men.  That made the CSX vastly more profitable - using the formulas he developed at the CN and CP, the result being that the CN is today the most efficient rail carrier in North America. Equally, the running of rail on scheduled service implies that rail can take market share away from trucks for "general merchandise" carriage;  You can load a truck trailer on a flatcar and haul it non-stop right across America with no driver, along with another 300 trailers.  If those trailers are designed the same as sea-freight box containers,  then rail can even double-stack them and dramatically increase the haul per train. 

What all this implies is that diesel fuel use will drop, not increase.  And that is before new steam locomotives running on coal come back into play.  Which they eventually will. 

Locomotives can run on LNG also. Just build the facilities along the tracks where they are needed. They can simply add a car full of LNG right behind the locomotives. 

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Just now, ronwagn said:

Locomotives can run on LNG also. Just build the facilities along the tracks where they are needed. They can simply add a car full of LNG right behind the locomotives. 

Of course they can.  The obstacle seems to be in two areas:

1.   The diesel set up to run on LNG shows a considerable drop in available horsepower, thus you have less "drawbar pull."  A locomotive with decreased drawbar pull is not attractive to railroads.  

2.    I don't see how you can build a tank car for the locomotive, akin to a tender, that would be split-proof in a derail or collision.  Absent such a tank, I doubt that the Federal rail regulators will approve its use. 

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