U.S. Shale Output may Start Dropping Next Year

1 hour ago, butasha said:

I am more of a lurker than a poster on numerous forums that I frequent. With that said I feel the need to point out that as a land owner here in the US the minerals below my property belong to me and my family are do not yours to conserve. 

If you want to conserve the oil and gas below my property then buy my minerals at a negotiable price and conserve all that you want. Until then I will quite happily invest the royalty payments that we receive and provide for future generations of my family. 

Butasha,

By conserve, I mean not waste.

How would you feel about a producer, just spilling the oil produced on the ground and not getting a penny for it?

That is kind of what is going on with the massive flaring of natural gas in the Permian basin.

My suggestion is merely that we utilize the resources in a responsible manner rather than waste them.  The RRC and other regulatory agencies should do their job and not allow the massive waste of resources in my opinion.  

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31 minutes ago, David Jones said:

These prices seem unlikely since alternative technology is already almost as cheap as fossil fuels. I don't see how the oil industry will be able to ask for anything above $80 a barrel for a prolonged time. As soon as prices go this high, alternatives will start gaining ground so quickly that the industry will be forced to lower them again. The only way prices are going this high is if a carbon tax is implemented globally and even then it'll be even harder for the industry since they will have to work to lower production costs further since the above alternative energy source price reduction over time still applies.

The likelihood of >$100 per barrel at any point in the future for a prolonged time seems quite marginal. My guess is that the range of 60-80 will be maintained for a while and this range will start slowly shifting down over the next decades until everyone just gives up on oil as it looses it's financial viability.

You are forgetting the old saying -the solution to low oil prices is low oil prices.

Once the money is not there -companies stop looking for it -which makes it scarce again. This logic will work forever with oil and gas.

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19 hours ago, mthebold said:

 

6)  Gas flaring is wasteful.  It's also temporary and necessary.  We don't build massive infrastructure on the hope that demand will emerge.  We let market signals indicate that infrastructure is necessary and then we build.  Gas flaring is a market signal, and pipelines are being built.  This situation is normal and efficient.  The market is working. 

 

 

If I were king I would be making the industry incinerate rather than flare. It does not cost much more but is way better. Destroys the methane and the BTEX.

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7 minutes ago, Jeff_Calgary said:

You are forgetting the old saying -the solution to low oil prices is low oil prices.

Once the money is not there -companies stop looking for it -which makes it scarce again. This logic will work forever with oil and gas.

True in general but not forever, at least not in the form of a major industry. I think this is generally incorporated and is in fact part of the death spiral. As less is invested, prices rise but as prices rise more people shift to alternatives which gain additional attractiveness simply due to this price development in oil markets and in addition to intrinsic technology developments vis a vis costs, thus keeping a continuous lid on oil prices unlit demand is completely drained. Eventually, with no (or minor) demand, the industry can't ask for high prices regardless of how scarce the product is and the only way to maintain such prices is likely in a comparatively niche capacity. We wouldn't be talking about anything more than a minor industry at that point. Alternatives will likely continue to fall in costs as we move forward as well as improve in capability. They are much closer to the computer industry in their development profiles compared to fossil fuels which are very much "old school" at the core, regardless of more recent efforts.

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32 minutes ago, David Jones said:

These prices seem unlikely since alternative technology is already almost as cheap as fossil fuels. I don't see how the oil industry will be able to ask for anything above $80 a barrel for a prolonged time. As soon as prices go this high, alternatives will start gaining ground so quickly that the industry will be forced to lower them again. The only way prices are going this high is if a carbon tax is implemented globally and even then it'll be even harder for the industry since they will have to work to lower production costs further since the above alternative energy source price reduction over time still applies.

The likelihood of >$100 per barrel at any point in the future for a prolonged time seems quite marginal. My guess is that the range of 60-80 will be maintained for a while and this range will start slowly shifting down over the next decades until everyone just gives up on oil as it looses it's financial viability.

David,

It will take quite a bit of time for alternative modes of transport to reduce consumption of oil sufficiently that oil prices will fall.

Your argument might be correct after 2040 or so (when oil prices are predicted at $110/b in 2018$ by the EIA), there were about 1.3 billion vehicles in the World in 2015 (about a billion were personal vehicles and the rest commercial), today the number may be 1.5 billion, it will take some time to replace these vehicles with hybrids, plugin hybrids, and BEVs, how quickly this occurs is unknown, but I agree that higher oil prices may speed up the process.  Plugin vehicle sales have grown at about 58% per year from 2014 to 2018 (321,000 in 2014 and 2.018 million in 2018), if these growth rates continue (which seems unlikely even with oil at $100/b), most ice vehicles would be replaced by plugin vehicles by 2040 (noe that many of these vehicles would still use some oil as a plugin hybrid today typically goes only 40 miles on electricity.).  If that were to occur  oil prices might start to fall by 2025 due to falling demand for oil, as I expect more and more of "plugins" will be BEVs like the Tesla Model 3 and Model Y.  Note that the Tesla Model 3 was the 11th best selling vehicle in the US in Dec 2018 (includes pickup trucks, SUVs and cars) and the 5th best selling car in the US in Dec 2018 (behind Camry, Accord, Civic, and Corolla).  The oil price might be lower than the EIA thinks after 2040, but I think it may be above the EIA's estimate form 2022 to 2035 as the oil market will be tight over that period.

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1 hour ago, D Coyne said:

David,

It will take quite a bit of time for alternative modes of transport to reduce consumption of oil sufficiently that oil prices will fall.

Your argument might be correct after 2040 or so (when oil prices are predicted at $110/b in 2018$ by the EIA), there were about 1.3 billion vehicles in the World in 2015 (about a billion were personal vehicles and the rest commercial), today the number may be 1.5 billion, it will take some time to replace these vehicles with hybrids, plugin hybrids, and BEVs, how quickly this occurs is unknown, but I agree that higher oil prices may speed up the process.  Plugin vehicle sales have grown at about 58% per year from 2014 to 2018 (321,000 in 2014 and 2.018 million in 2018), if these growth rates continue (which seems unlikely even with oil at $100/b), most ice vehicles would be replaced by plugin vehicles by 2040 (noe that many of these vehicles would still use some oil as a plugin hybrid today typically goes only 40 miles on electricity.).  If that were to occur  oil prices might start to fall by 2025 due to falling demand for oil, as I expect more and more of "plugins" will be BEVs like the Tesla Model 3 and Model Y.  Note that the Tesla Model 3 was the 11th best selling vehicle in the US in Dec 2018 (includes pickup trucks, SUVs and cars) and the 5th best selling car in the US in Dec 2018 (behind Camry, Accord, Civic, and Corolla).  The oil price might be lower than the EIA thinks after 2040, but I think it may be above the EIA's estimate form 2022 to 2035 as the oil market will be tight over that period.

 

The result of a continuous (or average) global expansion in EV sales at 58% and starting from the 1.2 million sold in 2018, would be 116 million BEVs sold annually by 2028 which is likely to be about 100% of the market by 2028. I agree that it could taper off somewhat and the actual growth rate might be about 30-40% during the 20s but either way, EVs are likely to be most of the market by 2035 or even substantially earlier. If the 1.58 multiple were to hold though, EVs would have displaced ICEVs in sales by the 30s. 10 years of 100 million vehicles sold constitutes 1 billion EVs. It is highly unlikely that there would be many 40 mile EVs in the 2030s, most are likely to be 50-100 mile vehicles minimum which will serve the majority of use cases thereby oil demand from these vehicles would be comparatively minor.

China is already moving to discourage lower range EV sales and they are the key market for these vehicles and most of the newly displayed models from other markets are also in the Tesla type ranges so lower ranged EVs are likely to be replaced with longer range versions quite soon.

What's really vital to consider is that 2040 is just 20 years away, it really is not even the length of a career. The potential of losing >20% of the market for oil can already be considered as critical but this is not the only area where alternatives are advancing. The renewables sector is likely to be quite mature and capable by 2040 also and will undoubtedly be backed by close to 1 billion EVs with at least 25-50kWh battery capacities. That should provide ample support for storage technology needs and improve storage tech immensely. In my opinion, the oil industry should adapt and transition into a general energy industry quickly, instead of running the risk of exposing a large global workforce to these eventuality which could result in additional societal unrest.

I'm reasonably certain that my assumptions about oil prices being range bound from now on are accurate but I guess only time will tell. I have been saying this for quite some time now and so far, nothing has happened to suggest a different outcome. While key oil industry elements may have the slack to increase prices for a while to come, I don't think they will chance it due to concerns that the transition will get away from their control entirely.

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1 minute ago, David Jones said:

 

The result of a continuous (or average) global expansion in EV sales at 58% and starting from the 1.2 million sold in 2018, would be 116 million BEVs sold annually by 2028 which is likely to be about 100% of the market by 2028. I agree that it could taper off somewhat and the actual growth rate might be about 30-40% during the 20s but either way, EVs are likely to be most of the market by 2035 or even substantially earlier. If the 1.58 multiple were to hold though, EVs would have displaced ICEVs in sales by the 30s. 10 years of 100 million vehicles sold constitutes 1 billion EVs. It is highly unlikely that there would be many 40 mile EVs in the 2030s, most are likely to be 50-100 mile vehicles minimum which will serve the majority of use cases thereby oil demand from these vehicles would be comparatively minor.

China is already moving to discourage lower range EV sales and they are the key market for these vehicles and most of the newly displayed models from other markets are also in the Tesla type ranges so lower ranged EVs are likely to be replaced with longer range versions quite soon.

What's really vital to consider is that 2040 is just 20 years away, it really is not even the length of a career. The potential of losing >20% of the market for oil can already be considered as critical but this is not the only area where alternatives are advancing. The renewables sector is likely to be quite mature and capable by 2040 also and will undoubtedly be backed by close to 1 billion EVs with at least 25-50kWh battery capacities. That should provide ample support for storage technology needs and improve storage tech immensely. In my opinion, the oil industry should adapt and transition into a general energy industry quickly, instead of running the risk of exposing a large global workforce to these eventuality which could result in additional societal unrest.

I'm reasonably certain that my assumptions about oil prices being range bound from now on are accurate but I guess only time will tell. I have been saying this for quite some time now and so far, nothing has happened to suggest a different outcome. While key oil industry elements may have the slack to increase prices for a while to come, I don't think they will chance it due to concerns that the transition will get away from their control entirely.

David keep in mind that a lot of fuel is used by commercial vehicles, jets, and ships, BEVs may take over the passenger car market, but it may take much longer for commercial land transport, for ships and air transport, it probably will take longer or won't happen at all

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David,

The more I look at this the more complex.  How much will jet fuel and ship transport fuel rise?  How quickly will BEVs take over commercial trucking, what about autonomous vehicles and does this increase or decrease fuel use?  Eventually oil use will decrease and the question is does demand decrease faster than supply?  Difficult to determine as it will depend on oil price and the oil price depends on supply and demand so not a straightforward calculation.  In the near term I expect supply will be short from 2022 to 2027, after that demand may fall faster than supply tending to keep oil prices low, though this may lead to faster supply decrease as investment falls and oil loses the economies of scale it has today which would tend to bring oil prices back up.

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(edited)

40 minutes ago, D Coyne said:

David keep in mind that a lot of fuel is used by commercial vehicles, jets, and ships, BEVs may take over the passenger car market, but it may take much longer for commercial land transport, for ships and air transport, it probably will take longer or won't happen at all

 

33 minutes ago, D Coyne said:

David,

The more I look at this the more complex.  How much will jet fuel and ship transport fuel rise?  How quickly will BEVs take over commercial trucking, what about autonomous vehicles and does this increase or decrease fuel use?  Eventually oil use will decrease and the question is does demand decrease faster than supply?  Difficult to determine as it will depend on oil price and the oil price depends on supply and demand so not a straightforward calculation.  In the near term I expect supply will be short from 2022 to 2027, after that demand may fall faster than supply tending to keep oil prices low, though this may lead to faster supply decrease as investment falls and oil loses the economies of scale it has today which would tend to bring oil prices back up.

I think in terms of supply/demand, demand will be the first to go as you mentioned above. The current setup for oil production seems to have at least 20-30 years of solid production (in real terms not in terms of sanctions and other political and corporate plays) while demand is likely to start falling rapidly in the first half of the 30s due to the various alternative technologies approaching a capabilities/infrastructure capacity convergence point around then.

In terms of trucks, there are already quite a few options on the horizon (the Tesla semi being one of them) and trucking companies are not regular consumers, if they can shave off substantial running costs with EVs, they'll likely pony up the initial cost even if it's slightly more that fossil fuelled variants for the same carrying capacity. Most of the complaints about EVs are often a case of people just not having done a proper analysis/comparison in association with their actual use case. Businesses actually engage in proper analyses before purchases so I think this segment is likely to be faster to take off once appropriate options are available.

Heavy duty vehicles and planes are a different matter but they are not as numerous and in terms of planes, there is already a 9 seater EP with a purported range of 650miles in the works. My guess is that in terms of air travel, many shorter range destinations will be covered by either hybrid planes, alternative fuels or battery powered planes before 2040.

Also, autonomous driving will likely reduce demand. Autonomous vehicles should generally be more efficient at driving than humans.

Edited by David Jones

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Sounds exciting.  Nice to see the numbers laid out in a reasonable fashion, and the tone of the presenter being non-combative helps a lot too (thank you, @David Jones, and @D Coyne for debating with civility).

 

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(edited)

1 hour ago, Dan Warnick said:

Sounds exciting.  Nice to see the numbers laid out in a reasonable fashion, and the tone of the presenter being non-combative helps a lot too (thank you, @David Jones, and @D Coyne for debating with civility).

 

Thanks Dan,

The more I look at this the more I come around to David's point of view, though keep in mind I am making very optimistic assumptions in these demand scenarios.  I have further assumed that commercial vehicles will follow the path of passenger vehicles with the changeover starting in 2025 and matching the rate of increase of passenger vehicles at 58% annual growth in sales (2016 growth rate for passenger used for 2025 commercial vehicles, etc),  I used US numbers for commercial vehicle fuel and simply applied that (25,000 annual miles and 6.4 MPG) to world wide commercial vehicles (about 10% of worldwide vehicles assumed to be commercial heavy duty trucks and buses).  I also assumed air and water transport and other oil uses remain constant at 2025 levels to simplify the analysis.  Demand falls as shown in the chart below, the supply line is what might be supplied under the AEO reference oil price scenario where demand is assumed to be equal to supply.  Under the "low demand scenario, supply would fall to the level of demand and oil prices would need to be lower than the AEO scenario in order for this to occur, most tight oil, deep water offshore, and oil sands production would not be profitable at these lower price levels, the more expensive producers would gradually be eliminated from the market.  The AEO oil price in 2025 of $82/b in 2018$ would be as high as oil prices would go and by 2028 we might see Tom's $50/b again, and oil prices might continue to fall to $30/b by 2040, or whatever the marginal cost to produce the most expensive barrel that gets us to 47 Mb/d of oil produced.

oilsupplydemand.png

Edited by D Coyne
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the above chart / conversation assumes that electric vehicles are going to be power by an other energy sources - not oil and gas.  What is this energy source that within 14 years it will replace 40 million barrels equivalent of oil and gas?

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6 hours ago, Jeff_Calgary said:

That is comical! Try going to your Carnegie index for climate change if you want real numbers rather than cartoons.

Nothing more needs to be replied to after that opening genius sentence.  "Carnegie index of climate change".......  Yea.  What is REALLY hilarious is your cute map goes to 2014... Hrmm, date is 2019...

What is ripe is you tell others not to play in 2014.... Yet YOU use data from 2014....  EPIC!

Flaring massively dropped in Permian as people like making .... get this....

$$$. 

Yes, selling NG for $$$.  Who knew....

Then pipeline capacity problem 2018 and oil is worth more so flaring massively increased. 

As for the rest of your. ??? "Post" ???

The kicker?  The idiotic claim Methane is worse than CO2... yet one more moronic repeat babble from moron town.  CO2 at least has a small window where it can absorb and why the global warming boys in the 80's postulated MUCH higher CO2 concentrations in the upper atmosphere and because less water vapor up there so it could absorb more..... We got testing done and oopsies, not happening at anywhere close to the rate down below.  OF course rub 2 brain cells together and one notices the obvious, CO2 is heavier than "air".

Now as for Methane... Water vapor almost completely covers the Frequency spectrum of Methane for solar absorption.  But, once again the CLimate boys predicted it going into the HIGH upper atmosphere where less water vapor and it can do more.  At least this time the idiots could figure out that Methane is lighter than air and should be found in ever increasing numbers up high.  And, Methane breaks down into H20 and CO2 near ground level.... But hey, lets use that number for the upper atmosphere!  9 year half life... Oopsies, vastly higher UV and much higher OH radicals which are 100% replaced everyday https://climate.nasa.gov/news/2829/greenhouse-gas-detergent-recycles-itself-in-atmosphere-nasa-study/... But lets make our models not recycle the OH radical and make CH4 eat it all so we get a really LONG time to break down.... Yea, GW propaganda team!    Has this little tid bit been added to the discussion?  Hell no!  That would invalidate 100% the Methane Bull Shit and stop the gravy $$$ train to their pockets for "research". 

  You know where they get their idiotic 25X worse number from?  100 year projections...  See above why that number is utter BS. And by also pretend there is no water vapor in the atmosphere up high because kicker, "It is too random to predict".... Right in their last paragraph....  They pretend the earth is Venus!!!!!  Brilliant!  And since most everyone is too damned lazy to look up the actual data, they swallow the propaganda hook line and sinker. 

https://www.acs.org/content/acs/en/climatescience/greenhousegases/properties.html

Now read carefully how they also WEASEL and LIE.  They use 1kg of gas...  Well dear friend, what is the difference in weight of CH4 and CO2... Well one is 16 and the other is 44.......   44 >>> 16 last I checked...  😆

And their persistence data is complete Hogwash from another perspective which is also  true of CO2.  They made it up as they have no idea what the mixing of the atmosphere into the oceans is.  You know, the vast majority of the earths surface.... Their Data is for perfectly calm water with an average wind speed(no wave action) because well... we can do it in a lab in a small box.... that must be like how the ocean works right.... Oh wait.... No, that is complete BS.... Well, we know for a fact that absorption rate of gases into the ocean change upward of the 4th power of velocity.  Where the "start" point is... well we have no idea as that would require perfectly analyzing storms... One hurricane engorges more gases into the ocean than the entire Atlantic for an entire year if you use their, nice "averages" number and its not like the North Atlantic is known for being a nice calm pond or there aren't massive squalls trampling across the ocean every afternoon...

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(edited)

1 hour ago, NWMan said:

the above chart / conversation assumes that electric vehicles are going to be power by an other energy sources - not oil and gas.  What is this energy source that within 14 years it will replace 40 million barrels equivalent of oil and gas?

I'm not going to say anything about specific displacement values but in general this was already implied in some of my posts. I mentioned alternatives on multiple occasions and also a convergence of relevant technologies by the early 30s in my last post. EVs and renewable energy are interlinked technologies so you are looking at this in the wrong way. Their technological benefits to the grid will probably considerably outweigh power draw issues. EVs are in effect likely to become an element of the future power grid, not something that is entirely separate from it like ICEVs have been.

There's also one more important aspect of EVs to keep in mind in relation to the above. Assuming that we are talking about displacing 40 million barrels of transportation related fuel, EVs would not need to be fed the same amount of energy from the grid. An EV such as a Tesla Model 3 consumes about 0.26kWh per mile (there are others that consume even less), that is about 1/5th of the average consumption of an ICEV. So in general, there's only a need to provide about 40/5=8 million barrels of oil and gas equivalent in terms of energy for the 40 million barrels being displaced. Hence, regardless of what source the electricity comes from, demand for fuel will likely be substantially lower.

Edited by David Jones

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(edited)

9 hours ago, D Coyne said:

Tom Kirkman,

 

Has your view of prices changed lately?  You at one time suggested about $60/b was a price that balanced the market, I had thought you were talking about WTI, perhaps you meant Brent?  In any case the EIA, in their AEO 2019 reference oil price case seems to see things differently, my guess is that they are too conservative, I think oil prices are likely to be 20% higher than they have guessed.  I of course am also likely to be wrong about future oil prices, but +/-20% of the EIA's reference oil price scenario seems reasonable.  For 2019-2022 the average is about $70/b for WTI for AEO 2019 reference case scenario and +/-20% suggests $58/b to $84/b over that period.

aeooilprice2019.png

Wow, EIA can't predict 2 months in advance and your throwing charts 30 yrs into the future. I find this all too speculative and not worthy of in any sense correct. 

Edited by Old-Ruffneck
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3 hours ago, D Coyne said:

Thanks Dan,

The more I look at this the more I come around to David's point of view, though keep in mind I am making very optimistic assumptions in these demand scenarios.  I have further assumed that commercial vehicles will follow the path of passenger vehicles with the changeover starting in 2025 and matching the rate of increase of passenger vehicles at 58% annual growth in sales (2016 growth rate for passenger used for 2025 commercial vehicles, etc),  I used US numbers for commercial vehicle fuel US and simply applied that (25,000 annual miles and 6.4 MPG) to world wide commercial vehicles (about 10% of worldwide vehicles assumed to be commercial heavy duty trucks and buses).  I also assumed air and water transport and other oil uses remain constant at 2025 levels to simplify the analysis.  Demand falls as shown in the chart below, the supply line is what might be supplied under the AEO reference oil price scenario where demand is assumed to be equal to supply.  Under the "low demand scenario, supply would fall to the level of demand and oil prices would need to be lower than the AEO scenario in order for this to occur, most tight oil, deep water offshore, and oil sands production would not be profitable at these lower price levels, the more expensive producers would gradually be eliminated from the market.  The AEO oil price in 2025 of $82/b in 2018$ would be as high as oil prices would go and by 2028 we might see Tom's $50/b again, and oil prices might continue to fall to $30/b by 2040, or whatever the marginal cost to produce the most expensive barrel that gets is to 47 Mb/d of oil produced.

oilsupplydemand.png

Another dumb-ass chart predicting 5 to 20 years into the future. Someone has too much time on their hands …………………….

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3 hours ago, David Jones said:

I'm not going to say anything about specific displacement values but in general this was already implied in some of my posts. I mentioned alternatives on multiple occasions and also a convergence of relevant technologies by the early 30s in my last post. EVs and renewable energy are interlinked technologies so you are looking at this in the wrong way. Their technological benefits to the grid will probably considerably outweigh power draw issues. EVs are in effect likely to become an element of the future power grid, not something that is entirely separate from it like ICEVs have been.

There's also one more important aspect of EVs to keep in mind in relation to the above. Assuming that we are talking about displacing 40 million barrels of transportation related fuel, EVs would not need to be fed the same amount of energy from the grid. An EV such as a Tesla Model 3 consumes about 0.26kWh per mile (there are others that consume even less), that is about 1/5th of the average consumption of an ICEV. So in general, there's only a need to provide about 40/5=8 million barrels of oil and gas equivalent in terms of energy for the 40 million barrels being displaced. Hence, regardless of what source the electricity comes from, demand for fuel will likely be substantially lower.

BEV's leveling the grid.  WHat hogwash.  Walk out to your vehicle and it is drained of energy.... Hell no.  Or plug in when you go into work, except you find that neighbors section had clouds over it and your section got drawn down and now getting home is a nice walk. 

OH yea, we will "solve" this with software.... Yea, and you know what EVERY user will do?  TURN IT OFF so their vehicle has full charge when THEY want to use it.  

Utopia... unicorns farting rainbows and humanity will become goody-2-shoes... ah what a sweet dream. 

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Shale is going to be around for awhile, while we don't know exact timing, graphs and charts 25 years into the future are futile and a waste of brain cells guessing what the market will be like. Please remember that as new tech comes along we seem to find more. Many areas of the earth potentially have easy recovery oil if it wasn't for geo-politics. Venz still swamps em all. I look for regime change soon there. Guyana is now pumping oil, and so schemes to get the pricing up will be a challenge.

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The US Secretary of State was just in Houston at some big shindig and publicly stated he wanted oil companies to support US foreign policy. That means keep the oil flowing. He’s making them an offer they can’t refuse. 

Shale oil has become bigger than just jobs. It is a tool of US foreign policy.

No doubt the government is approaching banks and private equity and asking them to continue lending. Favors granted or denied down the line are implied. 

So long as the C suite of shale companies get their golden parachutes I’d bet on the oil continuing to flow at full throttle.

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I am confused,

According to Google US consumes 19.96 million barrels per day and  expects to pump 12.4 million barrels of crude a day in 2019.

I am sure it's a political tool for foreign policy, for US to become OIL independent and not spend trillions of dollars in oil wars.

Google also claims that
US production costs are $36 a barrel.

What I really find odd, besides the numbers not divisible by 2, is that the price gap between WTTI and others is about $10 where as now I am seeing that WTTI is going up and closing that gap.   I am not sure why.  

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On 3/12/2019 at 5:17 PM, Tom Kirkman said:

Whoopsie.  Looks like The U.S. Shale Oil Hamster Wheel of Debt © might start rolling closer to a cliff by 2020 or so.

Maybe I need to rephrase my pet name for the debt trap to ...

The U.S. Shale Oil Lemming Wheel of Debt ©, now with improved cliff action.

Maybe they can ask the pentagon if there is any space in their ledger for a few more unaccounted for expenses? 

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16 hours ago, D Coyne said:

Tom Kirkman,

 

Has your view of prices changed lately?  You at one time suggested about $60/b was a price that balanced the market, I had thought you were talking about WTI, perhaps you meant Brent?  In any case the EIA, in their AEO 2019 reference oil price case seems to see things differently, my guess is that they are too conservative, I think oil prices are likely to be 20% higher than they have guessed.  I of course am also likely to be wrong about future oil prices, but +/-20% of the EIA's reference oil price scenario seems reasonable.  For 2019-2022 the average is about $70/b for WTI for AEO 2019 reference case scenario and +/-20% suggests $58/b to $84/b over that period.

aeooilprice2019.png

Dennis,

My opinions do tend to change over time, as I get additional information.

Heck, back around 2014 or so I was all gung ho and pretty darn vocal about U.S. Shale Oil making America Energy Independent.  I've since modified my opinion about that over the years, as a certain Mike S. and Enno and a few others presented some disheartening facts to counter the Mainstream Media and Wall Street hype.

Anyway, my current views are I tend to see roughly $70 Brent and $50 WTI for this year.

For background, here is one of my old comments from May 2018:

My view on oil prices are pretty clear.  I've been pretty consistent about my views on oil prices since 2015.

But since I'm new to this forum, guess I need to reiterate.

In 2015 and 2016 I commented ad nauseum (mostly on the new defunct Oilpro forum) that I would be happy if oil was a stable average around $50 to $60, but closer to $50.  

In 2017, I changed my view and comments to I would be happy if oil was a stable average around $50 to $60, but closer to $60.  

This year, I changed my view and comments to I would be happy if oil was a stable average around $65.

And I would be happy if oil was a stable average around $70 for 2019.

Note that I think the value of the US Dollar will be devalued a bit later this year and early next year as the PetroYuan starts gaining international acceptance.

So in real terms, I'm actually hoping for oil prices to average $65 for 2018 and 2019.

$100 oil is not sustainable long term.  $300 oil is just nuts.

Excessively high oil prices would kill global economies, and crash oil prices all over again.

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(edited)

5 hours ago, Wastral said:

BEV's leveling the grid.  WHat hogwash.  Walk out to your vehicle and it is drained of energy.... Hell no.  Or plug in when you go into work, except you find that neighbors section had clouds over it and your section got drawn down and now getting home is a nice walk. 

OH yea, we will "solve" this with software.... Yea, and you know what EVERY user will do?  TURN IT OFF so their vehicle has full charge when THEY want to use it.  

Utopia... unicorns farting rainbows and humanity will become goody-2-shoes... ah what a sweet dream. 

You seem to be thinking of the EVs of decades ago. I was discussing the EVs in 20 years. Considering that these vehicles have gone from a range of about 40 miles to a range of 300 miles in about a decade even with relatively minimal investment, it's a reasonable assumption to say that in 20 years they will have a range of 600 miles at the median price point or lower (close to 400 miles already looks likely by 2025). They will also likely be able to charge quite quickly by then (charging is now half the time on Tesla vehicles and Porsche are coming out with a similar technology). It's very unlikely that a modern EV in 2040 will have any range or charging issues whatsoever even if some of it's capacity is being used to help the grid. You are simply ignoring developments in technology and just about everything I have said in this thread and are displaying a remarkable certainty in that ignorance.

If you want to talk about unicorns and rainbows, it would be more applicable to the idea that fossil fuels will flow forever. It's almost entirely certain that this is not going to be the case (it takes in the order of 100'000 years for these to form naturally) and thinking that it is, will expose humanity to a dead end/cliff edge scenario down the line.

Edited by David Jones
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On 3/12/2019 at 9:05 AM, Marina Schwarz said:

Copyright the improved cliff action, please. It's brilliant!

I found the analogy with farming very helpful. Makes it clear without requiring specific knowledge of the oil industry.

Marina interesting comment as a lot of the terminology on a drilling rig comes from farms, lots of animals on the rig floor....

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Fascinating!

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