Shale Oil Fiasco

[PE Scott + 563]

4 hours ago, Old-Ruffneck said:

Makes more sense than EV cars, just in miles of maximum range. But until we see more service stations carrying LnG, electric seems to be the next phase of cars etc. The powers that be invested and by God that's is the choice. So a handful of upper 1% dictate the lower 99%. 

By that logic, does owning an electric car make a person a dictator?

I'm liking it, PE Scott the Dictator. 

I'm joking, I agree with you though. EV's are likely to be the future in NA and Europe especially. @ronwagn, I do agree NG should be utilized, but it seems more and more unlikely for the majority of transportation needs.

[ronwagn + 6,290]

20 minutes ago, PE Scott said:

By that logic, does owning an electric car make a person a dictator?

I'm liking it, PE Scott the Dictator. 

I'm joking, I agree with you though. EV's are likely to be the future in NA and Europe especially. @ronwagn, I do agree NG should be utilized, but it seems more and more unlikely for the majority of transportation needs.

So you actually think that people will pay for electric SUVS, pickup trucks, eighteen wheelers, big equipment, buses etc. They would cost twice as much just as the little sedans do, and that is optimistic. We will see who is right. 

Edited January 10, 2020 by ronwagn
error

[ronwagn + 6,290]

4 hours ago, Old-Ruffneck said:

Makes more sense than EV cars, just in miles of maximum range. But until we see more service stations carrying LnG, electric seems to be the next phase of cars etc. The powers that be invested and by God that's is the choice. So a handful of upper 1% dictate the lower 99%. 

I think there are a lot more natural gas and propane stations than electric stations but I will have to get the figures.Foreign countries are the largest users of CNG and LNG vehicles but it is also used to make the electricity for the electric cars and to produce much of the electricity around the world for industrial use, lighting, and heating. 

[0R0 + 6,251]

11 minutes ago, PE Scott said:

By that logic, does owning an electric car make a person a dictator?

I'm liking it, PE Scott the Dictator. 

I'm joking, I agree with you though. EV's are likely to be the future in NA and Europe especially. @ronwagn, I do agree NG should be utilized, but it seems more and more unlikely for the majority of transportation needs.

I would have expected it to catch on for trucks, but there are big holes in the infrastructure of filling stations remaining. Besides, CNG tanks are bulky and energy density is lower than diesel. So though it is possible for trucks it is not quite as attractive as it is for bulk haulers like marine vessels and trains. It also works for buses with limited range requirements and fixed routes.. 

[PE Scott + 563]

4 minutes ago, ronwagn said:

So you actually think that people will pay for electric SUVS, pickup trucks, eighteen wheelers, big equipment, buses etc. They would cost twice as much just as the little sedans do, and that is optimistic. We well see who is right. 

Fisker announced an electric SUV for release in 2022 with a pricetag around $36k. I think the cost will continue to fall until they're competitive up front with ICE models. It's hard to say how long that will take, but I think it could be quick-ish.

I still think it will take EVs a while to get appreciable market shares and I think large trucking needs will continued to be satisfied with diesel fuel in NA for the foreseeable future. I just don't think there will be a push for NG, even if there should be. I hope I'm wrong, @ronwagn

 

[ronwagn + 6,290]

Just now, PE Scott said:

Fisker announced an electric SUV for release in 2022 with a pricetag around $36k. I think the cost will continue to fall until they're competitive up front with ICE models. It's hard to say how long that will take, but I think it could be quick-ish.

I still think it will take EVs a while to get appreciable market shares and I think large trucking needs will continued to be satisfied with diesel fuel in NA for the foreseeable future. I just don't think there will be a push for NG, even if there should be. I hope I'm wrong, @ronwagn

 

You can lead a horse to water but you can't make them drink. The electricity will be produced mainly by natural gas IMHO so "what me worry?"

Many parts of the world already use natural gas vehicles in bulk and they will continue to do so. There are far more natural gas vehicles than electric and I hope to see that continue. 

[Old-Ruffneck + 1,242]

13 minutes ago, ronwagn said:

So you actually think that people will pay for electric SUVS, pickup trucks, eighteen wheelers, big equipment, buses etc. They would cost twice as much just as the little sedans do, and that is optimistic. We well see who is right. 

The old Mitsubishi plant near Bloomington, former Diamler, is now almost totally completed for EV Suv's and Pickup Trucks.....Google EV Bloomington plant.

[markslawson + 1,057]

11 hours ago, ronwagn said:

The entire fleet of ICE vehicles can be converted gradually as our oil runs out. 

Um, is there something you haven't told us? Oil pundits have been forecasting an end to oil production since the start of the industry.  Was there anything specific you had in mind?

[ronwagn + 6,290]

6 minutes ago, PE Scott said:

Fisker announced an electric SUV for release in 2022 with a pricetag around $36k. I think the cost will continue to fall until they're competitive up front with ICE models. It's hard to say how long that will take, but I think it could be quick-ish.

I still think it will take EVs a while to get appreciable market shares and I think large trucking needs will continued to be satisfied with diesel fuel in NA for the foreseeable future. I just don't think there will be a push for NG, even if there should be. I hope I'm wrong, @ronwagn

 

You are right with low diesel and gasoline prices but not if prices increase greatly. 

[PE Scott + 563]

1 minute ago, ronwagn said:

You can lead a horse to water but you can't make them drink. The electricity will be produced mainly by natural gas IMHO so "what me worry?"

Many parts of the world already use natural gas vehicles in bulk and they will continue to do so. There are far more natural gas vehicles than electric and I hope to see that continue. 

Again I agree that's probably what should happen. I'm just not sure that's what will happen. 

I'm a huge supporter of all things fossil fuel and I must admit I love driving an EV. Just saying

[ronwagn + 6,290]

Just now, markslawson said:

Um, is there something you haven't told us? Oil pundits have been forecasting an end to oil production since the start of the industry.  Was there anything specific you had in mind?

I am just going by all the posts we have had about shale oil running out in a decade, or so, I didn't write any of it and don't think it will happen that soon. Also, we could be importing but we are burning off natural gas to use what we have. I hate that, so I keep trying to get people to act rationally in the interest of all of us. 

[Old-Ruffneck + 1,242]

12 minutes ago, ronwagn said:

I think there are a lot more natural gas and propane stations than electric stations but I will have to get the figures.Foreign countries are the largest users of CNG and LNG vehicles but it is also used to make the electricity for the electric cars and to produce much of the electricity around the world for industrial use, lighting, and heating. 

Nearest one is Waste Management for retail as Peoria's bus's also using now. It is in West Peoria, about from my shop a good 25 miles. That's the only place as of yet so the whole Metro-Peoria area kinda behind that LNG curve....Sux as in my opinion stations don't carry or put in the infrastructure is because the product is slightly more explosive and you would need trained attendants. So ICE and EV is it...…….

[ronwagn + 6,290]

4 minutes ago, PE Scott said:

Again I agree that's probably what should happen. I'm just not sure that's what will happen. 

I'm a huge supporter of all things fossil fuel and I must admit I love driving an EV. Just saying

I have considered something like a Leaf, which may now be discontinued. I decided that we will stick with our Chrysler minivan and our big Nissan NG3500. I think they are great for scooting around town, but it would have to be a third car so wouldn't make sense for us. 

[ronwagn + 6,290]

1 minute ago, Old-Ruffneck said:

Nearest one is Waste Management for retail as Peoria's bus's also using now. It is in West Peoria, about from my shop a good 25 miles. That's the only place as of yet so the whole Metro-Peoria area kinda behind that LNG curve....Sux as in my opinion stations don't carry or put in the infrastructure is because the product is slightly more explosive and you would need trained attendants. So ICE and EV is it...…….

I am trying to get Loves to add it to their new station here in Decatur, IL.Central IL is a problem but here is a list of all the stations.

http://www.cngprices.com/station_map.php

[Old-Ruffneck + 1,242]

8 minutes ago, ronwagn said:

I am trying to get Loves to add it to their new station here in Decatur, IL.Central IL is a problem but here is a list of all the stations.

http://www.cngprices.com/station_map.php

https://www.pantagraph.com/business/game-changer-mayor-not-surprised-by-ford-s-m-investment/article_61e995c9-6423-5001-8c6e-73c9ad74eaf4.html

The truck has 800hp 400 mile range. Looks better than that Tesla truck p.o.s.

Edited January 10, 2020 by Old-Ruffneck
adding

[ronwagn + 6,290]

28 minutes ago, Old-Ruffneck said:

https://www.pantagraph.com/business/game-changer-mayor-not-surprised-by-ford-s-m-investment/article_61e995c9-6423-5001-8c6e-73c9ad74eaf4.html

That is a nice story and I am glad for Peoria and Rivian. I hope they are successful, I would rather not buy anything that has not got a proven track record though. I love my Nissan NV3500.Passenger Van. $40,000 

See the map of CNG stations https://afdc.energy.gov/vehicles/natural_gas.html

https://ww.electrek.co/2017/06/19/us-electric-vehicle-charging-stations/#

https://afdc.energy.gov/vehicles/natural_gas.html

Edited January 10, 2020 by ronwagn
added reference

[ronwagn + 6,290]

26 minutes ago, Old-Ruffneck said:

https://www.pantagraph.com/business/game-changer-mayor-not-surprised-by-ford-s-m-investment/article_61e995c9-6423-5001-8c6e-73c9ad74eaf4.html

The truck has 800hp 400 mile range. Looks better than that Tesla truck p.o.s.

That is some serious horsepower! Some of the muscle cars get close to that though. Not in my price range!

[0R0 + 6,251]

1 hour ago, ronwagn said:

So you actually think that people will pay for electric SUVS, pickup trucks, eighteen wheelers, big equipment, buses etc. They would cost twice as much just as the little sedans do, and that is optimistic. We will see who is right. 

It is a matter of economies of scale, and component costs: the batteries and Neodymium motors. Otherwise, an EV drivetrain has far fewer parts than an ICE, and should ultimately cost much less to build - but for a large sensitivity to rare earth metals prices. Most Neo comes from China, and Cobalt from Congo (70%).

Battery costs are down over 80% this decade.  Which is what makes both EVs and intermittent solar and wind electricity a viable proposition as it solves over supply issues and stoppage inherent to them.

If it were that complex to build EVs then Tesla would have taken more than the months it took it to go from breaking ground to cars on the road from their China plant. . 

[cbrasher1 + 272]

On 1/9/2020 at 3:11 AM, James Regan said:

Question- How much of the US Shale Plays do the Saudis own?

what? 🤔🤔

[D Coyne + 305]

18 hours ago, 0R0 said:

The Eagle Ford and Niobrara info is very useful. Do you recall whether it was a substantial rate of decline or minor? I am still wondering about the statistical finding that recoveries from Tier 2 and 3 wells has not been that much less than from Tier 1. Assuming that what is being drilled at these 2 fields is now lower tier, it would be useful to see how much EUR/length has declined. 

IEA puts the total US peak oil at just under 15 MMBbl/d at 2027 and staying at about that level through the 2030s.

I expect that oil will be displaced by NG and NGLs as a petrochemical feedstock over the next decade (what hasn't been swapped yet) so would be about 10% lower in consumption, assuming 4% is Naphtha for nylons etc.which is not that easily replaced by NG, though it is possible. China does it with its chemical production from coal. The current share of NG in petrochemical feed is 37% or so, and industry expectation is that it will hit 43-44% by 2040. I don't believe it will be that slow. The cost advantage is just too great for NG. So in 20 years expect it to displace all of the existing production out of oil. 

Marine transport, will take longer to be displaced but its' 12% share will be mostly gone by 2040, So that is another 10% drop - which is not considered by industry nor EIA yet. 

OECD X US population aging and drop will reduce passenger car consumption by 4 MMBbl/d and another 1 or 2 MmBbl/d may come from the US aging vs. the transition to larger SUVs and trucks. 

China's active population is already shrinking. But rising wages may continue till their credit crisis manifests. So while their population shrinks, their oil intensity in passenger car use will rise to compensate in part. But the first car buying demographic has shrunk by 43% so the rate of addition of drivers has fallen by that much. Furthermore, starting last year, more people retired than joined the workforce. Meaning that those of retirement age that owned cars will be using them for 1/4 or less of the driving they did while working. By 2030 demographics' contribution to oil consumption will fall by 6.5%, and will continue falling at an accelerating rate. Presuming China oil consumption is peaking this year along with its active driving age population, at say 15 MMBbl/d  then they will consume 1 MMBbl less by 2030 and 2.5MMBbl less by 2040. Presumably, their plastics industry will continue being base on coal as primary input. 

All of emerging S. America and SE Asia but for India Indonesia and the Philippines have aging demographics. Their younger generations may become better off, but there are fewer of them. While the more youthful countries are growing more slowly than historically and may not be able to compensate for much of the drop of consumption from OECD and China. India is still not constructing roads that would take additional car density. Their main passenger transportation modes are scooters, public transport and trains. And unless the government changes its direction it will stay that way. IEA expects a 2 MMBbl/d rise in consumption. So I will leave it at that. 

India has increased oil imports significantly over the decade, but not that much of it goes for passenger transport and industrial demand will likely be displaced by LNG. Car sales have grown very slowly this decade at 5-6 mil/yr as legendary metropolitan congestion makes car ownership less useful. Scooters and buses just won't get them to be a huge oil market, so even if they double consumption as their forecasts say, that will be an additional 6 MMBbl/d.

Considering that Africa is the main source of population expansion and is young, there may be a future oil consumption giant there. But the cultural hurdles to development and the deep and broad corruption will limit investment. So its development.is still in question despite much effort by Western charitable organizations to kick up microlending. So I will leave that with 1 MMBbl/d

.  

The EIA case for petrochemical oil consumption growing 80% is unlikely, as the bulk of the increase in petrochemical consumption will come from NG and NGLs rather than oil till their pricing comes to balance in energy and carbon content. So I believe the oil prices will never reach as high as they expect, and NG prices will ultimately be somewhat higher than EIA estimates.

The core problem with the energy estimates outside of too little consideration of displacement by NG is that the standard demographic forecast from the UN is simply no longer current. The world has already had its first year of fewer births than the year before, and all but a handful of countries and Africa at large are shrinking their active populations into the 2030s. And they are also shrinking in the developing world. The global population will grow to only 9 billion vs. the UN forecast of 11 B. Most significant though, is that the fraction of it that is retired or semiretired will be much greater than expected, and they consume so much less.. . . 

So looking ahead to the 2030-2040 period I am guesstimating a 14 MMBbl/d decline from current levels. Of course, some Gas to liquids plant might be necessary for dry gas regions where NGLs are insufficient, and that might not be competitive with oil sourced feeds even at current ratios of NG below $20 Boe vs. $60 Bbl. .. 

 

 

 1 quad = 180 MMboe

EIA U.S. Natural Gas Exports by Country.html 189.71 kB · 2 downloads

 

Interesting analysis, thanks.  Keep in mind that the price predictions of both EIA and IEA are based on both supply and demand, you believe their demand scenarios are too high, I believe their supply scenarios are too high.  Perhaps the two will balance (if we are both correct) and there price predictions will not be far off.

I am more familiar with the EIA scenarios, which I think are more useful because they break out the different types of liquids, where the IEA lumps all liquids together.  The most recent EIA AEO scenario for the US is unrealistic after 2027 or so as output will likely decline rather than remain on a plateau, it is possible that World demand for C+C will decrease at a similar rate to the decline in World C+C, and oil prices will remain low (where more than $90/b Brent in 2018 US$ is considered "high").

My thinking is that demand may not be as low as you have forecast, high oil prices will be needed after 2023 to balance output and consumption of C+C, also natural gas will eventually peak (2030 to 2040) so those prices will also rise though perhaps not until 2027 to 2030.

The statistical finding that EUR of all wells is essentially the same is disproven by the data.

See

https://shaleprofile.com/2020/01/07/us-update-through-september-2019/

Chart below is for tight oil basins only with wells which started producing from 2015 to 2018, 12 month cumulative output distribution, with average cumulative output of 109 kb over first 12 months of production and 58% of wells with less than 110 kb of output.  Median 12 month cumulative output is 96 kb.  I would be careful using "rate of decline" because that phrase is usually associated with the steep decline of the well profile over the first 36 months or so of output.  The rate of decrease in the EUR was relatively slow, so far, but it is likely this decrease will continue over time and may accelerate, this is difficult to predict in advance.  Eventually all tight oil plays will see new well EUR decrease as sweet spots become fully drilled, the productivity of the plays is not uniform, anyone making such claims has not looked at the data.

[D Coyne + 305]

8 hours ago, 0R0 said:

It is a matter of economies of scale, and component costs: the batteries and Neodymium motors. Otherwise, an EV drivetrain has far fewer parts than an ICE, and should ultimately cost much less to build - but for a large sensitivity to rare earth metals prices. Most Neo comes from China, and Cobalt from Congo (70%).

Battery costs are down over 80% this decade.  Which is what makes both EVs and intermittent solar and wind electricity a viable proposition as it solves over supply issues and stoppage inherent to them.

If it were that complex to build EVs then Tesla would have taken more than the months it took it to go from breaking ground to cars on the road from their China plant. . 

See

https://cleantechnica.com/2019/09/27/tesla-model-3-vs-toyota-camry-5-year-cost-to-own/

Model 3 cheaper TCO than Camry, for assumptions of model in post above.

[0R0 + 6,251]

1 hour ago, D Coyne said:

See

https://cleantechnica.com/2019/09/27/tesla-model-3-vs-toyota-camry-5-year-cost-to-own/

Model 3 cheaper TCO than Camry, for assumptions of model in post above.

Yes, makes me think of getting out of old Town Cars into something electric. 

[James Regan + 1,776]

6 hours ago, cbrasher1 said:

what? 🤔🤔

Tellurian Inc

Driftwood 

Sempra Energy Refinery In Sabine PA

Dig deep enough and it all starts to unfold, it a Shell Game.

 

Edited January 10, 2020 by James Regan
Deepstate at work, of course KSA has assets in 🇺🇸

[0R0 + 6,251]

3 hours ago, D Coyne said:

Interesting analysis, thanks.  Keep in mind that the price predictions of both EIA and IEA are based on both supply and demand, you believe their demand scenarios are too high, I believe their supply scenarios are too high.  Perhaps the two will balance (if we are both correct) and there price predictions will not be far off.

I am more familiar with the EIA scenarios, which I think are more useful because they break out the different types of liquids, where the IEA lumps all liquids together.  The most recent EIA AEO scenario for the US is unrealistic after 2027 or so as output will likely decline rather than remain on a plateau, it is possible that World demand for C+C will decrease at a similar rate to the decline in World C+C, and oil prices will remain low (where more than $90/b Brent in 2018 US$ is considered "high").

My thinking is that demand may not be as low as you have forecast, high oil prices will be needed after 2023 to balance output and consumption of C+C, also natural gas will eventually peak (2030 to 2040) so those prices will also rise though perhaps not until 2027 to 2030.

The statistical finding that EUR of all wells is essentially the same is disproven by the data.

See

https://shaleprofile.com/2020/01/07/us-update-through-september-2019/

Chart below is for tight oil basins only with wells which started producing from 2015 to 2018, 12 month cumulative output distribution, with average cumulative output of 109 kb over first 12 months of production and 58% of wells with less than 110 kb of output.  Median 12 month cumulative output is 96 kb.  I would be careful using "rate of decline" because that phrase is usually associated with the steep decline of the well profile over the first 36 months or so of output.  The rate of decrease in the EUR was relatively slow, so far, but it is likely this decrease will continue over time and may accelerate, this is difficult to predict in advance.  Eventually all tight oil plays will see new well EUR decrease as sweet spots become fully drilled, the productivity of the plays is not uniform, anyone making such claims has not looked at the data.

 

On 1/8/2020 at 10:26 AM, D Coyne said:

The Rystad estimates for World oil are too high by about 500 Gb.

There are definitely different well productivities, so the idea that this doesn't matter for profitability is nonsense.

See advanced insights and slide the tabs to the left to click on productivity distubution, then change to 12 months on production (from default of 24), choose under year of first flow all years 2010 to 2018, and under basins choose ND Bakken, Niobrara (CO and WY), Eagle Ford, and Permian (TX and NM), link follows

https://shaleprofile.com/2020/01/07/us-update-through-september-2019/

mean 12 month cumulative output is 91544 barrels, median is 77366 barrels, 64% of all wells have cumulative output of 100,000 barrels or less and 37% of wells have 12 month cumulative of 70,000 barrels or less, only 19% of wells have 12 month cumulative of 140,000 barrels or more.  Now you may think oil operators just drill wherever, but my guess is they try to pick the spots where output is highest, eventually the "sweet spots" run out of room and oil operators must move their drilling to less prospective areas.  The oil field has always operated this way and it always will.

Or that is my impression from listening to those who know how to produce oil.  I am not an oil man.

Chart with productivity distribution attached.  Thank you Enno Peters for your excellent website at https://shaleprofile.com

Thanks again, Comparing the two charts, the median seems to be 85k for 2010-2018, and 95k for 2015-2018. So it isn't showing a decrease trend (yet) in the overall stats. A mild decreasing trend in Niobrara and Eagle Ford isn't terribly worrisome for me yet as they are smaller formations and have less child well problems. . Still in line with Gautreau's charts of annual initial productions for the shale play as a whole still increasing. From what you told us, the length adjusted 12 mo. initial EUR is possibly starting a downtrend, but in any case not showing improvement since 2016 or 2017. ..

[ronwagn + 6,290]

14 hours ago, 0R0 said:

It is a matter of economies of scale, and component costs: the batteries and Neodymium motors. Otherwise, an EV drivetrain has far fewer parts than an ICE, and should ultimately cost much less to build - but for a large sensitivity to rare earth metals prices. Most Neo comes from China, and Cobalt from Congo (70%).

Battery costs are down over 80% this decade.  Which is what makes both EVs and intermittent solar and wind electricity a viable proposition as it solves over supply issues and stoppage inherent to them.

If it were that complex to build EVs then Tesla would have taken more than the months it took it to go from breaking ground to cars on the road from their China plant. . 

It will be an interesting competition to watch! I think that fossil fuels will continue to be the basic energy source for decades, but welcome electric cars, although they will increase demand for electricity created by fossil fuels and renewables. Natural gas is clean, cheaper, and most abundant so that is my favorite. Economies benefit from low priced energy that does not pollute. Economies suffer from polluting fuels that cost more and also from renewables that cost more.