Wednesday, July 25, 2012

Spain and Italy

I really need to change the name of this blog to The European Energy Crisis. Peak Oil exports is upon them and it is wiping the floor with them.

While Spain's bond yields dominate the news, those interested in Oil should read this report in its entirety.

Unlike the U.S., Spain is 99%+ DEPENDENT on foreign Oil and Natural Gas. While there might be a glut of Nat Gas in the North American market, that just is not the case for Europe.

Spain's net imports of Oil are down 10% from their peek in 2005 thru 2010.  Spain's net imports were down 7% in 2011 from 2010. I think 20% peak to today is in the bag... and this is with Libya coming back on line!

The data in this graph is from the IEA. Unfortunately, the data comes in 5 year increments before 2005, so the slope of the graph does not accurately reflect the decline. However, you can see that Spain is back to late 1990's Oil supply. Meanwhile Spain's population has increased 20% during that time.



Given that world oil exports continue to decline, and China and India continue to increase their imports by out-bidding countries like Spain, is there any hope that Spain can increase its Oil consumption in the future?

NAFC.

Greece now. Spain (or Italy) soon. So... who, exactly is it that China, Japan, German, the U.S. are going to increase exports of their goods (and services) to?

Certainly not Spain. Or Italy. In fact, it looks to me like the Eurozone is going to show the rest of the world what Peak Oil means as a practical matter.

Italy is in worse shape because of its shear size and the percentage of debt to GDP. Italy is 90% dependent upon imports for its Oil supply. Oil imports and consumption have declined by 20%. Natural Gas has already been substituted for Oil for electricity generation - the low hanging fruit has been plucked. Even so, and with the switch from gasoline to diesel, diesel consumption/supply is still off over 5% from  peak to 2009... its more than 10% thru 2012.

Here's the graph for Italy:



After looking at this IEA report I can only conclude that Italy will be coming off the rails in the very near future.

Japan is in the same boat:



Greece is small potatoes. Spain is big potatoes. "Where's the beef?" Italy.


12 comments:

tweell said...

How many vehicles do you think will get converted to CNG in the next few years? At $2k per car, it's not cheap, but that could still be economically viable if the difference between gas/diesel and NG continues to grow.

With the PIIGS dropping like flies and the US doing it's best to catch up to them, we live in interesting times.

Greg T. Jeffers said...

For the U.S. CNG can substitute somewhat. Not Europe. There is no Nat Gas glut there.

James M Dakin said...

Isn't our natural gas glut as short lived as fracking? Glad you got your sea legs back, Mr. J. Good to read you again. You are still a main source of theft for my own blog.

Greg T. Jeffers said...

James:

I think fracking can go on for as long as it is economically feasible - and I think the U.S. is very fortunate in that regard.

At some point markets will seek equilibrium and the market will build export facilities for North American Nat Gas.

This is a very, very complicated issue. If total Oil exports continue their decline, what happens to Europe? How does that effect the U.S., which relative to Europe is in great shape energy wise, $ wise, current account wise, security wise....

While all of those are unanswerable the real, $64,000 question is: What is the future for gross Oil exports from export land?

Greg T. Jeffers said...

If exports continued their 2005 to 2010 decline, about 1 million bpd, for the next 15 years... and Chindia was able to maintain their current imports and grow no more... Japan, the US, and Europe would have to split very, very, very little Oil. Now, the U.S. will import from Canada without interruption, and will continue to produce 5 to 6.5 million barrels... so things will be different, but we can get by...

WTF happens to Europe and Japan? They are truly doomed.

Anonymous said...

I know someone associated with the local ivy league university that is doing serious work on ammonia as a transport fuel. It was used in Belgium during WW2. The important point is that there is no carbon in the equation. It can be manufactured from water, air and electricity.

I'm suspecting that dangerous or not, a lot more nuclear power will go into place before this is over.

Regards,

Coal Guy

Anonymous said...

Excellent post and comments all.

Even without all the analysis I knew Europe was screwed when I saw that nat. gas crisis over gas flows from Russia several winters ago. What it was exactly that precipitated the crisis I cannot recall now, but I think it was some payment issue or a dispute with an intermediate country on the pipeline, or some kind of embargo.

Regardless, Europe has little coal or wood to space heat with and solar isn't going to do it. Meanwhile North Sea oil and gas production continues to drop.

No, they are done. It will only get uglier and at some point, it will affect us too.

If not for fracking, we'd be really suffering here too directly from our oil oil and gas woes, though we still have at least a sizable domestic production of oil and especially gas ("sizable" meaning greater than single percentage digits of consumption.)

Stephen B.

Greg T. Jeffers said...

Compared to Europe and Japan, the U.S. is swimming in oil/ethanol/shale&tar sand oil...

Italy, Greece, Spain, and likely France have seen Peak Oil. The question now is the rate of change.

I received an email today from Jeffrey Brown regarding all of this... I will be posting soon to take that data and info into consideration.

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westexas said...

I don't know if they are having some unusual production problems in Alaska, but in any case, the combined crude oil production from Alaska + North Dakota (EIA):

January, 2012: 1.15 mbpd
April, 2012: 1.16 mbpd

http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_m.htm

And then we have the continuing question of the EIA/RRC discrepancy for Texas. (RRC = Railroad Commission)

The RRC is promptly updating the statewide production reports at the following link:

http://www.rrc.state.tx.us/data/production/ogismcon.pdf

I am going to see what kind of monthly updates we see for 2011 annual and for January, 2012 throughout the year.

The June RRC update puts 2011 annual Texas crude oil production at 1.13 mbpd, and January, 2012 as 1.21 mbpd.

The July RRC update puts 2011 annual Texas crude oil production at 1.14 mbpd, and January, 2012 at 1.23 mbpd.

Meanwhile, currently the EIA puts 2011 annual Texas crude oil production at 1.47 mbpd, and January, 2012 at 1.71 mbpd.

So, January, 2012 Texas crude oil production:

EIA: 1.71 mbpd
RRC: 1.23 mbpd

Difference: 480,000 bpd

To put this gap in perspective, following is what the EIA shows for January, 2012 crude oil production for selected states:

Alaska: 612,000 bpd
North Dakota (all pay zones): 535,000
California: 531,000
Oklahoma: 224,000
Louisiana: 191,000

In any case, the EIA is saying that the RRC, in January, is missing (after a couple of monthly updates) more than the combined crude oil production from all of Oklahoma and Louisiana.

Note that the RRC sums the reports from Texas producers, while the EIA samples Texas producers and then extrapolates to get a statewide estimate. The RRC reports to increase with time, as late reports come in, but this is a diminishing factor with time, because late reporters tend to be smaller producers.

westexas said...

Re: US Natural Gas Production (With an emphasis on Texas)

The latest RRC monthly reports are subject to (generally increasing) revisions, but having said that, check out the magnitude of the recent reported declines in Texas natural gas well production:

http://www.rrc.state.tx.us/data/production/ogismcon.pdf

Art Berman noted that about 40% of the current natural gas well production in Texas & Louisiana comes from wells put on line in the past 12 months.

An interesting question is once the shale players slow down their drilling (which they have done), and the overall decline rate really kicks in, will they ever be able to catch up?

Note that the RRC shows three straight years of annual declines in Texas natural gas well production, while the same RRC data base shows three years of increasing natural gas production from the Barnett Shale. In other words, increasing natural gas production from the Barnett (and other shale plays) could not keep total Texas natural gas well production on an upward slope. Again, using one data source, the RRC.

I suspect that the Texas natural gas well data may have been providing an early warning signal that the natural gas market could really turn, perhaps as soon as this winter.

Note that the weekly natural gas storage volumes continue to be about one-third of the five year average.

Also, what does the Texas experience with shale gas plays tell us about the overall Shale (oil & gas) Play model?

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