Tuesday, January 22, 2013

U.S. Oil Production

It is difficult to wrap my mind around the incredible increase in U.S. production of Crude & Condensate.

As it turns out, there was a great deal more $100 per barrel Oil than nearly any one thought possible (int he U.S., anyway). I should think that there will be one heck of a lot of $150 Oil - if we ever even need to find out.

When the wind (or data) changes, one must tack to the wind. I am not interested in being long Oil at the moment.


14 comments:

Anonymous said...

Shell is still chipping away at the problems of in-situ production of oil from oil shale. If they succeed, there are about 800 billion barrels of recoverable oil out there. At $100 per barrel, that's $80 TRILLION worth of oil. With a prize that big, I'd suggest that it is only a matter of time.

Regards,

Coal Guy

Anonymous said...

Rig count has quadrupled the last 5 years, in order to increase production. How long can it be sustained?

PioneerPreppy said...

Oh the demand is out there regardless of price for a while anyway. It's more a question of who is buying really.

Publius said...

The demand is "out there," but a larger and larger percentage of the US population will be unable to afford it.

The middle class has already been decimated by a combination of absurd Fed policy (destroying the middle class via inflation), outsourcing jobs to nations with lower costs due to slave labor and no environmental standards, automation, and peak oil.

Will there always be someone able to afford the oil produced? Yes, until the point that the civilization upon which the remaining elite buyers depend collapses.

At some point, bankster CEO's and rentier elites will realize that they depend on a functional civilization to survive or have their cake and eat it too, but by then, it will be too late.

I think that crapitalism-based pseudo-democracy has reached a point at which it can no longer be feasibly reformed to make it what it could be (a somewhat efficient system that rewards innovation and industry). It has been so corrupted that those who stand to lose by reform will not allow that reform, even though they are condemning themselves also to destruction (at least economically, if not literally).

The selfish rentier oligarchs who have rigged the system, along with the welfare-class dependents who are bought off by entitlements, will both decide to suck the middle class dry rather than give up any of their goodies.

Probably.

Anonymous said...

Have you all seen this report on US driving trends?

http://www.uspirg.org/sites/pirg/files/reports/Transportation%20%26%20the%20New%20Generation%20vUS_0.pdf

Stephen B.

westexas said...

I think that the most accurate assessment of the global situation is that net oil importing OECD countries like the US are gradually being forced out of the global market for exported oil as the developing countries, led by China, have consumed an increasing share of a declining post-2005 volume of Global Net Exports of oil (GNE*).

Our data base shows that the ratio of GNE to Chindia's Net Imports of oil (CNI) fell from 11.0 in 2002 to 5.3 in 2011, and the rate of decline in the ratio has accelerated in recent years, falling from 8.9 in 2005 to 5.3 in 2011.

At the 2005 to 2011 rate of decline in the GNE/CNI ratio, in only 18 years the Chinidia region alone (China + India) would theoretically consume 100% of GNE.

Rising US oil crude oil production (to a level well below our 1970 peak rate) certainly helps, but it's a near certainty that we finished 2012 with the highest overall decline rate from existing wellbores in US history, and I have a hard time believing that thousands and thousands wellbores quickly headed toward stripper well status--10 bpd or less--will make a material long term difference in the global net export situation.

*Top 33 net exporters in 2005, BP + Minor EIA data, total petroleum liquids

Greg T. Jeffers said...

Westexas:

There is no question that the "violent" shift (as described by the IEA) of exports formally going to Europe and the U.S. are going east - and the move IS violent.

The U.S. is in a much better position than Europe - it ain't even close. Will the U.S. produce another 150 Billion Barrels? Very doubtful. Does production increase outstrip the fall in imports? Close, but doubtful there, too.

Still, we are in a damned sight better position than Europe - and I maintain that I should have named this blog the European Energy Crisis because that's where the energy story is unfolding first.

westexas said...

I think that we are temporarily in a better position supply wise, but ever increasing decline rates in existing wellbores will catch up with us sooner or later.

In any case, I don't think that the American consumer is necessarily in a better position, since the fact remains that the global price of oil is around $112, versus $25 in 2002.

And while WTI prices are certainly lower than global prices, the WTI price is really only relevant to Mid-continent producers and refiners.

Based on the WTI crack spread versus Brent crack spread, US consumers (even in areas where refiners pay WTI prices) are almost totally exposed to global crude oil prices. Basically, Mid-continent refiners are paying WTI prices for crude, but largely charging Brent based prices for refined products.

IMO, net oil importing OECD countries have gone increasingly into debt, from real creditors and accommodative central banks, trying to keep their "Wants" based economies going, as the developing countries, led by China, have consumed an increasing share of declining volume of post-2005 Global Net Exports of oil.

westexas said...

Ratio of Global Net Exports of oil (GNE) to Chindia’s Net Imports (CNI), extapolation b

http://i1095.photobucket.com/albums/i475/westexas/Slide03.jpg

GNE/CNI Ratio Versus Total Global Public Debt (debt data from Economist Magazine):

http://i1095.photobucket.com/albums/i475/westexas/Slide01.jpg

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