Posted on 09/18/2014 7:24:16 AM PDT by ckilmer
We use the period starting with January 2010 when crude production had come back to 2005 levels after the exceptional year of 2009.
The world is transfixed on growing world crude production driven by US shale oil but forgets to look what is happening under this remarkable growth curve. We find a production drop in the rest-of-world since February 2012, mainly caused by geopolitics (Iran), civil strife (Libya), corruption (Nigeria) and a poor performance of Saudi Arabia. Declining crude production in one group of countries could still be offset by a growing group, but only because of unconventional oil from Canada and conventional oil from the Southern part of Iraq.
Given how capital-intensive fracking is, on an ongoing basis, do you seek it taking off anywhere outside the US, given how foreign governments have this way of nationalizing oil finds and/or tearing up existing contracts?
The wild card to EOG’s bearishness and Pioneer’s bullishness is oil prices. These graphs show that the rise in US oil production is masking production declines around the world.
T Boone Pickens doesn’t think Brent oil prices will go much below $100 @ barrel because the price is controlled—principally by the saudis. http://www.freerepublic.com/focus/f-news/3194660/posts
So we are producing 760% of what Saudi produces and letting them rule us?
So we are producing 760% of what Saudi produces and letting them rule us?
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US oil production is currently about 8.6 million barrels@ day and Saudi oil production is about 10 million barrels@ day.
Venezuela oil production is way down also.
The graphs are confusing. The top graph shows the US at 76 million barrels a day.
I think the endgame will be more government intervention on the consumption side.
Oil needs to be available for military, aviation, marine, rail use. Automobiles are getting some non-oil options: CNG and electric by nat gas.
Related thread from last month, more affecting short-term supply
U.S. liquid fuels production growth more than offsets unplanned supply disruptions
http://www.freerepublic.com/focus/f-news/3197649/posts
No, it is the total world production with the US. The lower line is the world production without the US. US production is the difference.
And my gas is still $3.59 a gallon. And the media continues not to care. No one even complains anymore.
“Given how capital-intensive fracking is, on an ongoing basis, do you seek it taking off anywhere outside the US, given how foreign governments have this way of nationalizing oil finds and/or tearing up existing contracts?”
I do not see anything like the explosive nature of fraccing taking place anywhere in the foreseeable future.
You hit the nail as to why: foreign govts are too used to lucrative contracts benefiting them, and the capital intensive nature will allow meager shares to the govt due to the cost recovery mechanism of production sharing contracts, the primary contract vehicle in existence.
That is what I thought for a while but then the “BRENT” line makes no sense.
The article assumes everyone is pumping all they could.
Maybe the Rag Heads have figured out that pumping less actually makes them more! (since that drives the price higher)
The have two charts in the same space so you can compare price to production. The black lines are production rates using the black scale on the left.
The red line is price of Brent using the red scale on the right.
Seems kinda strange but I got it now.
It is intend to help show how one impacts the other, reduction in supply helped lead to higher prices. There are other factors so it is not a perfect match. But when the Libya war dropped global supply, prices went high.
Nope. Not until their situation gets desperate and they need a US oil company to cme in and frack their existing fields to start secondary recovery.
Maybe the Rag Heads have figured out that pumping less actually makes them more! (since that drives the price higher)
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they have been manipulating prices for years. If the price oil falls much below 90 the saudis will cut production.
what they don’t have is excess capacity anymore. Also they have configured their economies so that they need at least 90 @ barrel to pay their bills.
Given how capital-intensive fracking is, on an ongoing basis, do you seek it taking off anywhere outside the US, given how foreign governments have this way of nationalizing oil finds and/or tearing up existing contracts?
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strategic calculations today based on natural resource considerations make an ass out of the people doing the same thing 5 years ago. Likely the same will be the case 5 years from now.
With that said,
....imho we are in the last great hurrah of the oil age. It will take at least 5 years for fracking to produce any real volume anywhere else in the world besides North America. However, 5 years from now or sometime after 2020 imho demand for oil will start to decline worldwide. Slowly at first but then the rate will start to accelerate.
Why?
Natural gas buildings trains trucks and buses in the USA will will strip up to 40% of the demand for oil out of the USA market because natural gas is so much cheaper than oil currently....and natural gas will remain cheaper.
but far more significantly ... after 2020...the volumes on electric cars will go way up. Tesla is not so much significant for themselves—though they are a very big deal — but rather what they are doing to all the major car companies around the world. Tesla is forcing all the major car companies to innovate toward electric cars in a very big way.
The result of this will be that somewhere around 2020 the volumes of electric cars will start to accelerate around the world. This is absolutely in the interest of every industrialized country in the world.
This fall in demand for oil caused by electric car production will cause a price collapse in the price of oil and seal off any real opportunities for any other countries to do fracking in a big way.
The great thing about this is that there will be a decades long battle between electric cars and internal combustion engine cars which will steadily shove the cost of gasoline down and the cost of internal combustion engine cars while raising their mpg and shelf life. The same thing will happen with electric cars. This titanic battle which pushes down the cost of energy will result in a huge decades long explosion of wealth around the world as happened in the 1990’s with low energy prices.
This great battle between internal combustion engine based cars and electric engine base cars will be a great testimony to the creative destruction of the capitalist system but it will likely go unrecognized as such.
anyhow that’s my wild ass guess or wag for short. there’s probably not word of truth to it.
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