Those of you in the "Oil is a bubble" camp should read this article in today’s WSJ, titled, Oil Exporters Are Unable To Keep Up With Demand:
"The world’s top oil producers are proving unable to
put more barrels on thirsty world markets despite sky-high prices, a
shift that defies traditional market logic and looks set to continue.
Fresh data from the U.S. Department of Energy show the
amount of petroleum products shipped by the world’s top oil exporters
fell 2.5% last year, despite a 57% increase in prices, a trend that
appears to be holding true this year as well.
There are several reasons behind the net-export
decline. Soaring profits from high-price crude have fueled a boom in
oil demand in Saudi Arabia and across the Middle East, leaving less oil
for export. At the same time, aging fields and sluggish investments
have caused exports to drop significantly in Mexico, Norway and, most
recently, Russia. The Organization of Petroleum Exporting Countries
also cut production early last year and didn’t move to boost supplies
again until last fall.
In all, according to the Energy Department figures,
net exports by the world’s top 15 suppliers, which account for 45% of
all production, fell by nearly a million barrels to 38.7 million
barrels a day last year. The drop would have been steeper if not for
heightened output in less-developed countries such as Angola and Libya,
whose economies have yet to become big energy consumers."
We not only have strong demand, we have an ongoing supply problem. The map below reveals that the world’s top 15 exporters are shipping 1 million barrels a day less in 2008 than in 2007:
Oil Exporters Are Unable To Keep Up With Demand
Domestic Needs, Sluggish Investment Crimp Shipments
NEIL KING JR. and SPENCER SWARTZ
WSJ, May 29, 2008; Page A8
Public WSJ/Digg Version
Hmm…I read awhile back that Iran was planning to cut production because their inventory levels were getting too high and noone was buying.
Do I trust Iran or WSJ?
Is it possible we are both in a bubble and there is an ongoing supply problem?
I don’t necessarily see the two as being exclusive, but perhaps I am wrong?
Barry by this post and commentary last night I’m assuming your long oil. I think that’s a really bad idea.
BR: We were long OIL from when it passed $32 back in 2003. Energy was my chosen sector for the annual Business Week forecast for 2004.
As I previously mentioned, my target for Crude was $125 — and since that price, we have owned no Oil futures any longer. Maybe it goes higher, maybe not. As mentioned on K&C last nite, we are long Swift Energy (SWY) Enersys (ENS) and Arch Coal (ACI)
This article gives concrete evidence to support the view that oil production has peaked. It also contains evidence to support the Export Land Model, which if it’s borne out will hasten the crunch in consuming countries, especially but not only the US, and which may actually make the precise peak moment sooner, and moot when it does come.
Like I said earlier today, make it a transparent system and it will become obvious if the recent jump in energy prices is based on supply and demand or manipulation. Until then, it’s just a playground argument. Given the thieves who control oceans of capital and the knowledge of how to use it, I’m betting on a bubble. Only a fool would take a sucker bet in the stock market without knowing if the system is gamed or not.
I distinctly remember sitting around a table and arguing with others about the first time we ran out of oil a couple of decades ago. Anyone who said the oil shortage was a fraud or contrived in some way was looked at as a kook. The ‘kooks’ were apparently right. I suppose the kooks who claimed house prices were in a bubble were also wrong? Or how about the kooks who thought ‘mark to model’ is a screwy idea? Didn’t Enron rape the people of California by manipulating energy contracts, and it was all legal. I believe all participants in these markets claimed ‘supply and demand’ and circular logic as proof as the rightness of these positions.
I just found the Farm Bill, and the Enron Loophole was closed. However it won’t be effective for about 6 months. Now transparency need to be added to all other aspects of energy trading.
The demand/supply quandary is an inflation-induced illusion.
Why sell and ship today, when you can wait a few days/weeks/months and get 5-10% for the trouble?
In fact, in this regime of screaming oil price increases, it befuddles me why any oil producer would want to sell today what they can sit on for a fat profit tomorrow.
Of course, this can’t go on forever. When it ends, oil will crash–below where it started its climb last fall. But that will require a grown-up at the helm of the monetary policy ship in the US. It may take awhile.
Export land model explains some of what I’m hearing from local folks monitoring the Saudi situation. One was just a couple days ago citing reports that the Saudis are drilling and then capping wells as if to bank them for future generations. His read was that they were banking on prices continuing to rise, but the increase in internal demand aspect is one I hadn’t thought about.
That said, oil industry people are like global warming folks – the end is always only several years ago – and still they manage to find oil many many years and decades past doomsdays past.
For fun past perspective see The Coal Question, a book written in 1906 when “peak coal” was just a few short years off. It’s available as a free download on Google Book search. http://books.google.com/books?id=gAAKAAAAIAAJ&dq=william+stanley+jevons+%22the+coal+question%22&pg=PP1&ots=M4b6VPpkEQ&sig=DV3ZQg7b0oIIZIB-o0gVEVvWtms&prev=http://www.google.com/search%3Fq%3DWilliam%2BStanley%2BJevons%2B%2522the%2Bcoal%2Bquestion%2522%26sourceid%3Dnavclient-ff%26ie%3DUTF-8%26rlz%3D1B3GGGL_enUS230US230&sa=X&oi=print&ct=title&cad=one-book-with-thumbnail#PPA17,M1
Remember how the US adapted when the world “ran out” of coal?
In fact, in this regime of screaming oil price increases, it befuddles me why any oil producer would want to sell today what they can sit on for a fat profit tomorrow.
Reply: Well said, and I suspect there is just enough volatility in oil prices to make both sides of the trade profitable for index traders, especially in a market that is gamed to go up over a short time.
I do not have the WSJ subscription and so I can’t read the whole article but one data point I do not see in the excerpt or in the graph is the net change in oil exports from those countries NOT in the top 15.
This would complete the picture. Does anyone have data on this?
EIA report, huge draws. 8.8m b. I can’t remember a draw that large, ever.
No evidence of demand destruction there.
Or, it might mean that old, low cost inventory is being run down because current prices are too high and possibly expected to go down. Maybe actual buyers, as opposed to index traders, are betting on lower prices coming around before inventory levels become critically low? Could this be a bad sign for bubble buyers?
Mexico currently supplies 14% of US oil. Their fields are declining at a rate that they will be a net importer of oil in 6 years. Who will replace this 14%?
Short-term anything can happen. Medium term, oil is going higher.
Nothing in that article indicates that there is a shortage situation, only that suppliers are not putting more product on the market at todays prices. This may be justified if the suppliers believe demand is adequately met and that prices are a bubble, which means by pumping more they would actually kill the bubble and their golden goose.
I dunno. Short-term, I got my longs protected on last weeks “CNBC Special Report: America’s Oil Crisis” and the BenSteinery in the NYT. These are not signs of a bottom.
Rule of 20x in a bubble. Taking oil’s starting point as the Fall, 1999 Economist cover “A world awash in oil”, this would yield about $250 crude at the top.
But I don’t know that we’ve ever seen a bubble in something the world relies upon for its continued existence.
All the other bubbles have essentially been in financial instruments. Even the 70s oil bubble was really just OPEC’s reaction to Nixon’s abandonment of the gold standard; there, the pumps could’ve been turned on again at any time.
If I remember correctly, there was a huge supply problem in housing in 2005. There was no new land getting created and that was the reason why the burgeoning population of the US was causing prices to go up.
Of course, this time it is different for you, Barry. Good luck. :)
BR: You remember incorrectly.
The problem was not one of land. Rates were dropped to historically low levels at the same time that Bank lending standards all but disappeared. Just about anyone who asked, applied for a mortgage — regardless of credit score, down payment, income or home value — got a mortgage.
Your understanding of the housing situation is woefully, painfully inadequate.
Saudis might be deciding that oil in the ground is worth more than US Treasuries in the vault.
If we hadn’t screwed up in Iraq, there would be much more supply available.
I can see more people have figured it out in the market. Gold is continuing to deflate. Oil should come with it next and take the market with it.
Good point DMR but I think we are seeing that these oil producing countries are a little smarter than home builders, no? They are holding back on production. The problem with the export land model is that eventually, with ridiculous price increases that we have seen, you hurt your own GDP. Basically price your own people out. You have to massage the price for long term and that is certainly out the window here. Do you really think OPEC wants soccer mom Jane getting rid of her excursion to drive a hybrid? The people who want oil at 150 are investors who look to gain from the increase.
It’s a hedge against poor equities and failing financials, not peak oil. Play at your own risk. I’m an amatuer so I’ll just sit back and watch the fireworks.
for non-believers, why is it so hard to imagine that if suppliers have monopoly and they know that the world has limited supply(20 years time horizon) why would they not just hoard it(simply keep output low).
in the short term oil may crash to $70-80, it may as well go to $200.
(it all depends on what the govs of powerful countries want to happen, since oil is very crucial, it can also mean war and regime change, if it is against govs of powerful countries)
but long term oil is in limited supply unless all the data we have been given is a lie.
That’s harse on old DMR. I think his argument was poorly stated though. I took his meaning to be that there was the claim by builders, realtwhores, and mortgage brokers that one should buy now at inflated prices because there was a shortage of land to build on. This can be synonymous with claims of peak oil, no?
This all becomes an issue of credibility and trust. Do I trust reports of ageing fields in Saudi Arabia and Russia? Unfortunately due to the recent bubbles, Enron, and World Com scenarios it makes it hard to believe that the doubling in oil prices is fundamental
BR: My problem with his ilk is lack of accountability — publishes under multiple names (DMR, Matt, Monty Burns, Contrarian), w/o an email address, no ID, no website.
From troll-like behavior, what else can I conclude? He’s a likely troll.
I wonder if there are any studies of the impact high oil prices have on supply (I’m thinking specifically of nationalized oil) and how that might be increasing prices. Let’s say you are a government and you have expected expenditures of x. If the price of oil goes up, you’ll cut back production and save it for later years. I would assume this would be particularilly true the less democratic the government, but that is debatable. I wonder what the magnitude of such thinking might be, and what it’s %age impact on the total price increase is, and if it creates a circle of continuing price increases,and whether or not it is only academic or matters.
How much of the price increase is peak oil, and how much is self-serving interest?
Here’s a parody of an argument used by people who don’t believe in AGW and Peak Oil:
“Remember that ‘experts’ once claimed the world was flat? It just goes to show you can’t trust experts.”
Yes, for every valid theory on any subject, I can find someone who guessed way off the mark. For some anti-PO and anti-AGW folks, finding an invalid prediction — however old or narrowly held — is apparently “QED”.
Of course supply was weak compared to demand in 2007. Oil has rallied from 50 bucks to 135 bucks in less than 18 months….of course “someting” is going on that is bullish. That’s NOT the relevant question. The key question is how much of all the bullish news and information is priced into the market? I think given the massive dump into wildly bullish data today…it suggests we’re getting pretty damn close to a near term peak.
Has anyone else noticed a decrease in traffic on the road?
Barry wrote: “Rates were dropped to historically low levels at the same time that Bank lending standards all but disappeared”
The reduction of interest rates is across the board. The same low interest rates that allow Joe BurgerFlipper to buy a house are the same low rates that are pushing the dollar down. Priced in Euros, or any other currency not linked to the dollar, the price is up but not of the historic proportions we are seeing.
Lower bank lending standards is not a cause, it is a symptom of the end game in a bubble. Banks lowered their standards when expectations for 20% gains became the norm and could not be met in 2006…the subprime mess started after the primary market already peaked…it just prevented the market from crashing till 2007. With Dodge trying to pay us for gas to buy their trucks and plans for Gas Tax holidays, I can imagine that demand will stay high longer than supplies warrant. But, once there is
(1) Large scale reduction in automobile and aviation consumption
(2) Sharp drop in imports due to pinched wallets in the US, knocking those millions of Indian/Chinese consumers off their feet
the Peak Oil side of the story will quietly go away.
BR: My problem with you — aside the fact that much of what you write is indecipherable nonsense — is a lack of accountablility. Normally, I would email this to you privately, but:
Under IP address 188.8.131.52, you publish under multiple names (DMR, Matt, Monty Burns, Contrarian) , bad email address, no ID, no website.
That, plus half of your posts begin OFFTOPIC.
Get a real email address, name (or website), and I will take you seriously.
One thing I’m missing everywhere is that I don’t see any shortages at the pumps anywhere in the world. No rationing nor long lines….
Just prices that go up…. There’s got to be a trick to all this, no? Less oil being pumped out of the ground, yet the supply of it’s derivative products are aplenty. What gives?
Peak Oilers don’t disagree with the notion that much of the rise in oil prices the past few months stems more from (a) lost faith in paper investments than from (b) peak oil production.
Like some of you, I expect oil to go down from here or to at least plateau, thanks to reduced consumption. But, it could go up, too, if the US refuses to get its house in order.
Interesting article and comments. While not disagreeing with the symptoms described I’d argue with the diagnosis. There’s a lot of Oil around but it’s increasingly not available for non-market reasons. Not least of which is political decisions combined with politically-driven decisions to under-invest in both production and exploration. We’ve also shot our own feet off by our lack of rational energy policy – again not least of which is prohibiting offshore exploration, nuclear power or widespread investment in clean coal. If you’d like to see some charts consider this:
http://tinyurl.com/5jcah5 as well as this earlier survey of the long-term troubles of the industry: http://tinyurl.com/5wxuo9
I think you might be surprised at who controls which oil and how the majors are reacting.
The Enron loophole is set to expire in 6 months? Looks like Barack ‘Sadam’ Hussein ‘Osama’ Obama ‘Binladen’ is gonna inherit a mighty nasty finicial situation here come the beginning of January. Its a real shame our political process has a built-in incentive to pass along fiscal problems to the next guy. Falling equities, falling commodities, rising interest rates, and a mountain of public and private debt does not paint an attractive economic forecast.
As for declining inventories, people are IMO using less at these prices and suppliers are IMO not eager to restock at these prices, facing lessening demand. When the pension funds get pushed out of commodities we are likely to see some sanity return to these markets, hopefully….
DMR said “the Peak Oil side of the story will quietly go away.”
Tell that to T Boone Pickens.
I don’t see that guy that was telling me that Iran was storing oil in tankers, which was about 20.
I also don’t see that guy asking me if I believe everything I read either.
Regular readers of The Oil Drum will recognize the theme that exports, not simple raw production would be the real problem. This has been raised repeatedly by many of the prominent posters there and has been tracked for a long time. Good to finally see the WSJ get on board, YEARS after the fact that this was a looming problem.
If you trade the energy sector, or are interested in peak oil, alternative energy, global macro econ, etc the Oil Drum website is a good resource. Disclaimer: I am in no way affiliated with that website, other than being a frequent reader.
A foot note to the oil inventory report noted the drop was due to “temporary delays in crude tanker off loading in the Gulf Coast.”
So it’s not in the tanks, its sittin on the floating tanks near the big tanks. I wonder if this provides the push for institutions to get net short.
Canada is a glaring omission in the chart (let’s hope they’re at least in the data).
They are, and have been for some time, the largest exporter to the US. Canada has non-trivial offshore production on its E Coast (and that’s growing). But the real story of course is the Athabasca Tar Sands in northern Alberta.
Sometime in the last yr or two I read that Canada had hit a production rate of a bil bbl/yr. Which works out (divided by 365) to 2.74 m bbl/day. Which in a global market of, let’s say, 85 m bbl/day isn’t chump change.
The even bigger story however is that Canada is well on track to producing 3 bil bbl/yr or 8.28 m bbl/day – which would be over 10% of world production in the next 5 yrs. That’s real and soon (unlike) the recent, deep finds off of the coast of Brazil (on the soon part that is).
The tar sands production comes however at a huge environmental cost. Go to images.google.com and look up something like
athabasca tar sands
and you’ll see (or should see) some truly horrifying pictures. Like something out of the most dystopic parts of Blade Runner. Set in something close enough to the Arctic to look like the Arctic. Ridley Scott (who’s heavy on the visuals) would be pleased.
Still, world pressures are such that it’s going to happen.
To benchmark a putative yrly Canadian production of 3 bil bbl, consider that currently Saudi Arabia is #1 at over 10 m bbl/day. Russia is #2 at maybe 9.25. The US (yes, the US) is #3 at 7.25. Iran is #4 at 4 m bbl/day. And so on (in downwards order).
3 m bbl/day would make Canada one of the world’s largest producers. And I think it safe to say that something close to all that production will be consumed in North America.
Did you check out Matthew Simmons on Squak Box this morning, plenty of interesting peak oil discussion.
Pool Shark, thanks for the pictures. Where are those pictures from? This is not what I saw in China for 2 weeks 5/10-5/24.
Traffic was bad and lots of cars on the road, but no lines at any pump at all…. I was in Shanghai, Hangzhou, Huzhou and Hong Kong.
I see no mention of Brazil’s emergence as a global producer. And if Brazil can do it, god knows how many others can, if they only had the proper incentive (*cough*$100+oil*cough*).
Mexico plunged this year. It’s been a very touchy subject with the Mexicans for a long time (foreign, esp gringo, intervention), but Pemex’s best bet is to joint-venture with any of the ‘majors’, and in particular get access to their expertise (technology). Note also: the Mexican govt gets about 1/3 of its revenues from Pemex. I wonder what the current state of the government’s finances look like right now?
In fact that’s the case with all the NOCs (National Oil Companies). They have the reserves, but the ‘majors’ (Exxon, Chevron, BP, Shell and you might want to throw in Total and Conoco-Phillips) have the technology. And not just deep-sea drilling. The majors have the technology to make the NOCs’ _existing fields_ much more productive.
But, by-and-large, the NOCs don’t allow in the majors. Is the idea that they’re going to develop that expertise themselves (and move up the value-added chain)? So far and for the most part, I don’t see that that’s happened. What’s happened is declining production.
With maybe two exceptions among the NOCs: Norway and now Brazil. Norway has performance brilliantly with the windfall it received (among other things they’ve developed the world’s largest fertilizer firm as well as the world’s largest solar power firm, REC, – yes your heard me right, the world’s largest solar power firm – in Norway). And Petrobras is acting very intelligently as it seeks to make use of its new finds as well as technology from the majors.
Russia is a different story. Invite in the majors. Have them help in shoring up existing infrastructure and have the majors develop or start to develop new fields. Hopefully steal some of the majors’ expertise and technology along the way. And then come pretty close to completely disenfranchising the majors (that is, steal everything back). Kleptocracy indeed.
Now though, with falling production, do you (the Russians) invite back the majors? And how do the majors react? Or do you believe (tell yourself) that Russian firms are now up to the task of restoring Russian production alone?
Peak oil is not a “theory” it is a fact. It is a fact in the sense that anything that is finite has a beginning a middle and an end.
Glad we can dispense with that.
Up for argument, however, is whether or not there are massive new finds lurking off our coasts or secret capped wells or something.
Here’s where a little bit of data can go a long way. World discoveries peaked in 1963. Before you can produce, you have to find. And the fact of the matter is finds peaked, uh, lessee here…carry the one…45 years ago(!).
Get that peak-deniers? Peak discovery for the globe was 45 years ago. And that’s a fact.
Interestingly, US peak discoveries preceded the US peak of production by 41 years. That too is a fact.
As to whether or not new fields could be brought on-line fast enough to cover the shortfalls from current fields PLUS the required percentage increase to keep the whole global economy growing by ~3%/yr, well, in a word, no.
Exponential functions are tricky that way.
I’ve tried my best to explain that in a pair of very short flash videos at my site.
Now mind you, in spite of remarks above that may seem to encourage production, I think the US should get off of oil (and fossil fuels) post haste. I plunked down the extra premium and bought a Camry Hybrid two yrs. And with gas now at $4/gallon, that premium looks to amortize itself even sooner than I thought.
I also bought the car though for its (ultra) low emissions (for which there’s no financial reward).
And I think reduction should start with conservation (which can also be called reduced demand). And $5/gallon gas would be very effective in encouraging conservation (as well as subsidizing new technologies).
However in addition to my hybird, I drive about 9,000 miles/yr. Which is low, I think the avg in the US is something like 12,000 or maybe even 14,000.
So what about social justice? (not that this is something the US has been consistently good at). How about a gas-related tax deduction or rebate for all individuals or households who are below some income level to be determined? One year to start. Renewable and adjustable depending on where avg gas prices for the past yr land from one yr to the next.
So how then do we pay for the corresponding reduction in tax revenues? Well I’ve written too much already, so to-be-continued.
I’m no expert, but it would seem that different countries will peak at different times, which could make the ones who still have oil into the wealthy nations. Canada may become the next US in the near future.
Sorry. In my first poast re: Canada started mixing bbl per yr with per day.
If Canada goes to 3 bil bbl/yr that translates to 8.22 m bbl/day. In a currently (approximate) market of 85 m bbl/day.
Which is huge.
I think one distinction that bears fleshing out is the control of reserves by states as opposed to private companies. States can easily have a different set of incentives (e.g., macro/exchange rate stability, long-term economic diversification or simply political goals) that result in a backward bending supply curve. It’s no secret that many of the state-dominated producers — Mexico, Venezuela, Russia, etc. — have underinvested in upstream production for many years. Russia has oil export duties that effectively siphon off any additional profit above $35/bbl. Kazakhstan has recently followed suit with similar export duties. In terms of promoting macro stability (i.e., avoiding excessive real exchange rate appreciation as a result of oil-related revenues), this has actually been a reasonably effective policy in Russia (combined with the saving of oil-related revenue off shore in the stabilization fund). However, it’s come at the cost of new production capacity.
Russia is at least considering changes in these oil export duties and there are efforts by the Mexican gov’t to loosen restrictions on foreign investment but this is still very politically sensitive. Venezuela’s PDVSA can’t invest because it has to spend on social programs. Russia’s Gazprom, for that matter, has to pay for a winter olympics in 2012.
Finally, even the private companies’ incentives have not changed as dramatically as prices have increased. This is because of capital budgeting constraints. Exxon is famous for being very conservative in its capital budgeting having learned very hard lessons from the 1980s oil bust. The market has consistently rewarded this approach with a very high price/bbl reserve ratio. Most of the private majors invest in projects that are profitable at relatively low prices. These use to be set as low as $18-20 bbl at the beginning of the decade. You hear that there are some investments made on $50/bbl price assumptions but that’s about it. Even at $50/bbl much of the potential new deep sea production wouldn’t be profitable. Keep in mind, these prices need to materialize through the 20+ plus year life of the project so spot prices are not a particularly useful gauge.
(eric) again (in a way) it’s not that I’m deaf to peak oil. I’ve read maybe six books on the subject and thought about it a lot.
When you include the Athabasca tar sands, Canada’s reserves are second only to Saudi Arabia. Now one caveat is that not all of that is recoverable with current methods. But huge amounts are. And, as I investigated it, predictions that Canada will go from 1 b bbl/yr to 3 – i.e. tripling their output – seem very realistic.
Another problem/caveat though (let’s put as many facts up front as possible) is that the current methods are very water (and energy) intensive. Northern Canada has plenty of water but some people are already worrying that water availability is going to impact oil extraction from tar sands.
In sum though, I don’t think Canada is going to peak anytime soon.
Ghawar may be in decline (and if so, generally it’s steep) although the Saudis would of course never cop to this.
But the Saudis (and their Am and European precursors) having been going at Ghawar for a long time. The Canadian tar sands have been barely touched.
The point is to buy ourselves time while we hopefully get a better handle on energy consumption in general and develop new technologies. Without a collapse of the world economy. A conservative guess is that a ‘sufficient’ collapse of the world economy would require a reduction of the current 6.6 billion world population by, let’s say, 25-50 percent (and the longer the collapse, the more the reduction).
Chinese oil/gas retailers are forced to eat a lot of profit by the state dictate on prices. They forced a supply “shortage” last year and I saw big lines for petrol in Xi’An, deep inside China. They got permission for a 20% price jump then. Rumour is the oil majors are grumbling for another price jump.
Feeding Chinese demand is a big factor. There are several major oil refineries under construction that will dramatically increase Chinese oil imports (and consumption) in the next 10 years. In just the past 14 years China has gone from self-sufficiency to importing over 3 million barrels per day last year. This is going effect prices for a long time.
Exactly, and if you look at inventories by PADD, it’s evident that nearly all of the total draw is accounted for by PADD 3 (U.S. Gulf Coast).
The WSJ seems unconscious to the fact that consumer demand within some importing nations has not been exactly booming while many exporting nations subsidise domestic demand. Beyond which there’s some implication of a generic ‘world oil’, no matter that there are many different grades within a reference formula structure with benchmarks’ price discovery taking place in financial markets.
Too many still imagine there was/is some strict supply/demand; price relation — even though this hasn’t held for nearly a century (or more). Instead it has been a matter of distinct price regimes and who/what dominated these. Price management, whether decades ago by the so-called ‘international oil cartel’ or by OPEC or by financial interests does not have much to do with free market orthodoxies, though the current regime is often referred to as “market-related”.
Athabascan, and potenially Orinoco, production might benefit from newer in-situ recovery methods such as toe to heel air injection (a thermal recovery technique with much lighter footprint).
Here’s a piece from Oil Drum Canada:
Hi Juan, yes I’m aware that there as newer, better methods as regards both the Canadian tar sands and Venezuela’s heavy oil. Methods that are both less environmentally destructive (it’s better put than way than “more environmentally benighn”) and increase output.
I think one can almost assume that it’s a matter of time before these methods are used in Canada.
Oh and as regards a prior post of yours (different grades of crude). I was reading some piece on an independent US refiner somewhere in the Middle US (by which I mean from Texas to Montana) that had had the foresight to rig out their refineries for the extra beating that heavy oil produces.
And there’s a non-trivial quantity of heavy oil in places like Wyoming and Montana. There’s been a mini-boom with lots of new rigs put in, and the refiner in question is one of the few that can handle their output and is making money hand-over-fist.
Wyoming/Montana would make sense to me since that’s where the Powder River Basin is. And the world’s largest coal mine. More US coal now comes from here than from Appalachia.
Think the Ghawar of coal.
I live in DC and I noticed on I-270 Sunday afternoon, traffic seemed really light for a gorgeous Sunday on Memorial Day weekend. I have also noticed more people waiting for buses at bus stops. Also saw an actual pedestrian trying to cross a major intersection in Rockville the other day where I had never seen a pedestrian before. Been noticing these types of things lately. I say bring it on. Then maybe I can bike more to places and not worry about cheating death while I do so.
“Exxon is the world’s largest non-state oil company and the largest publicly traded corporation by market capitalization ($478 billion). If anyone has both the incentive and the resources to find and sell more oil, it is them. But they can’t. In the last five years, as the average price of oil more than tripled, their production has been flat…
And it’s not as if they haven’t been trying: their capital and exploration expenses for upstream operations have nearly doubled in recent years.”
“Under IP address 184.108.40.206, you publish under multiple names (DMR, Matt, Monty Burns, Contrarian) , bad email address, no ID, no website.”
Well, considering that IP address is a JP Morgan Chase gateway, it could be any number of people from the company. The Big Picture must be some popular reading at JP Morgan during lunch.