Alex Epstein’s Fossil Future Flames Out on Climate Change
Reading Fossil Future was a painful experience for me not because of Epstein’s positions but because the book is flawed and dishonest journalism.
For Alex Epstein To Be Right, Everyone Else Has To Be Wrong
Epstein’s case is based on a deep state organization that has created and spread fake news about fossil fuels and climate change.
Fact-Checking the DUC Meme: Mostly False
If financial success were as simple as the memes that often guide investors, everyone would be rich.
A NEW OIL PARADIGM?
Goldman and most analysts are using an outdated paradigm for oil-market dynamics and price formation.
They’re Not Making Oil Like They Used To: Stealth Peak Oil?
The sooner we stop expecting a miracle of technology or a quick transition to renewable energy, the better we will be able to cope with a more difficult energy future.
Why Analysts Are Wrong About Oil Prices: What The Market Knows
The market is pricing in the more-likely case that China’s long period as a driver of oil growth is near its end.
FUSION BREAKTHROUGH IS A NUCLEAR NOTHING BURGER
Magical thinking about the possibility of nuclear fusion in the future does nothing to address our bad energy behavior today.
Why Are Oil Prices Crashing?
Oil prices are not returning to $100 nor is the economy returning to normal.
ENERGY AWARE #4: THE DEVIL IS IN THE DIESEL
There is little flexibility to modify the kind of crude oil input or distillate yield once the refinery is built. Suggestions by some people to re-design, to build new refineries, or to use new technologies to boost diesel output are not realistic.
ENERGY AWARE #3: U.S. ENERGY INDEPENDENCE AND OTHER DUMB MEMES
I’m not suggesting that everyone needs to become an energy expert. I’m saying that memes are a lazy approach to something too important to be lazy about.
ENERGY AWARE #2: THERE IS NO CLEAN, CHEAP ENERGY
The energy debate assumes that there is some sort of black-and-white choice between fossil and renewable energy. That is not only wrong—it’s impossible.
Energy Shock, Energy Transition: A Perspective from Inside the Energy Industry
More than 30% of Americans favor ending the use of fossil fuels completely. That is only possible because of energy blindness.
Energy Aware #1: There Is No Energy Transition Away From Fossil Fuels
Lower carbon emissions are critical for the future. That does not mean we can pick a fantasy and make it happen.
Europe’s energy crisis, the war in Ukraine, and escalation of U.S. – Chinese tensions over Taiwan are all part of a struggle to dominate remaining fossil resources as well as new energy sources.
Saudi Prince Delivers a Message About The Second Cold War
Price Abdulaziz bin Salman’s comments this week mean that Russia’s interests are our interests and the West’s problems are not our problems. Welcome to the Second Cold War!
Energy and Oil Markets with Art Berman
If we continue to consume the same amount of energy—it doesn’t matter if its fossil fuel or “green” energy—our ecosystem will be wrecked & the earth will become unliveable.
The rate of change in energy intensity is now approaching zero. Future GDP will not increase without substantial increases in energy consumption. That is bad news for climate change and for earth’s ecosystem.
Paradigm Shift: End of the Oil Age
Old-paradigm analysts believe that oil demand must revert to ever-higher levels which supply simply cannot meet. In fact, the opposite is true. The correct oil paradigm is supply-driven and price-constrained.
The Misunderstanding of Oil Underinvestment
The level of oil investment over the last several years has been exactly right based on market price and investor expectations. The oil business is not a service industry nor is it part of the Consumer Protection Agency.
Video: Worst Oil Price Shock Since 1980 — When Will It End? (If Ever) | Energy Expert Art Berman
This is going to fundamentally re-structure the economy & probably the world order. Buckle up. It’s going to be a wild ride!
We are now experiencing the fourth oil shock. The removal of 5 mmb/d of Russian crude oil and condensate exports would be the biggest structural change to the oil market since the Iran-Iraq war in 1980.
Steven Koonin’s Unsettled: Much to Like and to Dislike
For its many merits, people deserve better information and guidance than Unsettled provides.
Nuclear Power is No Solution for The World’s Energy Problems
Let’s be realistic about what is feasible in the limited time available before energy supply becomes an even bigger crisis.
Oil—it was the best of fuels, it was the worst of fuels: Art Berman and Nate Hagens
Link to the interview
The Climate-Change Trip to Abilene
Climate change cannot be fixed with renewable energy and electric vehicles. Substantial reductions in population, energy use and consumption are the only answers to climate change and its cause, overshoot.
Art Berman on the Energy Dilemma: replacing Fossil Fuels with Renewables & Spiking Energy Prices
Art Berman on the Energy Dilemma: replacing Fossil Fuels with Renewables & Spiking Energy Prices
Reality check on Fossil Fuels and the Energy Markets
Reality check on Fossil Fuels and the Energy Markets with Art Berman
Net Zero, Gross Delusion
For those who think that transport is the main use of internal combustion engines, think again. Less than half were for automotive use in 2020. Agriculture, manufacturing, power generation, forestry and construction accounted for the other 53%.
The Great Artificial Oil Price Rally
Markets are not nearly as suggestible as most analysts and investors. They are cheap and hate to over-pay.
The Oil Price Rally Is Over
The rally was over a few weeks ago but until late last week, there was hope it might resume its upward momentum. That seems unlikely for now.
Super-Cycle Silliness: Why Oil Prices Will Not Increase Much Further
Monthly oil prices have nearly quadrupled since April 2020 and that has some analysts talking about an oil super-cycle. What nonsense.
Texas Power Grid Train Wreck
The obvious conclusions from this crisis are that 27% reliance on wind is a big risk and that Texas’s unregulated electric grid system is a train wreck.
Hot Take of the Day podcast Episode 100 with Art Berman
The bullishness in oil is because the market is sending a price signal saying, “You guys need to get busy and drill.”
Natural Gas Amateur Hour: The Supply Shortage That Never Was
The idea that gas price might soar this winter because of lower production reflected a profound misunderstanding of how natural gas markets work. It was natural gas amateur hour.
Oil Price Spike Next Blow To Economy: Petroleum Expert Art Berman Issues Warning
Many of the wells that were turned off were not shale wells and they’ll never be turned on again.
DUC2K: Drilled Uncompleted Wells Won’t Save U.S. Oil Production
It doesn’t matter whether wells are newly drilled and completed or DUCs—there are simply too few wells being added to maintain present levels of production.
MacroVoices Art Berman: U.S. Oil Production Still Set for Steep Decline in 2021
Podcast Slide Deck
How High Will Oil Prices Go? What the Market Knows
The market knows that investment is needed immediately. The consequences of ignoring what the market knows may be economically disastrous for a struggling world economy.
Climate Change: The Great and Silly Debate
What lies ahead during the lifetimes of our grandchildren will most probably not be comparable to anything since the development of multi-cellular life on Earth.
Oil and The Changing World Order
Oil was responsible for the singular economic growth after World War II. It is the only thing that can prevent slow growth from becoming negative growth in that new world order.
Stop Expecting Oil and the Economy to Recover
It is unlikely that either oil supply or demand will ever return to 2018 levels.
The Decline and Fall of the Bakken: The Red Queen Collapses
Decreasing EUR and b-exponents in the Bakken are because the sweet spot or core area has reached full development. More wells are now being drilled outside the core.
Saudi Arabia Thinks OPEC+ Is Central Bank of Oil—Fire The Banker!
OPEC+ has done a dreadful job of managing world oil markets over the last three-and-a-half years.
Comparative Inventory and Natural Gas Storage Report June 8, 2020 (2020-1)
Gas markets are more over-supplied than they have been in 2.5 years and that the over-supply is increasing for now. That is hardly a bullish signal for gas prices.
A Natural Gas Price Play is Wishful Thinking
Lower production of associated gas does not logically account for the complexity of natural gas markets. Conventional wisdom is, after all, based on conventional thinking.
Oil Prices and Demand are not Returning to Normal
We are near the end of a rally whose ceiling will be in the low $40-range for the foreseeable future.
Why Is Anyone Celebrating $33 Oil?
I don’t know about you but I’m going to leave the champagne in the refrigerator for awhile.
Oil Storage-Comparative Inventory Report – Example
This is a free trial version of the weekly Oil Storage-Comparative Inventory Report.Click here to subscribe to weekly editions. WTI will average less than $20 in May WTI remains grossly under-priced. That sends the strongest possible signal to producers to shut in their wells. Oil prices will remain depressed until there is evidence for lower
Game Over for Oil, The Economy is Next
Large segments of the U.S. oil industry will have to be nationalized before the year is over.
US Land Horizontal Rig Count Report, Week Ending April 3, 2020
Total U.S. land rig count decreased -64 to 646 & horizontal land rig count decreased -60 to 592. Tight oil horizontal rig count decreased -46 to 453 and shale gas rig count decreased -1 to 101. Tight oil: Permian -32, Eagle Ford -6, Bakken -6, Niobrara -1, Mississippi Lime -1. Shale gas: Woodford -2, Haynesville
Coronavirus: How This May End for Oil Prices
Hope versus reality will be the manic pattern for 2020.
Coronavirus Will Crush Oil Prices
For those who think that devaluation or the effects of the virus will soon be memories, think again.
Earth to EIA: Unaccounted-for Oil is a Big Problem
Unaccounted-for oil was the largest factor in crude oil stock changes in 2019.
MacroVoices 12 June 2019
How can natural gas be in backwardation (Jul-Aug’19) in the summertime, when contango is the norm?
The energy price sell-off has continued even as the stock market has mostly recovered. What’s next for energy prices?
Just-in-Time Natural Gas Supply: Pluses & Minuses
U.S. natural gas prices reached the highest maximum level in 4 years this winter. That’s because of a new “just-in-time” gas supply paradigm that relies more on wellhead production than storage. It has pluses and minuses. In November 2019, weekly Henry Hub spot prices were $4.68/mmBtu, a level only exceeded in January 2014 over the
U.S. No Longer Over-Supplied With Oil: Good News, Bad News
The United States is no longer over-supplied with oil. That sounds like good news. The bad news is that it may signal lower oil prices going forward. An unexpected 9 million barrel (mmb) crude oil withdrawal from storage this week moved comparative inventory (C.I.) below the 5-year average. That shifted C.I. to into negative territory
2018 Oil Price Collapse: More Than a Correction
Oil price lost 44% of its value late last year. That price collapse was a signal to tight oil companies to stop over-producing. The message will be repeated until action results. From October 3 to December 24 2018, WTI fell from $76.41 to $42.53 (Figure 1). Since then, WTI has recovered to nearly $60/barrel and
Alternative Facts About OPEC & U.S. Shale From The Wall Street Journal
The Wall Street Journal’s recent editorial “How America Broke OPEC” shows that even high-quality journalism is susceptible to the contagion of alternative facts. It is a propaganda piece about how the underdog U.S. oil industry miraculously rose from the ashes and kicked OPEC’s ass. Never mind that the U.S. has been an oil super power
Oil Markets Recover From Panic Attack but Prices Will Go Lower
Crude markets had a panic attack in August and September that sent prices soaring. Sanity is now returning. Prices have fallen but are likely to move even lower over the next few months. The panic attack was caused largely by Trump’s August 7 announcement that sanctions would be re-imposed on Iran. Anxiety about the effect
Natural Gas Risky Business: What, me Worry?
Natural gas storage is at record low levels but prices are falling going into winter heating season. Markets seem to be betting that wellhead supply will be sufficient to cover demand this winter. That may be but at what gas prices? This is a game of natural gas risky business. Natural gas 6-month calendar spreads
Shale Plays Will Not Cause the Next Financial Crisis
Many think that debt and negative cash flow by U.S. shale companies will crash the global financial system. I believe the opposite is more likely, that a developing financial crisis may crash oil prices and test the survival of shale plays. In The Next Financial Crisis Lurks Underground, Bethany McLean argues that the U.S. energy
Art Called Important Market Player by Black Diamond Research
Key Financial Market Quotes (June 2018) https://www.blackdiamondindex.com/single-post/quotes201806 July 5, 2018 Black Diamond Research The following is an extract from the Black Diamond Stock Market Indexes Report for the month of June 2018. We always closely follow what important market players communicate at the end of a bull market because they often say out loud what the really “big
Excel File: AEO 2018 Tight Oil & Shale Gas Annual Production & Forecast
79. Lower 48 Onshore Crude Oil Production by Region and Type_TIGHT OIL & SHALE GAS
$60 – $65 Emerging Mid-Cycle Price For WTI
This is a guest post by J. M. Bodell modified from a comment he wrote on my recent Oil Price Crossroad post. He has extensive experience in petroleum market analysis, natural resource cost structure, scenario planning and strategic planning for Strategic Energy Research & Capital, Cambridge Energy Research and Associates, and Unocal. Comparative inventory (CI) is a
Oil Price Crossroad
The oil-price rally that began a year ago is at a crossroad. In February, WTI futures fell from a 3-year high of more than $66 to less than $60 per barrel but have since recovered almost 70% of that value. Was this a temporary adjustment on the long march to $70 oil or have prices reached
The U.S. Over-Supply of Oil is Ending
The U.S. over-supply of oil is ending. Comparative inventory (C.I.) has been dramatically reduced in 2017. Levels have fallen 159 mmb since February and are now approaching the 5-year average for the first time in nearly 3 years (Figure 1). An interpreted yield curve that correlates C.I. and WTI price is developed by cross plotting
Higher Oil Prices Are Likely in Early 2018
Oil prices will be lower for longer—that is the conventional wisdom. Data suggests, however, that oil supplies are tightening and that higher prices are likely in the relatively near-future. Refined Product Demand and Crude Oil Exports U.S. crude oil plus products comparative inventories have fallen 120 mmb (million barrels) in 26 of the last 32
WTI Probably Stuck in High $40 to Mid $50 Range Through December 2017
The most likely case is that WTI will remain stuck in the upper $40 to lower or mid- $50 range through December 2017. Comparative inventories have fallen dramatically since mid-February yet oil prices languish in the mid-to-upper $40 range. What will it take for oil prices to break out of the $45 to $55 range
U.S. Inventory Reductions Probably Not Sustainable
The decline in U.S. comparative inventories since February is the most significant oil market development since prices collapsed three years ago. It means that U.S. demand has exceeded supply for most of the last 5 months. The main cause is lower net imports, not higher domestic consumption, and that is probably not sustainable. Comparative Inventories:
Permian Reserves May Be Much Smaller Than You Think
We are entering a new age of American energy dominance according to Energy Secretary Rick Perry. President Trump reflected that view in comments he made last week that “…we’ve got underneath us more oil than anybody, and nobody knew it until five years ago.” Trump was referring to tight oil production and today, that means the Permian
Shale Gas Is Not A Revolution
Shale gas is not a revolution. It’s just another play with a somewhat higher cost structure but larger resource base than conventional gas. The marginal cost of shale gas production is $4/mmBtu despite popular but incorrect narratives that it is lower. The average spot price of gas has been $3.77 since shale gas became the
Energy Nonsense From the Wall Street Journal
The lead editorial in Friday’s Wall Street Journal was pure energy nonsense. “Lessons of the Energy Export Boom” proclaimed that the United States is becoming the oil and gas superpower of the world. This despite the uncomfortable fact that it is also the world’s biggest importer of crude oil. The Journal uses statistical sleight-of-hand to argue that the U.S.
MacroVoices Art Berman: Crude Oil Special Part 1
Erik Townsend welcomes Art Berman to MacroVoices. Erik and Art discuss: Perspective on OPEC and the 9-month extension on production cuts OPEC’s goal to keep a floor under oil prices Positioning of oil traders since February Reasons for lower oil prices Putting U.S. production into perspective Where does comparative inventory price Brent and WTI Inventory
OPEC Extends Cuts, Oil Prices Fall: What It Means
OPEC extended oil production cuts last week and oil prices plunged. OPEC’s goal was to keep a floor under current prices but the market expected the cartel to move prices higher through inventory reduction. OPEC was satisfied with greater revenues from higher prices compared to a year ago, but the market wanted deeper production cuts. OPEC takes the long
Strong Natural Gas Prices And Tight Supply In 2017
A year ago, most analysts were bearish about natural gas prices. I wrote that natural gas prices might double and they did. Today, most analysts are again bearish about gas prices and again, I think that they are probably wrong at least for 2017. The mainstream narrative is that new pipeline capacity—notably the Rover Pipeline—out of
Oil Prices Plunge To Where They Should Be
WTI oil prices plunged to almost $45 per barrel yesterday (Figure 1). That was a downward adjustment to where prices should be based supply, demand and inventory fundamentals. Analysts invent narratives to explain why things happen after we already know the answer. In this case, oil prices fell supposedly because of falling confidence that the OPEC production
OPEC Production Cuts and The Long Road To Market Balance
Global oil inventories are falling because of OPEC and non-OPEC production cuts but the road to market balance will be long. Production cuts have removed approximately 1.8 million barrels per day (mmb/d) of liquids from the world market since November 2016 (Figure 1). Saudi Arabia has cut 619 kb/d (35% of total) and the Gulf States Cooperation Council—including
Low Break-Even Prices Are For Everyone–Not Just Shale Companies
Shale companies have pushed break-even oil prices below $40 per barrel—but so have major oil companies. Analysts commonly portray cost reduction as something unique to the tight oil companies. Data from annual reports filed with the U.S. SEC (Securities and Exchange Commission) suggests otherwise. Along with tight oil companies, ExxonMobil, Royal Dutch Shell, ConocoPhillips and ChevronTexaco all had
Shale Cost Reductions Are 10% Technology and 90% Industry Bust
I am tired of hearing about the unbelievable impact of technology on collapsing U.S. shale production costs. The truth is that these claims are unbelievable. The savings are real but only about 10% is from advances in technology. About 90% is because the oil industry is in a depression and oil field service companies have slashed prices to
Oil Prices Plunge: Over-Reaction or Turning Point?
Oil prices plunged yesterday. Is this an over-reaction or a turning point? WTI futures fell $2.86 from $53.14 to $50.28 per barrel, and Brent futures dropped $3.81 from $55.92 to $52.11 per barrel. WTI is trading below $49 and Brent, below $52 per barrel at this writing. The official narrative was that a larger-than-expected 8.2 million barrel (mmb)
The Beginning of the End For The Bakken Shale Play
It’s the beginning of the end for the Bakken Shale play. The decline in Bakken oil production that started in January 2015 is probably not reversible. New well performance has deteriorated, gas-oil ratios have increased and water cuts are rising. Much of the reservoir energy from gas expansion is depleted and decline rates should accelerate. More drilling may increase
Don’t Hold Your Breath For $70 Oil
It is more likely that oil prices will fall below $50 per barrel than that they will continue to rise toward $70. Prices have increased beyond supply and demand fundamentals because of premature expectations about the effects of an OPEC production cut on oil inventories. Last week’s 13.8 million barrel addition to U.S. storage was the second largest in history. It moved U.S. crude oil inventories to
The Keystone XL Pipeline: A Risky Bet on Higher Oil Prices and Tight Oil
The Keystone XL Pipeline (KXL) is a bet on much higher oil prices several years from now. It will take at least $85 oil prices to develop the new oil sand projects needed to fill the pipeline. It is also a bet that U.S. tight oil output will continue to grow and will need heavy oil to blend
The Days of Cheap Natural Gas Are Over
Natural gas prices averaged a little more than $2.50 per mmBtu (million British Thermal Units) in 2016. Those days are over. Prices will average at least $3.50 to $4.00 in 2017. Prices have more than doubled since March 2016 but gas is still under-valued. Supply is tight because demand and exports have grown and shale gas production has declined.
Despite OPEC Production Cut, Another Year Of Low Oil Prices Is Likely
An OPEC production cut offers oil producers hope for higher prices in 2017. But there is a dark cloud hanging over that expectation. Global storage inventories must be substantially reduced before higher oil prices can be sustained. Some of U.S. tight oil has nowhere to go but into storage because it can neither be refined nor exported. If all OPEC cuts
Permian Giant Oil Field Would Lose $500 Billion At Today’s Prices
Did you hear about the largest U.S. oil and gas field that’s in the Permian basin of west Texas? That’s the one that’s not a field because it hasn’t been discovered yet. That’s the one whose 20 billion barrels are an estimate by the U.S. Geological Survey. That’s the one whose 20 billion barrels would lose $500 billion
World Oil Production In Balance, U.S. Natural Gas Production Way Down
World oil production is in balance and U.S. marketed natural gas output fell for the first time since 2005. The EIA (U.S. Energy Information Administration) published its Short Term Energy Outlook (STEO) today. Here are the highlights. World oil (liquids) output for September was 96.47 mmbpd (million barrels per day) and consumption was 96.39 mmbpd. That
U.S. Storage Filling Up with Unaccounted-For Oil
This is a joint post with Matt Mushalik, a retired civil engineer and regional planner based in Sydney, Australia, and may be seen also on his website Crude Oil Peak. U.S. crude oil storage is filling up with unaccounted-for oil. There is a lot more oil in storage than the amount that can be accounted for by
IEA-EIA Oil-Glut Bomb
IEA and EIA dropped an oil-glut bomb this month. Their September monthly reports indicate that the world continues to have a glut of oil with little hope of a balanced market in the near future. IEA’s Oil Market Report focused on weakening demand growth for oil.Their quarterly data shows that year-over-year demand growth has decreased consistently from
One Hundred Years of Natural Gas? Not At These Prices
One hundred years of natural gas? Not at these prices. U.S. gas production is declining and shale gas output is down almost 2.5 Bcf per day. Production is decreasing while consumption and exports are both increasing. EIA data indicates a supply deficit by the end of 2016. Henry Hub spot prices have doubled since early March. Will companies
Saudi Permian: A Race To The Bottom For Tight Oil
Remember the shale gale and Saudi America? The scale of those outlandish delusions has now dwindled to plays in a few counties in West Texas and southeastern New Mexico. Saudi Permian. It’s a race to the bottom as investors double down on the tight oil companies that can still tell a growth story. Permian-weighted E&P companies are the temporary darlings of Wall Street as
Pioneer’s Permian Oil Costs Compete With Saudi Arabia—Is That A Lie?
Pioneer CEO Scott Sheffield made headlines last week when he claimed that his company’s Permian production costs “…can compete with anything that Saudi Arabia has.” Is that a lie? Pioneer’s Q2 2016 Earnings presentation shows that production costs for Permian basin horizontal wells are $2.25 per BOE (Figure 1).That cost cannot be verified because only company-wide production costs
The Price Rally Is Over: Capital Drives the Oil Market to Low Prices
The current oil-price rally is over. U.S. rig counts have surged as oil prices sink. Capital is driving the oil markets and it enables bad behavior by producers. That is why oil prices will stay low. The oil-price rally that began in February is over. Prices rose from $26 per barrel to $51 by early June and are now below $42 (Figure
Oil Prices Lower Forever? Hard Times In A Failing Global Economy
Two years into the global oil-price collapse, it seems unlikely that prices will return to sustained levels above $70 per barrel any time soon or perhaps, ever. That is because the global economy is exhausted. The current oil-price rally is over as I predicted several months ago and prices are heading toward $40 per barrel. Oil has been re-valued to affordable levels based
Rig Count Matters: Separating The Signal From The Noise in Oil Market Opinion
Rig count matters. Saying that it doesn’t is like a realtor saying that location doesn’t matter. Rigs Don’t Produce Oil The holiest mystery of shale plays is that so much production is possible with ever-fewer rigs. But if we look at the number of producing wells, the mystery evaporates. That’s because rigs don’t produce oil and gas. Wells do. Horizontal
Permian Basin Break-Even Price is $61: The Best of a Bad Lot
The break-even price for Permian basin tight oil plays is about $61 per barrel (Table 1). That puts Permian plays among the lowest cost significant supply sources in the world. Although that is good news for U.S. tight oil plays, there is a dark side to the story. Just because tight oil is low-cost compared to other expensive sources of oil doesn’t mean
U.S. Oil Production Fell 150,000 Barrels Per Day in May
U.S. crude oil production fell 150,000 barrels per day in May and the global over-supply of liquids was 680,000 barrels per day. The EIA Short-Term Energy Outlook (STEO) posted on June 7 showed that U.S. oil production declined by the greatest monthly amount so far since the peak in April 2015 (Figure 1). Production has declined
Shale Gas Magical Thinking And The Reality of Low Gas Prices
Enthusiasts believe that shale gas is simultaneously cheap, abundant and profitable thus defying all rules of business and economics. That is magical thinking. The recently released EIA Annual Energy Outlook 2016 sparkles with pixie dust as it forecasts almost unlimited gas supply at low prices out to 2040 and beyond. Exuberant press reports herald a new era of LNG exports that will change
Returning To Market Balance: How High Must Prices Be To Save The Oil Industry?
The global oil market is returning to balance based on the latest data from the EIA. That should mean higher oil prices but how high must prices be to save the industry? Data suggests that oil producers need prices in the $70-80 range to survive. That is unlikely in the next year or so. Without more timely price relief, the
Gasoline Demand Is A Red Herring For The Oil Market
Gasoline demand is a red herring. A red herring is something that takes attention away from a more important subject. Gasoline demand distracts from the more important subject that there is no fundamental reason for the current oil-price rally. U.S. Gasoline Consumption Has Fallen 2 Million Barrels Per Day Since 2005 Those who believe that gasoline demand is the fire
No-Brainer Production Freeze Ends Mindlessly
The production freeze meeting in Doha was a no-brainer but it ended mindlessly with no action taken. OPEC plus Russia and Mexico met yesterday to agree to do almost nothing by freezing production. Instead, they agreed to do absolutely nothing leaving everyone wondering why they even held the meeting. All that they had to do
An Oil-Price Recovery? We’re Not There Yet
Oil prices have increased 60% since late January. Is this an oil-price recovery? Two previous price rallies ended badly because they had little basis in market-balance fundamentals. The current rally will probably fail for the same reason. The Oil Glut Worsens But Prices Reach 2016 Highs Although oil prices reached the highest levels so far in 2016 during the past
Natural Gas Prices Should Double
Natural gas prices should double over the next year. Over-supply plus a warm 2015-2016 winter have resulted in low gas prices. That is about to change because supply is decreasing (Figure 1). Total supply–dry gas production plus net imports–has been declining since October 2015* because gas production is flat, imports are decreasing and exports are increasing. Shale
Another False Oil Price Rally: Crossing A Boundary
The oil-price rally that began in mid-February will almost certainly collapse. It is similar to the false March-June 2015 rally. In both cases, prices increased largely because of sentiment. As in the earlier rally, current storage volumes are too large and demand is too weak to sustain higher prices for long. WTI prices have increased 47% over the past 20 days from $26.21
Oil Prices Should Fall, Possibly Hard
Oil prices should fall, possibly hard, in coming weeks. That is because fundamentals do not support the present price. Prices should fall to around $30 once the empty nature of an OPEC-plus-Russia production freeze is understood. A return to the grim reality of over-supply and the weakness of the world economy could push prices well into the $20s. A Production Freeze Will Not
What Really Controls Oil Prices?
World oil prices are controlled by the amount of crude oil stored at Cushing, Oklahoma. That’s because Cushing is the pricing point for WTI (West Texas Intermediate) oil prices, the most-traded oil futures contract in the world. Cushing Storage Rules World Oil Prices WTI (and Brent) oil prices have good negative correlation with the volume of crude oil stored at Cushing. Comparative
Natural Gas Price Increase Inevitable in 2016
Every week, the EIA proclaims a new record for natural gas production. But their own forecasts show that the U.S. will be short on supply by October of this year. A price increase is inevitable beginning later in 2016. Popular Myth vs Reality The popular myth is that gas production will continue to increase and that prices will remain low for years. In
OPEC-Russia Production Freeze Not A Cut & Meaningless
The oil production freeze announced Tuesday by a few OPEC members and Russia is not a cut and is largely meaningless. It does not include Iran and Iraq. It apparently only includes Saudi Arabia, Russia, Venezuela and Qatar. What is it really? A largely empty and cynical gesture that will almost certainly result in another “head-fake” price increase
OPEC Production Cut Unlikely Until U.S. Production Declines Another Million Barrels Per Day
An OPEC production cut is unlikely until U.S. production declines by about another million barrels per day (mmbpd). OPEC won’t cut because it would accomplish nothing beyond a short-term increase in price. Carefully placed comments by OPEC and Russian oil ministers about the possibility of production cuts achieve almost the same price increase as an actual
Fundamentals Point Toward Oil-Market Balance: IEA Too Pessimistic
Fundamentals point toward market balance but pessimism is dragging oil prices down. IEA has apparently succumbed to this negativity but their data suggests that things are getting better, not worse. In a business-as-usual world in which nothing unusual happens, the world will be close to market balance some time in 2016. If anything unusual happens, all
Big Drop In Rig Count Points To Capitulation By U.S. Shale Drillers
The big drop in rig count for the week that ended January 8, 2015 points to capitulation by U.S. shale drillers. The total land rig count fell by 37 rigs and the horizontal rig count fell by 30 rigs (Figure 1). Figure 1. U.S. shale play horizontal rig count. Source: Baker Hughes & Labyrinth Consulting
Investors Beware: U.S. Tight Oil Is Not The Swing Producer of The World
Daniel Yergin and other experts say that U.S. tight oil is the swing oil producer of the world. They are wrong. It is preposterous to say that the world’s largest oil importer is also its swing producer. There are two types of oil producers in the world: those who have the will and the means to affect market prices, and those
The Crude Oil Export Ban–What, Me Worry About Peak Oil?
Congress ended the U.S. crude oil export ban last week. There is apparently no longer a strategic reason to conserve oil because shale production has made American great again. At least, that’s narrative that reality-averse politicians and their bases prefer. The 1975 Energy Policy and Conservation Act (EPCA) that banned crude oil export was the closest thing to an
Less Than 2 Percent of Permian Basin Is Commercial at $30 Oil
Less than 2 percent of Permian basin tight oil wells are commercial at $30 per barrel oil prices. Sorry about that. I know that many believe that U.S. shale and tight oil plays are commercial even at current low oil prices but data on the Permian basin and Bakken plays simply does not support that belief. To
A Glimmer of Hope Amid the Oil Glut Gloom
Oil futures prices are below $38 but there is a glimmer of hope in EIA’s Short-Term Energy Outlook (STEO) released today–world consumption increased in November and supply fell. OPEC did what everyone expected last week–nothing–and oil markets reacted badly. Brent futures fell 15% from $47.44 before the OPEC meeting on Friday (December 4) to $40.25 today
Haynesville Shale Needs $6.50 Gas To Break Even: The Business Model Is Broken
Lynn Pittinger is co-author on this post. He is a consultant in petroleum engineering, economic evaluation, and decision analysis. The Haynesville Shale play needs $6.50 gas prices to break even. With natural gas prices just above $2/Mcf (thousand cubic feet), we question the shale gas business model that has 31 rigs drilling wells that cost $8-10 million
IEA Offers No Hope For An Oil-Price Recovery
The International Energy Agency (IEA) November report offers no hope for an oil-price recovery any time soon. Over-supply and weak demand for oil will dominate through 2016. The world has a 1.6 million barrel per day oil production surplus (supply minus demand) as the oil glut enters its 8th consecutive quarter (Figure 1). Figure 1. World liquids
Oil Prices Plunge With News of Worsening Supply Imbalance
Oil futures prices (WTI) plunged 12.5% this week from $47.90 on Friday, November 3 to $41.96 this morning Wednesday, November 11. The main reason is that the global supply imbalance is getting worse. The U.S. Energy Information Administration’s (EIA) latest report indicates that the world supply surplus (production minus consumption) increased 590,000 barrels per day (bpd) compared to
Only 1% of the Bakken Play Breaks Even at Current Oil Prices
Only 1% of the Bakken Play area is commercial at current oil prices. 4% of horizontal wells drilled since 2000 meet the EUR (estimated ultimate recovery) threshold needed to break even at current oil prices, drilling and completion, and operating costs. The leading producing companies evaluated in this study are losing $11 to $38 on each barrel of oil that
Congress Buys Oil High, Sells It Low: Terrible Idea!
Buy high, sell low. The definition of stupid. That’s what Congress is considering as it eyes selling oil from the U.S. Strategic Petroleum Reserve (SPR) to pay for certain projects in its latest spending plan. The last time the U.S. bought oil for the SPR in 2000 through 2005, oil prices were rising (Figure 1). Now
Preview: Congress Buys Oil High, Sells It Low–Terrible Idea!
This is a preview. The full post is available now on my Forbes blog. The full version will be posted on this website at 11:00 p.m. CDT on Thursday, October 29. Buy high, sell low. The definition of stupid. That’s what Congress is considering as it eyes selling oil from the U.S. Strategic Petroleum Reserve
The Problem With Oil Prices Is That They Are Not Low Enough
The problem with oil prices is that they are not low enough. Current oil prices are simply not low enough to stop over-production. Unless external investment capital is curtailed and producers learn to live within cash flow, a production surplus and low oil prices will persist for years. Energy Is The Economy GDP (gross domestic product) correlates
The Problem With Oil Prices Is That They Are Not Low Enough
This is a preview. The full post is available now on my Forbes blog. The full version will be posted on this website at 6:00 p.m. CDT on Tuesday, October 20. The problem with oil prices is that they are not low enough. Current oil prices are simply not low enough to stop over-production. Unless external
Oil Fundamentals Improve But Inventories Will Keep Prices Low
Global oil supply and demand fundamentals moved in the right direction in September but surplus inventory will keep oil prices low for some time to come. EIA’s September 2015 STEO (Short Term Energy Outlook) reported lower world liquids production and higher consumption but out-sized inventories remain a major obstacle to near-term oil-price recovery. Crude oil stocks are the fundamental
The Party is Over For Tight Oil but Raymond James Says, “Party On, Dude!”
The party is over for tight oil. Despite brash statements by U.S. producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies. Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues. EIA said that U.S. production will fall by 1 million barrels per
Rig Productivity is a Red Herring
Rig productivity and drilling efficiency are red herrings. A red herring is something that takes attention away from a more important subject. Rig productivity and drilling efficiency distract from the truth that tight oil producers are losing money at low oil prices. Pad drilling allows many wells to be drilled from the same location by a single rig. Rig productivity
John Mauldin Defends The Faith, Fails Economics 101
John Mauldin defends the faith of what he calls the “fracking gospel” but fails Economics 101. In his recent post “Riding the Energy Wave to the Future”, he claims that oil prices are falling because the cost of producing tight oil is cheaper than most conventional oil. But oil is $40 per barrel and falling because it is being
Why Rig Counts Matter: How Good Is the Permian Basin Anyway?
E&P companies have added 30 horizontal rigs in the Permian basin since the end of June. Most analysts didn’t notice (Figure1). Figure 1. Tight oil horizontal rig counts since January 1, 2015. Source: Baker Hughes & Labyrinth Consulting Services, Inc. (click image to enlarge) Rig counts in most active plays are stabilizing after falling more than 50% since
IEA: Strong Demand Growth But Still Too Much Supply
World liquids demand will be huge in 2015 because of low oil prices. That’s the good news. The bad news is that the demand surge hasn’t really begun yet and over-supply will dominate the market through 2016. This is what I predicted Monday in my post “When Will Oil Prices Turn Around?” and what I reported yesterday
World Oil Supply Decreased, Demand Increased in July: EIA
The EIA Short Term Energy Outlook (STEO) published today reports that world oil supply decreased 130,000 bpd and demand increased 380,000 bpd in July compared to June. This reduces the relative production surplus (supply minus demand) by 510,000 bpd to 2.3 mmbpd (Figure 1). U.S. crude oil production decreased 100,000 bopd in July compared to
When Will Oil Prices Turn Around?
Look for some good news about oil prices this week…maybe. EIA releases its Short-Term Energy Outlook (STEO) on Tuesday (August 11) and IEA publishes its August Oil Market Report (OMR) on Wednesday (August 12). I hope to see a small increase in world demand and relatively flat supply. That will bring the market somewhat closer to balance and prices may increase or,
No Joy in Mudville*: Shale Gas Stalls, LNG Export Dead On Arrival
Something unusual happened while we were focused on the global oil-price collapse–the increase in U.S. shale gas production stalled (Figure 1). Figure 1. U.S. shale gas production. Source: EIA and Labyrinth Consulting Services, Inc. (click image to enlarge) Total shale gas production for June was basically flat compared with May–down 900 mcf/d or -0.1% (Table 1). Table
Rig Count Increases by 19 As Oil Prices Plunge–What Are They Thinking?
The U.S. rig count increased by 19 this week as oil prices dropped below $48 per barrel–the latest sign that the E&P industry is out of touch with reality. Getty Images from The New York Times (July 26, 2015) The last time the rig count increased this much was the week ending August 8, 2014 when WTI was $98
A Longer Period of Much Lower Oil Prices Ahead?
The news from the IEA is not good. “World oil demand growth appears to have peaked in 1Q15 at 1.8 mb/d and will continue to ease throughout the rest of this year and into next as temporary support fades.” I don’t have great faith in forecasts but the data shows declining demand growth from late 2010
Something Solid: World Oil Demand Increases
Traders were busy throwing in the towel on oil futures this week just as the first solid data and hope appeared that oil prices may be starting on the long road to recovery. As oil prices approached $52 per barrel on Tuesday, July 7, the EIA released the July Short-term Energy Outlook (STEO) that showed an increase in
A Year of Lower Oil Prices: Crossing A Boundary
The oil price collapse of 2014-2015 began one year ago this month (Figure 1). The world crossed a boundary in which prices are not only lower now but will probably remain lower for some time. It represents a phase change like when water turns into ice: the composition is the same as before but the physical state and governing
For Oil Price, Bad Is The New Good
Lately, oil prices have gone up when they should have gone down. In the last week, OPEC decided not to cut production and the two major energy agencies reported that the world over-supply problem is getting worse. Brent futures increased from $62 to $65. Bad is the new good. The expected bad news on Friday, June 5 that OPEC would not
OPEC’s Dilemma: The Long View
It is unlikely that OPEC will cut production at its June 5, 2015 meeting in Vienna. Assuming no cut, oil prices should continue the descent that began in early May (Figure 1). Prices may fall into the $50+ per barrel range since there is no tangible reason for their rise from January’s $46 low. Figure 1. Brent crude oil
Rig Count Decreases A Little: Don’t Get Too Excited
The U.S. rig count dropped by 10 rigs this week after only falling by 3 last week. No doubt some analysts will say that this increase is somehow important and that a return to normal–i.e., high oil prices–is around the corner. Well, don’t get too excited because the rig count that matters–the horizontal Bakken, Eagle
Hope Fades: U.S. Storage Withdrawals About Price, Not Supply & Rig Count Drop Stalls
Storage withdrawals and falling rig count have been the main sources of hope that U.S. tight oil production will fall and that oil prices will rebound. That hope is fading as it is now clear that recent withdrawals from U.S. crude oil storage are because of price, not falling supply, and that the drop in rig count
Oil Prices Will Fall: A Lesson in Gravity
The oil price collapse is not over yet. It is more likely that Brent price could fall back into the mid-$50 range than that it will continue to rise toward $70 per barrel. That is because oil prices have risen based on sentiment alone. The fundamentals of supply and demand indicate a dismal reality: oil prices will
David Einhorn Discovers Sex
David Einhorn just discovered sex. Too bad that he didn’t ask any adults if they already knew about it. In a presentation at the Ira Sohn Investment Conference on May 4, Greenlight Capital hedge fund manager David Einhorn revealed that tight oil is not profitable even at oil prices of $100 per barrel. Mr. Einhorn
The U.S. Production Decline Has Begun
The U.S. oil production decline has begun. It is not because of decreased rig count. It is because cash flow at current oil prices is too low to complete most wells being drilled. The implications are profound. Production will decline by several hundred thousand of barrels per day before the effect of reduced rig count is
U.S. Oil Production Fell 135,000 Barrels Per Day in January
U.S. crude oil production fell at least 135,000 barrels of oil per day in January 2015 compared to December 2014 according to the EIA (Figure 1). Figure 1. U.S. crude oil production. Source: EIA and Labyrinth Consulting Services, Inc. (Click image to enlarge) Bakken Shale production fell the most of any play or jurisdiction losing 37,000 barrels
Saudi Arabia’s Oil-Price War Is With Stupid Money
Saudi Arabia is not trying to crush U.S. shale plays. Its oil-price war is with the investment banks and the stupid money they directed to fund the plays. It is also with the zero-interest rate economic conditions that made this possible. Saudi Arabia intends to keep oil prices low for as long as possible. Its oil production increased to
The Oil Price Collapse Is Because of Expensive Tight Oil
The present oil price collapse is because of over-production of expensive tight oil. The collapse occurred because of the inability of the world market to support the cost of the new expensive oil supply from shale, oil sands and deep water. Demand was progressively destroyed during the longest period of sustained high oil prices in history from 2010 through 2014. Since the early
Shale Gas Rig Counts Are Too High
Spending cuts for oil-directed drilling have dominated first quarter 2015 energy news but rig counts for shale gas drilling are too high. Investors should pay attention to this growing problem. Bank of America fears sub-$2 gas prices now that winter heating worries are over. Low natural gas prices affect the economics for gas-rich oil production in the Eagle Ford Shale and Permian
Lifting the U.S. Oil Export Ban Is No Solution to Low Oil Prices
Tight oil producers are hoping for an end to the U.S. oil export ban. They hired IHS to write the second report on this topic in less than a year. In Unleashing The Supply Chain, IHS argues that U.S. jobs are the casualty from the export ban. The problem, they say, is that the U.S. lacks the capacity to refine
Misleading IEA Statement Sends Oil Prices Lower and The U.S. Rig Count
March 14, 2015 The IEA (International Energy Agency) made the following statement in its Oil Monthly Report yesterday that supposedly sent oil prices lower by $2.41 per barrel for Brent and $2.21 per barrel for WTI: “Steep drops in the US rig count have been a key driver of the price rebound. Yet US supply so far shows
World Oil Demand Surges: A Data Point For Price Recovery
March 13, 2015 World oil demand increased by 1.1 million barrels per day in February. This is a potentially important data point that suggests a crude oil price recovery sooner than later. It is also important because it further supports the view that a production surplus and not weak demand is the main cause for the recent oil-price fall.
ExxonMobil CEO Wrong About “Resilience” of Tight Oil Production
March 9, 2015 ExxonMobil CEO Rex Tillerson is wrong about the resilience of U.S. tight oil production. Last week, The Wall Street Journal reported: “…Mr. Tillerson pointed out that the collapse in natural-gas prices similarly had led the number of rigs drilling for that fuel to drop to 280 from north of 1,600 in 2008. Gas output jumped
Whiting Fall Reveals Weakness of Tight Oil Plays
March 7, 2015 Whiting Petroleum is the latest victim of the flawed U.S. shale play business model. The shale and tight oil play model is based on large-scale acreage acquisition at any price and massive over-production to satisfy growth targets. In Whiting’s case, it also involved debt-based acquisition of Kodiak Oil and Gas, another large Bakken player.
U.S. Rig Count Friday March 6, 2015
The main take-away from this week’s rig count is that everything is on track for lower U.S. oil production by mid-year. The weekly changes vary but the overall trend since October is down and that is positive for achieving a better balance between supply and demand. Please remember the following points and read my previous
Oil Prices Don’t Change Because of Rig Count February 28, 2015
Oil prices don’t change based on weekly rig count reports. Yet every week, there are proclamations by analysts that oil prices are poised to recover because of some change in the Baker Hughes North American rig count. Others state that U.S. tight oil production will continue to rise despite falling rig counts because of the miracle of
The Keystone XL Pipeline Veto Was Dumb February 26, 2015
President Obama’s veto of the Keystone XL Pipeline earlier this week was a dumb decision. The president thinks that his veto of the Keystone XL Pipeline is an environmental decision. He says that it is about greenhouse gases and climate change and that it is important to make a stand so that the world can
Tight Oil Production Will Fall 600,000 Barrels Per Day By June February 17, 2015
February 17, 2015 U.S. tight oil production may fall 600,000 barrels per day by June 2015 based on reasonable projections of current rig counts. I compared the decrease in rig counts that began in late 2014 to the rig count decrease in 2008 and 2009 following the Financial Crisis. I projected current total rig counts according to three scenarios
No Oil Price Rebound Yet: An Explanation in Two Charts February 11, 2015
February 11, 2015 The front page of The Wall Street Journal on Tuesday, February 10 proclaimed “Oil-Price Rebound Predicted” according to the IEA (International Energy Agency). Not true. The February 10 IEA Oil Market Report states that some “market participants are seeing light at the end of the tunnel” based on oil company spending cuts.
Bad Actors Hurt Eagle Ford Shale Well Performance February 8, 2015
February 8, 2015 Recent well performance in the Eagle Ford Shale play has declined among key operators. This is due in part to especially poor well performance by a few operators. Excluding those operators, well performance for 2013 and 2014 was still poorer than in 2012 but improved in 2014 compared with 2013. When I wrote that Eagle Ford well performance
U.S. Rig Count 6 February 2015
Rig Count Summary for 6 February 2015. Source: Baker Hughes Principal Observations: The overall rig count is 1,456 down 87 rigs from last week and down 475 (25%) from the 2014 maximum. As a group, rig counts for the tight oil plays have decreased much more than for the shale gas plays (27% vs.
From ‘The X-Files’ to shale, skeptic Berman wants to believe February 3, 2015
Edward Klump, E&E reporter EnergyWire: Tuesday, February 3, 2015 Copyright 2015, Environment and Energy Publishing LLC. Reprinted with permission. The original article may be found at: www.eenews.net HOUSTON — As he ponders the state of the U.S. oil and gas industry, Art Berman is reminded of “The X-Files.” Maybe, Berman said, the message on
Tight Oil Production Will Fade Quickly: The Truth About Rig Counts
January 25, 2015 U.S tight oil production from shale plays will fall more quickly than most assume. Why? High decline rates from shale reservoirs is given. The more interesting reasons are the compounding effects of pad drilling on rig count and poorer average well performance with time. Rig productivity has increased but average well
One of These Things Is Not Like The Others: IEA’s January Report
January 21, 2015 Remember the Sesame Street song? One of these things is not like the others, One of these things just doesn’t belong, Can you tell which thing is not like the others By the time I finish my song? OK. Which curve on this chart is not like the others?
Dumb and Dumber: U.S. Crude Oil Export
Exporting crude oil and natural gas from the United States are among the dumbest energy ideas of all time. Exporting gas is dumb. Exporting oil is dumber. The U.S. imports almost half of the crude oil that we use. We import 7.5 million barrels per day. The chart below shows the EIA prediction that production
The Oil Price Fall: An Explanation in Two Charts
January 11, 2015 Don’t worry. It’s not complicated. I offer a simple explanation for the recent fall in oil prices in just two charts. Oil prices move up and down in response to changes in supply and demand. If the world consumes more oil than it produces, the price goes up. If
The Real Cause Of Low Oil Prices: OilPrice.Com Interview With Arthur Berman January 2, 2015
See the full interview at OilPrice.com In a third exclusive interview with James Stafford of Oilprice.com, energy expert Arthur Berman explores: • How the oil price situation came about and what was really behind OPEC’s decision. • What the future really holds in store for U.S. shale. • Why the U.S. oil exports
U.S. Advises Oil Companies How to Break The Law, Approves LNG Despite Fracking Fallacy Debate
In the waning hours of 2014, the U.S. government slipped a few things past us: It advised oil companies how to get around the law prohibiting crude oil export by “self-classifying” crude oil as “not crude oil”, and Approved an LNG export facility despite the Fracking Fallacy debate that suggests that the U.S. may not
David Hughes Weighs In on The Fracking Fallacy Debate
In the current debate about the Nature article “The Fracking Fallacy,” the discussion has focused on estimates of cumulative production of shale gas plays by the Energy Information Administration (EIA) and The Bureau of Economic Geology at the University of Texas (UT/BEG). David Hughes provides another estimate in his recent post “Fracking Fracas: The Trouble
Why The Debate Over The Fracking Fallacy Is A Big Deal
The debate about “The Fracking Fallacy” is a big deal because EPA’s* plan to regulate coal out of existence is based on EIA’s* forecast of abundant and cheap shale gas for decades. If U.S. natural gas production is in decline by the early 2020s as described in the Nature article, there won’t be enough
Nature Responds To EIA and BEG Denial Letters
Today, Nature responded to letters earlier this week from the EIA (Energy Information Administration) and BEG (Bureau of Economic Geology, University of Texas at Austin) claiming that Mason Inman’s article “The Fracking Fallacy” published on December 4, 2014 was flawed. The EIA Denial Letter The BEG Denial Letter Nature stands by Inman’s article and, interestingly,
Peak Oil Demand: Near or Far?
An article from yesterday’s Washington Post “Is peak oil demand just around the corner?” is, in part, a summary of an article that appeared recently in The Economist (“Yesterday’s Fuel”). Citi recently predicted that world oil demand may peak by 2013 because of increased transport efficiency among other factors. The Washington Post piece features a discussion with Stanford’s Adam Brandt who
Wood Mackenzie Says Bakken & Eagle Ford Will Produce More than the Two Largest Fields in North America Combined
Wood Mackenzie reported on July 30, 2013 that U.S. shale plays will produce 5 million barrels of oil per day by 2019, at least half coming from the Eagle Ford and Bakken shale plays. Naturally, most people believe this without asking the obvious question, “How does this huge volume of oil compare with present U.S.
Shale Plays Not Working For Big Oil
Recent revelations and write-downs of shale assets in North America by Shell, ExxonMobil and Chevron support our research that big companies cannot make money on low rate-low volume shale wells. The majors exited North America in the 1980s because they could not support the operating costs associated with managing this kind of production even though
British Geological Survey Bowland Shale Gas Assessment
(The original post appeared on The Oil Drum, July 19, 2013) The latest exuberant shale gas news comes from a report by the British Geological Survey estimating enormous new shale gas resources in the central UK. On June 27, 2013, the British Geological Survey (BGS) released a natural gas resource assessment for the Bowland Shale
A Few Words About Peak Oil
(Note: This post originally appeared in The AAPG Explorer, Februrary, 2013) Steve Trammel of IHS stated in the January EXPLORER (“Surprise! North America Grabbed the Spotlight”), “The Peak Oil guys are pretty quiet now, thanks to the creativity and innovation of the industry,” as he discussed the tight oil additions to oil production in the
Lessons From Past Natural Gas Import Fiascos Suggest A Cautious Approach to Natural Gas Exports
The U.S. should take a cautious approach to exporting natural gas. That’s the clear lesson of three decades of bad guesses by analysts about natural gas prices and supplies. If pro-export advocates are wrong this time, consumers and businesses will be the ones who suffer from higher domestic gas prices. Several recent studies concluded that
Industry Experts Know Less Than College Professors and Journalists About Shale Gas Economics
A recent article by Ken Maize in Power mistakenly assumes that university professors who have never worked in the oil and gas industry know more about evaluating oil and natural gas well economics than industry professionals who have spent their careers doing this work. In “Is Shale Gas Shallow or the Real Deal?“, Maize cites Dr. Terry
The Big Deal About U.S. Energy Self-Sufficiency
Mark J. Perry caused a minor sensation on October 22, 2012 when he posted a blog about record-breaking fossil fuel production in the United States. Perry is an economics professor at the University of Michigan at Flint and a visiting scholar at the American Enterprise Institute. His blog is titled as an economics and finance
Testing the Davy Jones Well
I heard from a reliable source that McMoRan plans to test its ultra-deep Davy Jones 1 well soon after Labor Day.
Arthur Berman Publications
Arthur E. Berman Publications Berman, A. E., 2012, U.S. Shale Gas: A Different Perspective on Future Supply and Price: Bulletin of the South Texas Geological Society (February, 2012) v. 52, no. 6, p. 19-44. Berman, A. E., 2011, After The Gold Rush: A Perspective on Future U.S. Natural Gas Supply and Price: The Oil Drum
Berman On CBS Evening News With Scott Pelley
CBS anchor Scott Pelley did a story on Chesapeake Energy’s meltdown Friday, May 12, 2012. I had a brief appearance commenting on the slow train wreck of the shale gas producers as they consciously destroyed their own product price by over production.
Berman To McClendon: Some Support From An Unexpected Source
This has been a tough period for Chesapeake Energy and Aubrey McClendon with his loans and losses on drilling investments. Despite these issues, I give him and his company credit for vision and leadership in the shale revolution. He once described me as “a third-tier geologist who considers himself a reservoir engineer, that somehow [knows]
Meet the man the shale gas industry hates
Dave Parkinson has written a good article in The Globe and Mail about me called “Meet the man the shale gas industry hates.” I could say a lot about some of the comments by industry people in the article, but I will focus on Devon Energy spokesman Chip Minty’s statement that, “We kind of look
To The Editor of The New York Times
“U.S. Inches Toward Goal Of Energy Independence” (news article, March 23) adds fuel to a growing but unfounded perception that recent increases in domestic oil production means we will someday be able to forgo imported oil altogether. There is no question that production has increased. This, however, constitutes less than five percent of total U.S.
Rolling Stone Responds to Chesapeake Energy on ‘The Fracking Bubble’
Rolling Stone Contributing Editor Jeff Goodell has published a response on March 6, 2011 to Chesapeake Energy’s rebuttal of his “The Big Fracking Bubble: The Scam Behind the Gas Boom” that was published on March 2, 2012.
The New York Post: Another Shale Gas Attack
On March 5, 2012, The New York Post featured a post called “Another Shale Gas Attack Full of Hot Air.” The author, Abby W. Schachter, noted my dissatisfaction with being mis-quoted in the recent Rolling Stone article “The Big Fracking Bubble: The Scam Behind the Gas Boom.” She wrote, “Only trouble with the claim is
I Was Mis-Represented in the Rolling Stone Article: The Big Fracking Bubble
“The Big Fracking Bubble: The Scam Behind the Gas Boom” by Jeff Goodell was published March 1, 2012 in Rolling Stone. I was interviewed by Goodell and was mentioned in the article. I sent the following rebuttal to the editors of Rolling Stone: March 3, 2012 To the Editor: I was interviewed by Jeff Goodell
U.S. Shale Gas: Less Abundance, Higher Cost
SEE THE FULL POST ON THE OIL DRUM: http://www.theoildrum.com/node/8212 Arthur E. Berman and Lynn F. Pittinger Lynn Pittinger is a consultant in petroleum engineering with 30 years of industry experience. He managed economic and engineering evaluations for Unocal and Occidental Oil & Gas, and has been an independent consultant since 2008. He has collaborated with
Interview on Platts Energy Week TV
Arthur Berman, Houston-based Geoscientist, discusses a recent story featured in the NY Times that called into question whether the shale boom was akin to a ponzi scheme.http://www.plattsenergyweektv.com/video/default.aspx#/Platts+Energy+Week%2DAlt/07.24.11+Latest+Controversy+Over+Shale+Exploration/78974462001/748923961001/1070933193001
National Legal and Policy Center Lacks Courtesy to Respond
On July 7, 2011, The National Legal and Policy Center’s (NLPC) Chairman Kenneth Boehm published untrue and unsubstantiated statements about me. On July 12, I responded with demands for corrections that were published on this blog: https://www.artberman.com/the-smear-campaign-continues/. A week later, the NLPC has not shown the professional courtesy to respond to my request. I leave
The Smear Campaign Continues
Today, Mr. Kenneth Boehm, Chairman of the National Legal and Policy Center, wrote an e-mail to Arthur Brisbane,The New York Times Public Editor, in which he made false and unsubstantiated statements about my professional work and conduct: http://nlpc.org/stories/2011/07/07/ny-times-asked-investigate-shale-gas-bubble-series Mr. Boehm, I demand a public correction and apology for the unethical, un-researched and un-investigated statements that
The Smear Campaign to Distract From the Truth That Shale Plays Are Commercial Failures
There is a carefully organized smear campaign orchestrated by powerful corporate interests (http://nlpc.org/stories/2011/07/07/ny-times-asked-investigate-shale-gas-bubble-series) to distract from my central argument that the shale gas plays are commercial failures. I have a clean conscience about all of this and am willing to discuss it with anyone. I told no one beyond my closest circle of family and
Jon Entine forced to re-write his post, “Natural Gas “Bubble” Report: Market Tinkering or Shoddy Reporting?”
Because of my objections, RealClear Politics forced Jon Entine to “update” his post, “Natural Gas “Bubble” Report: Market Tinkering or Shoddy Reporting?” http://www.realclearpolitics.com/articles/2011/07/01/natural_gas_bubble_report_market_tinkering_or_shoddy_reporting.html Entine’s post remains objectionable because it relies on unsubstantiated speculation rather than evidence or data. It is indeed curious and ironic that one of Entine’s recent articles is titled, “When Science is
Letter to George Mason University re: Jon Entine’s post-Natural Gas “Bubble” Report: Market Tinkering or Shoddy Reporting?
Dear Sir or Madam, Jon Entine has posted an article called “Natural Gas “Bubble” Report: Market Tinkering or Shoddy Reporting?”(http://www.realclearpolitics.com/articles/2011/07/01/natural_gas_bubble_report_market_tinkering_or_shoddy_reporting.html) in which he represents himself as a staff member and representative of George Mason University. At the end of his post he identifies himself as “directing the Genetic Literacy Project and as a senior fellow
View my interview on CNBC Kudlow’s Money Politics
Here is the link to Kudlow’s Money Politics 27 June 2011 http://www.msnbc.msn.com/id/21134540/vp/43556438#43556438
Why I Support Hydraulic Fracturing
Some of you have asked if I am for or against hydraulic fracturing (fracking). I support it The oil and gas industry has been using this stimulation technique commercially since 1949. Among the tens of thousands of wells that have been hydraulically fractured, there are few documented cases in which contamination of shallow aquifers has
EIA Annual Energy Outlook 2011: Don’t Worry, Be Happy.
See my post on The Oil Drum: http://www.theoildrum.com/node/7285 We no longer have to worry about energy supply or prices. That is the message from the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook (AEO) 2011. Cheap energy will characterize the world for most of the next decade, according to the report. Oil will not reach
Oil Seepage: An Inconvenient Truth (TREICoLimited)
Oil seepage an inconvenient truth-npa seep information – gom portion View more presentations from aeberman.
BP’s Deepwater Horizon – Static Top Kill vs. Bottom Kill: Weighing the Risks
The original version of this post is on The Oil Drum A permanent solution to the BP Macondo blowout in the Gulf of Mexico may be achieved soon but there are risks. Admiral Thad Allen announced on Monday, July 26 that a static top kill would be attempted on August 2. The schedule may be
Arthur Berman talks about Shale Gas: An interview in ASPO-USA’s Newsletter
Arthur Berman talks about Shale GasPosted by Gail The Actuary on July 28, 2010 – 10:40am Topic: Supply/ProductionTags: Shale Gas Recently, ASPO-USA’s newsletter printed an interview (Part 1 and Part 2) with Oil Drum staff member Art Berman (aeberman). Art is a geological consultant whose specialties are subsurface petroleum geology, seismic interpretation, and database design and
My interview on CNN American Morning
View my interview about the BP Macondo well on CNN American Morning: http://www.youtube.com/watch?v=Zv2ONRlaLNc
Estimated Oil Flow Rates From the BP Mississippi Canyon Block 252 “Macondo” Well
Estimates of flow rates for the BP Deepwater Horizon “Macondo” well now range from 1,000-100,000 barrels of oil per day (bopd). Initial estimates were 1,000 bopd. These increased to 3,000 bopd and then to 5,000 bopd. Now the U.S. Geological Survey believes the well is flowing 20,000-40,000 bopd but other experts believe that flow rates
Impacts of President Obama’s Order Halting Work on 33 Exploratory Wells in the Deepwater Gulf of Mexico
The Presidential Order does not affect the 4,515 shallow-water wells, and it does not affect 591 producing deepwater Gulf wells. Roughly 33% of nation’s domestically produced oil comes from the Gulf of Mexico, and 10% of the nation’s natural gas. 80% of the Gulf’s oil, and 45% of its natural gas comes from operations in
What caused the Deepwater Horizon disaster?
See the full post on The Oil Drum: http://www.theoildrum.com/node/6493#more The blowout and oil spill on the Deepwater Horizon in the Gulf of Mexico was caused by a flawed well plan that did not include enough cement between the 7-inch production casing and the 9 7/8-inch protection casing. The presumed blowout preventer (BOP) failure is an
A Guest Post by Perry A. Fischer: Are incentives to blame in the Macondo blowout?
We now know, or at least we think we know, the causes of the BP Macondo blowout. Starting from the highest “top view” downward, the first cause may have been bonus incentive. “Better, faster, cheaper” has been the mantra of NASA for more than a decade. But “Two out of three ain’t bad” is not
Nothing New in Obama Plan for Offshore Drilling
In early April, the Obama Administration announced that it will expand offshore exploration and development to reduce dependence on foreign oil. The plan that was announced is, in fact, more restrictive than what was already in place, and will have no near- or mid-term impact on our need to import oil. It maintains the status
100 Years of Natural Gas Supply from Shale? It’s More Like 6 Years.
The widespread belief that there is 100 years of natural gas supply in the U.S. because of shale plays is incorrect. The Potential Gas Committee (PGC) estimated 1,836 Tcf of technically recoverable gas resources for the U.S. in its report released in June 2009. Along with proved reserves of 238 Tcf, there are 2,074 Tcf
ExxonMobil’s Acquisition of XTO Energy: The Fallacy of the Manufacturing Model in Shale Plays See the original full post on The Oil Drum:http://www.theoildrum.com/node/6229 Posted by aeberman on February 22, 2010 – 8:26amTopic: Geology/ExplorationTags: exxonmobil, natural gas, original, shale gas, xto energy [list all tags] Most analysts believe that the ExxonMobil acquisition of XTO Energy (XTO)
Implications of Exxon Mobil acquisition of XTO Energy Presentation February 2010
Check out this SlideShare Presentation: Implications of Exxon Mobil acquisition of XTO Energy Presentation February 2010 View more presentations from aeberman.
McMoran Davy Jones Gas Discovery
Arthur E. Berman and Joshua H. Rosenfeld McMoran Exploration Company has made a significant discovery in the U.S. Gulf of Mexico that may contain 2-6 trillion cubic feet (Tcf) of natural gas reserves. The well was drilled in 20 ft of water 10 miles south of the Louisiana coast on South Timbalier Block 168 (Figure
The Data That We Cannot Get
I would like to clarify what I mean about operators not showing their data. Anonymous says that there is no data to show because we only disagree about how to project existing data. That is partly true, but some of the rebuttals to our work dispute the reliability of Texas Railroad Commission production data for
From Perry Fischer, former World Oil Editor
November 5th, 2009 When I got up this morning, I decided not to pack my usual snack lunch–I thought that it would be my last day. I was right–I was fired. On Oct 22, I received two emails forwarded to me via the World Oil Circulation Department. They were from DS and KR at two
World Oil Editor Fired Over Shale Columns
World Oil Editor Perry Fischer was fired today by John Royall. While no reason was given, it is clear that this was related to his role in allowing me to publish a different view of the shale plays. Perry did a lot to elevate World Oil above the level of a trade magazine since joining
A Call from John Royall
I got a call today from John Royall, President and CEO of Gulf Publishing, the company that owns World Oil magazine. John told me that I “need to get my facts straight”. He claims that he did not cancel my November column as I was told. Rather, he said, he, Editor Perry Fischer, and Publisher
Pressure from Petrohawk helps cancell World Oil column
In an act of extraordinary courage, a top Petrohawk executive threatened to cancel his free subscription to World Oil if the magazine continued to publish my column. Today, John Royall, President and CEO for Gulf Publishing, cancelled my November column. I have accordingly resigned as contributing editor. I greatly enjoyed the nearly three years that
Shale gas numbers may not add up by John Dizard
There is an interesting article on shale gas plays by John Dizard in the November 1, 2009 Financial Times: http://www.ft.com/cms/s/0/b4240cf4-c585-11de-9b3b-00144feab49a.html
Facts are stubborn things
Several rebuttals to our position that shale gas reserves may be overstated have surfaced in recent weeks. This development is welcomed and positive because it elevates the important discussion of shale reserves and economics to a higher level of public awareness and dialogue. Although these rebuttals have been directed at me, I am not the
Rebuttals To Our Shale Play Research
Tudor, Pickering and Holt’s rebuttal to Lynn Pittinger’s and my work is not publicly available and is provided only to subscribers to their investment services. Below, however, is a transcription of their retort. I have also provided the articles by Devon and Chesapeake, coincidentally published on the same day as TPH’s report, in Oklahoma City
The Empire Strikes Back
Today, Chespeake, Devon, and Tudor, Pickering and Holt published objections to Lynn Pittinger’s and my articles on the Barnett and other shale plays. I choose not to respond at this time since there is little substance in these commentaries. The only response that is appropriate at this time is contained in the accompanying graphs of
Realities of shale play reserves: Examples from the Fayetteville Shale
Arthur E. Berman and Lynn Pittinger When asked about the production life of shale gas wells, Chesapeake Energy CEO Aubrey McClendon recently explained, “Yes, that’s 65 years. And I believe that’s our standard across all shale plays, which is actually a pretty interesting point to talk about” (Second Quarter Earnings Call, Aug. 4, 2009). It
A Long Recovery for Natural Gas Price: revisiting the Haynesville Shale
Natural gas prices increased 39% from a 6 1/2 -year low of $3.19/MMBtu on April 27 to $4.42 on May 13, 2009. Some think that the worst of the price collapse that began in July 2008 is over, and that gas prices will return to normal. I do not believe that is the case, though
Haynesville Sizzle or Fizzle: Let’s be fair!
When I read some of the comments posted on this web log to a friend yesterday, he said, “Anything that gets this much flak, must be close to the mark.” I have received dozens of e-mails and a half-dozen posted comments on this web log about the Haynesville Shale. Many of the e-mail authors strongly
Haynesville Sizzle Might Fizzle
Despite lower natural gas prices, the Haynesville Shale is the hottest onshore play in North America. Production is more than 150 MMcfd from recently drilled horizontal wells, and single-well Initial Production (IP) rates are as high as 24 MMcfd. I used standard rate-versus-time methods to determine estimated ultimately recoverable reserves (EUR) for 14 horizontally drilled
Shale Plays, Risk Analysis and Other Perils of Conventional Thinking: Haynesville Shale Sizzle Turns to Fizzle
In mid-July 2008, the United States somewhat unexpectedly discovered that it had an oversupply of natural gas, and prices fell sharply. Jen Snyder, head of Wood Mackenzie Ltd’s North American Gas Research Group, recently said that the development of shale gas plays has caused “a significant potential over-supply” (Oil and Gas Journal, December 1, 2008).