oilvoice magazine

American shale EampP growth is creating

a global energy independence transformation

What does the Mars Lander tell us about our industry

Edition Seven - October 2012

1 OilVoice Magazine | OCTOBER 2012

Issue 7 ndash October 2012

OilVoice Acorn House 381 Midsummer Blvd Milton Keynes MK9 3HP Tel +44 208 123 2237 Email pressoilvoicecom Skype oilvoicetalk Editor James Allen Email jamesoilvoicecom Sales Gabby Kotosoba Email gabbyoilvoicecom Manager Technical Director Adam Marmaras Email adamoilvoicecom Social Network

Facebook

Twitter

Google+

Linked In

Read on your iPad You can open PDF documents such as a PDF attached to an email with iBooks

Adam Marmaras

Manager Technical Director

Welcome to the 7th Edition of the

OilVoice Magazine

Having the magazine in a PDF only

format is a great way to distribute the

editions No printing costs no shipping

costs - just click and read But there

are a number of people who prefer

having a printed magazine in their

hands The beloved late Ray

Bradbury summed it up best ldquoA

computer does not smell if a book is

new it smells great If a book is old it

smells even betterrdquo Im not claiming

that a printed version of the OilVoice

magazine will have an enchanting

bouquet but I think you get the idea

Were currently investigating the

logistics of getting a few copies printed

and shipped If your business thinks it

would like a few printed copies sent to

it It will help us please let us know

with our plans

As always we have advertising

availability in the magazine Get in

touch with Gabby who will be happy to

talk you through our reasonable rates

Adam Marmaras


OilVoice


Contents

Featured Authors Biographies of this months featured authors 3

Russias Gazprom tightens its stranglehold on Europe France falls The natural gas war gets dirty by Wolf Richter

5

Has OPEC misled us about the size of its oil reserves Does it matter by Kurt Cobb 7

The stakes get higher in the fracking debate by Keith Schaefer 12

What does the Mars Lander tell us about our industry by David Bamford 17

Why the oil industry doesnt want you to remember the last 14 years by Kurt Cobb 21

Recent Company Profiles The most recent companies added to the OilVoice directory 27

The close tie between energy consumption employment and recession by Gail Tverberg

29

Oil energy dependence and energy transition by Andrew Mckillop 43

Regulation of all of the above energy to cost 20x more on public lands by Gary Hunt 50

American shale EampP growth is creating a global energy independence transformation by Gary Hunt

53


Featured Authors

Andrew MacKillop

OilVoice Contributor

Andrew MacKillop is an energy and natural resource sector professional with over 30 years experience in more than 12 countries

Keith Schaefer

Oil amp Gas Investments Bulletin

Keith Schaefer editor and publisher of the Oil amp Gas Investments Bulletin

David Bamford

Finding Petroleum

David Bamford is non-executive director of Tullow Oil and a past head of exploration West Africa and geophysics with BP

Gail Tverberg

Our Finite World

Gail Tverber has an M S from the University of Illinois Chicago in Mathematics and is a Fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries

Kurt Cobb

Resource Insights

Kurt Cobb is an author speaker and columnist focusing on energy and the environment

Gary Hunt

TCLabz

Gary Hunt is President TechampCreative Labs a disruptive innovation business collaboration of software data and advanced analytics technology companies working together to integrate their products to meet the changing needs of the energy vertical


Wolf Richter

Testosterone Pit

Wolf Richter has over twenty years of C-level operations and finance experience including turnaround situations and start-ups He went to school and worked for two decades in Texas and Oklahoma with an interlude in France and then headed east to New York City Brussels Tokyo and finally San Francisco where he currently lives

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Russias Gazprom tightens its stranglehold on Europe France falls The natural gas war gets dirty

Written by Wolf Richter from Testosterone Pit

Why would France suddenly prohibit shale gas exploration Sure there are environmental issues with horizontal drilling and hydraulic fracturing the methods used to extract gas from porous shale deep underground flammable drinking water earth quakes cows that die radioactive sludge in sewage treatment plants But French governments have had letrsquos say an uneasy relationship with environmentalists Its spy service DGSE for example sank Greenpeacersquos flagship the Rainbow Warrior in the port of Auckland New Zealand killing one person No there must have been another reason why the government of Nicholas Sarkozy prohibited shale gas exploration in 2011 after having already issued permits in 2010 A mini hullabaloo had broken out stirred up by the European Ecologists and The Greens (EELV) the fringe on the French left And Sarkozy caved Without a fight Enthusiastically The government of Franccedilois Hollande just confirmed the prohibition when Environment Minister Delphine Batho declared ldquoHydraulic fracturing remains and will remain prohibitedrdquo The clue Sarkozy suddenly visited Japan on March 31 2011 a couple of weeks after the horrific earthquake and tsunami and the subsequent nuclear accident at Fukushima to declare in front of shell-shocked Japanese that there was ldquono alternativerdquo to nuclear power Hersquod been dispatched by the almighty state-owned nuclear industry to tamp down on the growing anti-nuclear sentiment at home Owned by the government nuclear power plants produce 75 of Francersquos electricity and export some of it No one who wants to be politically viable is allowed to hamper the industry If someone strays off the reservation he or she is dragged back soon While Hollande campaigned on a vague promise to reduce dependency on nuclear power to 50 it was understood


as one of the bones he had to toss to environmentalists Nothing would come of it

So when Batho who wants to add more renewables to the portfolio toed the party line by saying ldquoNuclear power is an industry with futurerdquo then qualified it with a ldquobutrdquo it caused an outcry even among the Socialists Thatrsquos the power the nuclear industry has over the political machines But now another powerful entity turned up Russiarsquos Gazprom Itrsquos the worldrsquos largest gas producer gas exporter and gas distribution company with nearly 100000 miles of gas trunk lines and branches The Russian government owns 5001 of it At home it has to sell gas under cost one of the Soviet leftovers It relies on high-profit sales from Europe to make up for it But Europe is diversifying away from its single most important supplier Competitors include Russiarsquos number two Novatek and Norwaymdashthe second largest natural gas exporter in the world So in April Gazprom had to lower its European sales guidance for 2012 Its market share in Europe was 27 last year and itrsquos shooting for 30 by 2020 but if the US shale-gas boom ever infects Europe those plans would become a pipedreammdashand if the high-profit sales from Europe tapered off further it would have to raise prices at home a political nightmare Hence its fight by hook or crook against shale gas in France Gazpromrsquos ldquounderhanded tacticsrdquo and ldquoscaremongering about a new technologyrdquo have Moscowrsquos nod of approval and are designed to dissuade governments from developing their own shale-gas reserves according to a report by Platts a global provider of information on energy petrochemicals and metals Efforts include all manner of operations online and through encouraging demonstrations but also paying public relation firms to spread ldquomyths and misconceptionsrdquo said Aviezer Tucker assistant director of the Energy Institute at the University of Texas A ldquoEuropean Union-wide banrdquo on shale-gas production he said would be the ldquoholy grailrdquo With France already knocked off Sergei Komlev of Gazprom Export has been bouncing around the world in his fight against European shale gas At a meeting in Qatar according to Plattsrsquo report he gave a presentation ldquoMultiple Handicaps Will Retard Shale Gas Development Outside USrdquo was the title of one of his slides ldquoFortunately it claimed ldquoEuropean shale gas development faces numerous economic regulatory and political barriers before there are significant amounts of shale gas production not sooner than in ten or more yearsrdquo Breathing room for Gazprom in the natural gas wars In the US natural gas may be the most mispriced commodity these days Its price has been below the cost of production for so long that the industry is suffering billions in losses But demand for natural gas by power producers has been boomingmdashand itrsquos killing coal one powerplant at a time Read Natural Gas Is Pushing Coal Over The Cliff And here is a highly insightful interview of James Hamilton energy economist


former visiting scholar at the Federal Reserve Board in Washington DC and other Federal Reserve Banks Read The Real Reason Behind Oil Price Rises by James Stafford

View more quality content from Testosterone Pit

Has OPEC misled us about the size of its oil reserves Does it matter

Written by Kurt Cobb from Resource Insights

Has OPEC misled us about the size of its oil reserves The short answer is

probably The long answer is that currently there is no way to know for sure

The next question we should ask is Does it matter The answer is most definitely

yes OPEC short for the Organization of Petroleum Exporting Countries currently

claims that its 12 members hold 813 percent of the worlds oil reserves And with

few exceptions the world believes them Trouble is these reserves are not verified

by independent auditors according to a study (PDF) done by the US Government

Accountability Office the nonpartisan investigative arm of the US Congress OPEC

reserves are simply self-reported by each country Essentially OPECs members are

asking us to take their word for it But should we


It ought to give us pause that the reserve numbers OPEC countries release are used

in major reports produced by the US Energy Information Administration (EIA) the

Paris-based International Energy Agency (IEA) a consortium of 28 of the worlds oil

importing nations oil giant BP which annually publishes the widely cited BP

Statistical Review of World Energy and myriad other organizations Reports from the

two agencies cited above and BP are frequently consulted by governments industry

banks and investors around the world for policy formulation long-term planning and

lending and investment decisions Yet these groups seem blissfully unaware of the

caveats surrounding the numbers in those reports and by extension surrounding

more than 80 percent of the worlds oil reserves

Keep in mind as we go along that the sometimes astronomical numbers thrown

around for world oil reserves by the uninformed or by those who intend to mislead us

either have no basis in fact or actually refer to resources Resources are only an

estimate of oil thought to be in the ground based on rather sketchy evidence And

most of that oil will never be recoverable Reserves however are what can be

produced at todays prices from known fields using existing technology It turns out

that reserves are only a tiny fraction of so-called resources

Now heres the caveat from the International Energy Agency in its World Energy

Outlook 2010

Definitions of reserves and resources and the methodologies for estimating them

vary considerably around the world leading to confusion and inconsistencies In

addition there is often a lack of transparency in the way reserves are reported many

national oil companies in both OPEC and non-OPEC countries do not use external

auditors of reserves and do not publish detailed results National oil companies

refers to government-owned companies which typically control all oil development

within a country

The BP Statistical Review of World Energy for 2012 provides this explanatory note

under a table listing oil reserves by country

The estimates in this table have been compiled using a combination of primary

official sources third-party data from the OPEC Secretariat World Oil Oil amp Gas

Journal and an independent estimate of Russian and Chinese reserves based on

information in the public domain Canadian oil sands under active development are

an official estimate Venezuelan Orinoco Belt reserves are based on the OPEC


Secretariat and government announcements The key words are OPEC Secretariat

which refers to the OPEC staff located in an office in Vienna That office is where BP

presumably gets its information about OPEC reserves The EIA lists the OPEC

Annual Statistical Bulletin put out by--you guessed it--the OPEC Secretariat Alas

the Annual Statistical Bulletin tells us under the heading Questions on data that

[a]lthough comments are welcome OPEC regrets that it is unable to answer all

enquiries concerning the data in the ASB In other words trust us So information

about OPEC reserves comes either from the OPEC offices in Vienna or from

member countries Some analysts may adjust those figures based on the few shreds

of evidence that are available outside of official government pronouncements But in

reality there are almost no hard facts when it comes to OPEC reserves

Strangely many of these countries say that a detailed audit of their fields by

independent observers is out of the question because oil reserves are a state secret

And yet those countries report their reserves to OPEC which publishes them for all

to see So are oil reserves in many OPEC countries a state secret or not

Apparently whats secret is the field-by-field data that would tell us whether the

reserves claimed by these countries are actually there Are there reasons to believe

that if we saw this data it would contradict the official overall number provided by

some countries In a word yes

First OPEC allocates production levels among its members It does this to control

the flow of oil to world markets and thus to manipulate the price OPEC bases

production quotas for its members in part on the size of each members reserves

When this policy was first established in the 1980s reported reserves for several

OPEC members jumped between roughly 40 and 200 percent within one year--not

always the same year--as each country jockeyed for a higher production quota

Based on EIA data heres what it looked like

Country Reserves in Barrels

(Year)

Reserves in Barrels

(Year)

Percentage

Increase

Iran 488 billion (1987) 929 billion (1988) 904

Iraq 471 billion (1987) 100 billion (1988) 1123

Kuwait 667 billion (1984) 927 billion (1985) 390

Saudi Arabia 1726 billion (1989) 2576 billion (1990) 493

United Arab

Emirates 331 billion (1987) 981 billion (1988) 1964

Venezuela 250 billion (1987) 563 billion (1988) 1252


Not every country participated in the free-for-all But the countries with the largest

exports participated with a vengeance There was no drilling program in any of these

countries that could have explained such jumps in reserves

The competition continues to this day In October 2010 Iraq announced an increase

in its oil reserves from 115 billion barrels to 1431 billion barrels No attempt was

made to hide the reason for the increase Falah al-Amri the head of the countryrsquos

State Oil Marketing Company suggested that future quota calculations might have

been a factor in the revision A week later Iran raised its reserves number from

1366 billion barrels to 1503 billion barrels presumably in order to maintain its

position within the OPEC production quota system These numbers have been

dutifully included in the latest statistical compilations of both EIA and BP as if the

two hadnt gotten the memo that Iraqs and Irans increases were reported merely for

quota reasons and not because of any particular discoveries

Perhaps even more astounding is that some OPEC members dont even take the oil

reserves reporting game seriously any more Logic dictates that there should be at

least small adjustments up or down in reserves each year as new fields are

developed and old ones decline The world of geology simply cannot yield precisely

the new reserves needed to replace exactly the amount of oil extracted from existing

fields each year

And yet the United Arab Emirates has been reporting 978 billion barrels of oil

reserves every year since 1997 Kuwait has been reporting 104 billion barrels each

year since 2008 Iraqshows long periods from 1980 onward when reserves dont

change the latest running from 2004 to 2011 during which reserves supposedly held

absolutely steady at 115 billion barrelsAlgeria has reported 122 billion barrels from

2008 onward At least Saudi Arabia has demonstrated a certain sensitivity to

appearances and has adjusted its reserves number slightly from year to year And

yet that number has remained within a narrow range of 260 to 267 billion barrels

from 1991 to the present All of these numbers suggest that depletion from existing

fields is taking absolutely no toll on OPECs reserves Even if thats true we have no

way of verifying it

The second reason to doubt OPECs official oil reserve numbers is that two insiders

have told us not to trust those numbers The now deceased A M Samsam Bakhtiari

an executive for the National Iranian Oil Company told the Oil amp Gas Journal all the

way back in 2003 the following I know from experience how reserves are


estimated in major Middle Eastern (and OPEC) countriesAnd the methods used

are usually far from scientific as the basic knowledge for such a complex exercise is

not at hand He estimated that Iranian reserves were about 37 billion barrels not the

90 billion that were being cited at the time

Back in 2007 Sadad al-Husseini former executive vice president for exploration and

production at Saudi Aramco the state oil company that controls all oil development

in Saudi Arabia told a conference in London that world oil reserves had been

inflated by 300 billion barrels That number almost matches the increases in OPEC

members reserves for quota reasons in the 1980s and it represented about a

quarter of all reported reserves in 2007 As a result to this day al-Husseini remains

skeptical of claims that world oil production will rise much from here

Another piece of evidence that casts doubt on OPEC members reserve claims came

to light in 2005 That year Petroleum Intelligence Weekly an industry newsletter with

worldwide reach obtained internal documents from the state-owned Kuwait Oil Co

The documents revealed that Kuwaiti reserves were only half the official number 48

billion barrels versus 99 billion Since then policymakers and the public seemed to

have ignored the entire incident The BP Statistical Review lists Kuwaits reserves as

1015 billion barrels as of 2011 The EIA shows them as 104 billion Skepticism

apparently is taking an extended holiday at BP and EIA

Measuring oil reserves remains something of an art Even large publicly traded oil

companies with armies of petroleum geologists and engineers who operate under

strict US Securities and Exchange Commission rules for estimating reserves--even

these companies dont always get it right In 2004 Royal Dutch Shell had to lower its

reserves number by 20 percent a huge and costly blunder for such a sophisticated

company If Shell can bungle its reserves estimate then how much more likely are

OPEC countries which are subject to virtually no public scrutiny to bungle or perhaps

manipulate theirs

I said in a previous piece that the rate of production is the key metric when

evaluating the success of the worlds oil production and delivery system But

sustained production of oil depends on the size and quality of reserves If the world

does indeed have 300 billion fewer barrels of reserves than it thinks it does that has

implications for how long the current rate of production can be maintained (It has

been stuck between 71 and 76 million barrels per day since 2005) And that is why

the mystery surrounding OPECs reserves which supposedly constitute 80 percent


of the worlds reserves is so disturbing Even more disturbing is how much this

mystery is ignored or perhaps not understood by policymakers industry and the

public

We shouldnt be the least bit exultant over claims that we have more oil reserves

than weve ever had before First we are using up that oil at a faster rate than ever

before Second much of what is currently parading as reserves may not be Third

the plateau in worldwide oil production since 2005 is actually consistent with a

smaller reserve base

Given all this I think we can safely say that when it comes to the official statistics on

oil reserves there is likely to be less than meets the eye And that begs the question

Does it really make sense for the world to chart its energy future based on such

dubious information

View more quality content from Resource Insights

The stakes get higher in the fracking debate

Written by Keith Schaefer from Oil amp Gas Investments Bulletin

Is there any common ground in the debate over hydraulic fracturing Its a divisive

issue especially in the US where 90-plus of all global fracking is done now

pitting neighbor against neighbor

Two weeks ago I wrote about a success story - How a US Oil Refinery Got Saved -


in which different stakeholders were able to put aside differences and create a win-

win scenario for everyone

Can the groups on either side of the fracking debate do the same

The stakes are higher as the main concern of those against fracking is that it may

contaminate drinking water That may or may not be true but it certainly validates

the fierce emotion behind the issue

Media reports surfaced in late August that New York State Governor Andrew Cuomo

may end the ban on fracking the state has had since 2008 Trouble started

immediately

The Albany Times-Union reports that roughly 1200 people attended a march

through the states capital on Monday August 27 calling on Cuomo to uphold the

fracking ban

Hydrofracking remains a divisive issue for New Yorkers and presents DEC

(Department of Environmental Conservation) and the Governor with a political lose-

lose Steven Greenberg a pollster at Siena said Whatever decision they make is

going to upset as many people as it pleases

A recent survey from Siena Research Institute found more New Yorkers supported

restarting fracking than opposed ithellip by a razor-thin margin of 39 percent to 38

percent

Still the DECs research notes that the industry could bring more than 17600 jobs to

the state and potentially as much as $125 million each year in tax revenue making

a strong counter-argument all on its own

For many the issue is jobs and royalties vs the environment I dont see it that way

though This multi-billion dollar industry-horizontal drilling and multi-stage fracking-

has been around for 15 years but really only seen major growth since 2007-five

short years ago

And as companies test new fracking technology-plug amp perf vs open hole slickwater

vs oil vs propane-new things get developed that keep lowering costs and increasing

the amount of oil and gas that can get produced What I mean to say is that


technology is changing so fast the industry can hardly keep up-much less the

general public And the industry is obviously fixated on keeping up with the

competition not explaining things to the public-which in all likelihood will all be out

of date shortly

The industry is even developing more environmental ways of fracking I believe for

example that in five years all fracking fluid will be food-grade You (ok maybe not

you but the oil and gas company reps) will be able to drink the stuff The public is

demanding it I think it will happen-but not right away

The industry and the public are going to continue to dance around this issue for the

next couple years trying to find consensus The Shale Revolution is SO important

economically to the United States there is no way fracking is EVER going to get

banned in the near-to-mid-term But both sides need to work harder to find

consensus

The two sides dont talk the same language yet When regulators produce 450-page

studies which have scientific backing that say fracking can be done safely I dont

hear respect from the people opposed to fracking

And the industryhellip well a lot of them are like deer caught in the headlights Theyve

been fracking for 50 years and they just cant get over what all this new fuss is

about

Get over it guys And hurry

There is a very bright light of mainstream attention that will forever change the way

oil and gas does its business in the developed world and how it gets permitted

Sadly the industry hasnt been pro-active or successful in getting ahead of public

opinion on fracking and they remain re-active in responding to issues-most of which

they clearly never thought were issues in the first place

And some very aggressive operators who have little bedside manner havent helped

at local levels-especially in areas that are new to oil and gas like the northeast US

Carol French and Carolyn Knapp two Pennsylvania dairy farmers are outspoken

critics of fracking They not only point to stories of contaminated wells but to the


problems that come with the infrastructure brought in by operators According to The

Associated Press the pair say that pipelines can cut off access to crops and drilling

equipment can cause serious damage to roads

I never in my wildest dreams envisioned the industrialization that comes along with

this process Knapp told a group in North Carolina

Siobhan Griffin a New York cattle farmer told the news source that she fears for her

animals if fracking comes to town

Two incidents stick out in her mind the quarantine of 28 cows in Pennsylvania after

they drank fracking wastewater and the death of 17 Louisiana cows that died after

drinking water that was contaminated (Fracking involves millions of gallons of water

mixed with sand and about 1 chemicals pumped into the earth to fracture shale

rock releasing gas The wastewater created by this has caused many fears of

drinking water contamination)

Not all farmers have the same view of fracking however Some see the wealth it has

brought their neighbors and are anxious to get in on the action

New York dairy farmer Jennifer Huntington took her town to court after it stopped a

well plan on her land She says that the money brought in by the operation would

have paid for a number of updates to her farm

We would have used the royalties to update the anaerobic digester that we installed

in 1984 she told the AP We would have purchased a better oil seed press to more

efficiently press soybeans for biodiesel We would have invested in our farm our

land and our employees

Dan Fitzsimmons the chief of the 70000-member Joint Landowners Coalition of

New York has worked to have the Empire State lift its moratorium on fracking so he

and others could profit from it like their neighbors in Pennsylvania

I go over the border and see people planting orchards buying tractors putting

money back in their land he said Wed like to do that too but instead we struggle

to pay the taxes and to hang onto our farms

The picture is not always clear even once fracking starts up however While some of


the environmental impacts of fracking may often get overstated and are often

misunderstood some incidents have highlighted the potential for problems just in

bringing the gas industry into populated areas

The Philadelphia Inquirer notes that the town of Dimock Pennsylvania-made famous

by a shot of flaming tap water from the slightly histrionic documentary Gasland-

remains deeply divided by the presence of the gas industry

The town was at one point the epicenter of the hydraulic fracturing debate after initial

reports suggested that fracking had tainted nearby wells The story really kicked off

when methane that had collected in one well exploded ignited by the wells electric

pump

Investigation from the US Environmental Protection Agency eventually found that

the problem was actually with the cement used to seal off the wells which let gas

migrate into the local aquifers Still even with extensive efforts to fix the wells and

clean the water many residents remain opposed to further drilling and distrustful of

the companies doing the work

You sort of have to give them the opportunity to fix your water Its all about the

water its not about the money Bill Ely a 61-year-old resident of Dimock told the

Inquirer However he added Once your water is bad its hard to get back to

drinking it

Even in areas where the environmental impacts have been less dramatic there has

been notable disagreement The Star-Gazette notes the example of Montanas

Blackfeet Indian Reservation which leased about two-thirds of its land for oil and gas

exploration in 2008

The reservation has already brought in around $30 million enough to pay off debts

incurred building a casino upgrade some of the areas infrastructure and offer some

regular income for residents without any dramatic environmental problems

However the land has started to fill up with all the trappings of the oil and gas

industry from drilling rigs to water and chemical containers leading many to

question the decision

So the debate rages The emotional side needs to look at the science and the


engineers need to understand the emotion which doesnt get papered over with a

study I would suggest its up to industry to make the big first move-whatever that is

But for it to be effective it needs to be a Big Leap Forward

View more quality content from Oil amp Gas Investments Bulletin


Written by David Bamford from Finding Petroleum

Against the background of the Mars Lander I examine the charge that the oil amp

gas industry is extremely conservative compared to almost any other in its

approach to new technologies and ideas has some justification

Why is this Whats the evidence

At the recent British Business Embassy day on the Upstream ndash start here if you must

ndash somebody an optimist perhaps asked the august panel Perhaps the oil and gas

industry is very innovative in terms of technology but conservative in the way we run

the business How can we learn from other industries Can we do things in a way

that could be more efficient

Hmm no this is very innovative the 3D panoramic view of the surface of Mars taken

by the Lander


In contrast the facts indicate that our industry is conservative in the extreme

Some time ago I noticed an interesting article on RigZone talking about companies

that are consistently innovative the outcome of a study by three business school

professors who studied the worlds most innovative companies for the last 8 years

Really interesting I thought and similar in a way to some of the ideas of Niall

Ferguson on why the West rose to pre-eminence in the 19th and 20th Centuries

and George Magnuss on why China (and other community rather than individually

oriented countries) will struggle to outpace the West in the long run

But then IMHO the whole article was undone by referring to a study by HOLT a

subsidiary of Credit Suisse to identify the leading 100 innovative companies based

on how much revenue companies claimed new offerings would yield out into the

future

In this top 100 from the oil amp gas sector they put forward

FMC-Technologies

Schlumberger

China Oilfield Services

Cameron International

Tenaris SA

Halliburton

I wonder if you asked managers in the oil amp gas sector to name their top 5 innovative

companies ndash the lsquodisruptive innovatorsrsquo - whether any of these 6 would figure

I was struck by reading the commentary on the late Steve Jobsrsquo stepping down as

CEO of Apple that he invented new things ndash the iPod the iPhone the iPad ndash before

any of us realised we needed them This seems to me to be a really good definition

of innovation of leadership in innovation and it set me wondering where this exists

in our industry

Why do I assert that our industry is ultra-conservative

As a piece of data I offer the following graphic which summarises rather neatly the

insight that the oil amp gas industry is one of the most conservative industries around


Two of our lsquomost important

technologiesrsquo ndash horizontal drilling and

3D4D seismic ndash that are

consistently identified in surveys - of

what the lsquogreat amp goodrsquo in our

industry think - are great examples

of the decades it takes for new ideas

to achieve market dominance in our

industry having been first used in

the 1940rsquos and 1960rsquos respectively

View more quality content from Finding Petroleum

Time-to-market in years for various industries (Courtesy of Shell original work by McKinsey)

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Why the oil industry doesnt want you to remember the last 14 years


What were the prices of oil and gasoline in 1998 Do you remember Without

looking them up (or looking below this line) make your best guess

Ive been taking an informal poll to find out what people remember about oil and

gasoline prices in that year So far only one person has correctly characterized

prices back then Most guesses have clustered around $250 to $3 a gallon for

gasoline (in the United States) Only one person could come up with a crude oil price

which she guessed was around $55 a barrel The answers show a vague

recollection that oil and gasoline were cheaper than they are today But just how

much cheaper has been lost down the memory hole

Okay I know the suspense is killing you Heres how gasoline and oil fared in 1998

The nationwide average price of a gallon of gasoline in the United States in

December of that year was 95 cents The closing price for a barrel of crude oil sold

on the New York Mercantile Exchange on December 31 was $1205 Just three

weeks earlier the price of oil had hit its nadir for the year at $1072 Oil had started

the year above $17 and steadily slid as the Asian financial crisis slowed the world

economy and reduced oil demand Gasoline prices dropped only a little during the

year starting from the January average of $109 a gallon

Why does the oil industry want you to forget this Because after a 10-fold increase in

the price of crude oil and a fourfold increase in the price of gasoline the industry is

once again trying to sell the same story of continued abundance that they were

selling back in the late 1990s But the manyfold increase in oil prices ought to make

everyone doubt an industry which has repeatedly told us that huge supplies are just


around the corner and prices are headed for a crash

Perhaps the best example of the oil industrys Wrong Way Corrigans is industry

mouthpiece Daniel Yergin head of Cambridge Energy Research Associates

(CERA) a prominent energy consulting firm For a long time Yergin has been a

frequent guest on prominent television news programs and a source for many print

journalists He is a darling of the media on energy issues a media which is too polite

to confront him with his abysmal record of predictions in the oil market He was

wrong in his public pronouncements every step of the way from the 1998 low in oil

prices right up to the all-time highs of 2008 frequently predicting a large buildup of

new supply and crashing prices (One wonders why clients of CERA continue to buy

the companys research when it has been so wrong for so long But thats a story for

another time) Only at the end of 2008 did oil prices finally crash and then only

because the world economy was headed into the worst economic decline since the

Great Depression But as soon as the economy revived even tepidly prices rose

back to $80 a barrel and then above $100 which is about where they are today

The reason for high prices is actually quite obvious Crude oil production worldwide

has been stuck between 71 and 76 million barrels per day since 2005 (calculated on

a monthly basis) Oil volumes have been tracing out a troubling bumpy plateau that

many fear will mark the all-time peak in world production These numbers are

reported by the US Energy Information Administration the statistical arm of the

US Department of Energy and are widely considered to be the most reliable

available They reflect total production of crude oil including lease condensate

(which is the definition of crude oil) from all sources worldwide

Oil production has stalled despite the huge incentive that record high prices are

providing for oil exploration and development And despite enormous spending by

oil companies on exploration and drilling worldwide we have only just kept

production on a plateau for the last seven years These high prices and enormous

capital spending were the reasons given by Daniel Yergin for the expected buildup of

production volumes So what went wrong

The simple answer is that weve exhausted the easy-to-get oil and are now left with

mostly the hard-to-get oil It only makes sense that the early oil pioneers harvested

the easy oil first Why go after the hard stuff at that point Weve since learned how

to extract oil that is much harder to develop This includes deposits far offshore and

deep below the seabed as well as those locked in the Canadian Tar Sands deposits


that must undergo expensive and energy-intensive processing to convert what is

really bitumen a goopy thick hydrocarbon into what we call oil

And this leads me to a crucial concept which I find myself repeating over and over

again in response to all the foolish Daniel Yergins of the world The critical factor in

the oil markets and a global economy dependent on large continuous supplies of oil

is the rate of production The rate is the key not the size of the worlds reserves It is

the size of the tap not the size of the tank that matters

Let me offer another analogy to help explain If you inherit a million dollars with the

stipulation that you can only withdraw $500 a month you may be a millionaire but

you will never live like one That is increasingly the situation we face with oil There

may be huge resources of tight oil (often mistakenly referred to as shale oil) and of

oil-like substances such as tar sands But the expense the necessary energy and

increasingly the amount of water required to extract and process them is so great

that we have been unable to lift the worldwide rate of production significantly above

its current plateau for a sustained period during the last seven years Even with all

our vaunted new technology we have only just barely been able to replace the

capacity lost each year to the inexorable decline in the rate of production from

existing oil fields

Recently the head of a company well placed to judge trends in the worldwide rate of

oil production said he believes that the all-time peak is in Core Laboratories CEO

Dave Demshur told attendees at the Denver Oil amp Gas Conference last month that

[t]he maximum yearly oil production of the planet is taking place now Core

provides well analysis and reservoir management to oil and gas companies in

practically every major oil region of the world Demshurs statement is an unusual

admission from an industry insider with access to information that spans the entire

industry

The truth is we wont know for sure that weve passed the peak in world oil

production until long after it occurs It may be a decade after the event before oil

production turns down definitively and the peak becomes obvious for all to see

Just to clarify heres what peak oil does NOT mean

Peak oil does not mean we are running out of oil This is a canard used by the

oil industry to confuse the public Nobody who understands world peak oil


production ever says that it means we are running out In fact we wont run

out of oil for a very very long time At the peak the rate of production will

cease to rise probably trace a plateau for a time and finally begin a possibly

slow and bumpy decline That means well have less and less oil available

each year As oil becomes more and more expensive we will use less and

we will ultimately reserve it for critical purposes for which we cannot find good

oil substitutes

Peak oil does not mean that we wont find any more oil We are finding oil

every day Were just not finding enough and putting it into production fast

enough to grow production in the face of declining flows from existing fields

Peak oil does not mean the immediate collapse of modern civilization

However if we stand still and do little to address oil depletion peak oil will

likely result in immense difficulties

The industry and its paid spokespersons try to dazzle the public with talking points

that include the notion that we have more oil reserves than weve ever had That is

questionable and Ill explore that claim in a later piece But again I emphasize that

reserves are not the salient point It is and always will be the rate of production that

matters more If oil production stopped for a sufficiently long period--enough to drain

all aboveground supplies--modern civilization as we know it would collapse The

amount of reserves would not matter since the rate of production would have

dropped to zero

What matters is how much we can produce for continuous input into the world

economy As you might intuit weve built a financial system and physical

infrastructure premised on continuous and rising levels of oil consumption Thats

why peak oil matters so much and why flat oil production has been a large

contributing factor to the unstable world economy in recent years

To further illustrate the importance of rate consider the following Half of all oil

consumed since the beginning of the oil age has been consumed since 1985 We

consumed exponentially larger amounts nearly every year until 2005 when a number

of factors conspired to constrain supplies We frequently hear about multi-billion

barrel discoveries and think (wrongly) that oil must surely be plentiful as a result So

heres another question to ponder How long does one billion barrels of oil last the

world at current rates of consumption If you guessed something close to 12 days

you have a sense of the enormous challenges humans face in extracting finite

resources at ever higher rates Just multiply those multi-billion barrel discoveries by


12 to find out how many days the oil age might be extended by each discovery

Youll find the answer is not many

Perhaps it will seem puzzling that experts inside the industry--with a few notable

exceptions--cannot grasp that the rate of production is the central issue The best

explanation I can offer is to quote author Upton Sinclair It is difficult to get a man to

understand something when his salary depends upon his not understanding it

And here is where we get to the motivations behind the sunny optimism of the oil

industry If the public understood that oil supplies might be nearing an irreversible

decline it would demand the deployment of alternative fuels and efficiency measures

to soften the blow in order to give us time for a transition to a society based on

something other than oil That would ultimately reduce demand for oil products and

eventually end our dependence on oil Oil companies might get stuck with significant

inventories in the ground that they cannot sell at least not at the prices or in the

quantities they would like

The more immediate problem for oil company executives is that their companies may

soon find it impossible to replace all their oil reserves Oil companies strive to

replace at least 100 percent of what they produce so that their reserves dont fall If

investors come to believe that a failure to replace reserves will be ongoing year after

year they will mark down oil company share prices significantly In fact its already

happened and its likely to happen with more frequency as more companies struggle

to reach 100 percent replacement Such share price declines would of course make

a lot of oil executives significantly poorer as the value of their stock and stock options

plummet Essentially oil companies would be recognized as self-liquidating

businesses

All of this the oil industry wants you to ignore as it undertakes yet another public

relations campaign to convince the world that supplies will only grow from here

Naturally with prices near $100 a barrel the public needs reassurance The

campaign is designed to lull both the public and policymakers into a somnolent

surrender to a business-as-usual future that will leave us unprepared for the

momentous challenges ahead

Oil is the central commodity of the modern age As of 2011 it provided one-third of

the worlds energy and the basis for countless petrochemicals necessary to the

functioning of modern society Oils role in transportation remains critical 80 percent


of the worlds road rail air and sea transportation fuel is derived from petroleum and

in the United States the number is 93 percent Good substitutes for oil in

transportation are still hard to come by

No one can know exactly when world oil production will peak--not me not the worlds

oil companies not any government agency The dangers we face if we are

unprepared are potentially quite severe With worldwide oil production essentially flat

for the last seven years the sensible thing to do would be to get ready now as

quickly as we can

Given whats at stake for oil company managements it should be obvious why they

are telling us not to worry Given the publicly available production data the

persistently high price of oil and the failure of oil companies to expand worldwide

production even after enormous expenditures and effort it should also be obvious

why we shouldnt fall for the industrys beguiling but wildly misleading tale



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The close tie between energy consumption employment and recession

Written by Gail Tverberg from Our Finite World

The number of jobs available to job-seekers has been a problem for quite a long tine

nowmdashsince 2000 in the United States and longer than that in Europe If we look at

the percentage of the US population who are employed it is now back to 1984 or

1985 levels

Figure 1 Total number

of individuals employed

in non-farm labor and

reported by the US

Bureau of Labor

Statistics divided by

US resident population

as reported by the US

Census Bureau

I have run into a number of clues about what is happening In this post Irsquod like to

discuss what I am seeing Part of the problem is that high oil costs squeeze the

economy reducing employment Part of the problem is growing trade with Asia It is

even possible that the Kyoto protocol (which the US did not sign) has something to

do with what we are seeing Let me start by explaining a fairly strange relationship

A Strange Relationship ndash A Close Tie Between the Amount of Energy

Consumed and the Number of People Employed


Since 1982 the number of people employed in the United States has tended to

move in a similar pattern to the amount of energy consumed When one increases

(or decreases) the other tends to increase (or decrease) In numerical terms R2 =

98

Figure 2 Employment is the total

number employed at non-farm

labor as reported by the US

Census Bureau Energy

consumption is the total amount

of energy of all types consumed

(oil coal natural gas nuclear

wind etc) in British Thermal

Units (Btus) as reported by the

US Energy Information

Administration

I have written recently about the close long-term relationship between energy

consumption and economic growth We know that economic growth is tied to job

creation so it stands to reason that energy consumption would be tied to job

growth1 But I will have to admit that I was surprised by the closeness of the

relationship for the period shown

This close relationship is concerning because if it holds in the future it suggests that

it will be very difficult to reduce energy consumption without a lot of unemployment It

also would seem to suggest that a shortage of energy supplies (as reflected by high

prices) can lead to unemployment

Why Rising Energy Cost (Particularly Oil) Leads to Lower Employment and

Less Energy Consumption

Suppose oil prices rise2 The critical issue is that consumersrsquo incomes do not rise at

the same time Consumersrsquo budgets get squeezed and they cut back on

discretionary spending For example they may go out to restaurants less make

fewer long-distance vacation trips put off buying a new car or contribute less to their

favorite charities Workers in discretionary sectors of the economy tend to get laid

off as a result We have come to know this as part of recession

(The impact of an oil price rise will be worse if other fuel prices such as natural gas


rise as well It will be mitigated if natural gas prices are low as they are in 2012 in

the United States Europe has much higher natural gas prices than the United

States This is big part of the reason why recessionary impacts are now worse in

Europe than the United States)

In the case of high oil prices and lay-offs less energy of all typesndashnot just oilndashis

used Laid-off workers may move in with relatives and thus reduce their living

expenses Each laid-off worker would have used oil to get to their job and this will no

longer be required The jobs experiencing layoffs themselves may have required fuel

use of various types such as heat for buildings fuel for airplanes or electricity used

in making new cars and this is reduced as well

There is also likely to be a link to housing prices Moving up to a more expensive

home is a discretionary expenditure If peoplersquos incomes are squeezed by high oil

prices and some are being laid off there will be less demand for homes as well

This lower demand can be expected to reduce housing prices especially in areas

where commuting distances are longest (and thus oil use for commuting greatest)

There are also likely to be layoffs in the construction industry as there is less

demand for new homes and new buildings of all sorts

As I have mentioned previously James Hamilton (2011) has shown that 10 out of 11

recessions in the United States since World War II were associated with oil price

spikes

High Energy Costs in One Area Tend to Lead to Substitution to Places Where

Energy Costs Are Lower

If there is a possibility of international trade manufacturing and some types of

services will tend to move to areas where costs are lowest Part of these costs are

energy costs A manufacturer with cheap electricity costs will have an advantage

over one with higher electricity costs As energy costs rise (as they have in recent

years) they get to be more important in determining where manufacturing will be

done

Besides direct energy costs wages are another part of the difference in costs from

one part of the world to another Wages tend to be lower in the warmer areas of the

world In part this is because energy from the sun provides much of the needed

energy for heating homes so there is less need for supplemental energy This


means that wages do not need to be as high for a comparable standard of living

If we look at recent world energy consumption we see rapid growth in energy

consumption This pattern is quite different from the US pattern we saw in Figure 2

which was much flatter

Figure 3 World Energy

Consumption based on BPrsquos

2012 Statistical Review of World

Energy

Figure 4 below shows that there has been a striking difference in how energy

consumption has grown in various parts of the world

Figure 4 Energy Consumption

divided among three parts of the

world (1) The combination of

the European Union-27 USA

and Japan (2) The Former

Soviet Union and (3) The Rest

of the World based on data

from BPrsquos 2012 Statistical

Review of World Energy

Figure 4 Energy Consumption divided among three parts of the world (1) The

combination of the European Union-27 USA and Japan (2) The Former Soviet

Union and (3) The Rest of the World based on data from BPrsquos 2012 Statistical


Energy consumption has been quite flat in the grouping of industrialized countries I

show first (European Union-27 USA and Japan) The Former Soviet Union (FSU)

collapsed in 1991 and the consumption for those countries has never recovered

Energy consumption for the ldquoRest of the Worldrdquo has been increasing amazingly

rapidly since 2002 The rest of the world includes China India Bangladesh and

many small countries plus oil exporters such as Saudi Arabia and Mexico Although


I donrsquot break it out separately on Figure 4 the increase in energy consumption since

2002 has been especially marked in Asia

The ldquobendrdquo in the line for ldquoRest of the Worldrdquo energy consumption took place

immediately after China joined the World Trade Organization in December 2001 If

we look at Chinarsquos fuel consumption by itself we see that its huge rise in energy

consumption (Figure 5 below) came mostly from increased coal consumption

starting at that time Oil consumption also increased Nuclear and renewables are

too small to be visible on the chart

Figure 5 Chinarsquos energy

consumption by source based on

BPrsquos Statistical Review of World

Energy data

Other countries especially Asian countries like India also ramped up their energy

consumption at a similar time India also uses coal as its primary fuel with 53 of its

energy consumption in 2011 coming from coal (based on BP 2012 data)

While I donrsquot have employment data for Figure 4 groupings I do have economic

growth data (Real GDP is Gross Domestic Product adjusted to remove effects of

inflation) shown in Figure 6 below

Figure 6 Three-year average real

GDP growth for (1) EU-27 USA

and Japan (2) Former Soviet

Union and (3) Rest of the World

based on data by Angus Maddison

through 2008 and USDA since

then

Figure 6 indicates that the economy of the ldquoRest of Worldrdquo has been growing much

faster than the EU USA and Japan grouping since 2001 In fact the Rest of the

Worldrsquos growth has been much faster for nearly the entire period shown on the


graph Based on the steeper rise in energy consumption of the ldquoRest of Worldrdquo in

Figure 4 compared to the old industrialized countries grouping this might be the

predicted result

One point that many people miss is that the Great Recession of 2007-2009 was to a

significant extent a phenomenon of the older industrialized countries EU USA and

Japan all were hit very hard while the ldquoRest of the Worldrdquo almost sailed along This

can be seen in the energy consumption data on Figure 4 and the economic growth

data on Figure 6 The Rest of the World slowed down a bit but even during that

period its growth rate exceeded the best growth rate of the EU USA and Japan

grouping during the 1984-2011 period (based on Figure 6)

Is it Possible to Change the Relationship between Energy Consumption and Number

Employed

The answer is pretty clearly yes but lower wages may be part of the mix

Letrsquos look at how the United States changed its energy consumption per number of

people employed over time If we go back to the 1949 to 1972 time period we also

see a close relationship ( R2 = 99) between US energy consumption and

employment but it is a different close relationship than since 1982 (shown in Figure

2 near the top of this post)

Figure 7 Graph of amounts similar to

Figure 2 but for the period 1949 to

1972

During the 1949 to 1972 period energy consumption was consistently rising faster

than the number of people employed Oil was cheap as were other energy sources

so not too much thought was given to how efficiently it was used Also as we will

see in Figure 9 wages for workers were rising much more quickly (in inflation-

adjusted terms) than they have been in more recent times


About 1972 we discovered we had a big problem

Figure 8 US crude oil

production based on data of the


Administration

Oil had been our largest source of energy and our own domestic production was

dropping quite rapidly By 1973 the Arabs had discovered our vulnerability and the

1973 Oil Embargo began leading to a sharp rise in gasoline prices The US Federal

Government regulated oil prices from 1973 to 1981 At the same time a major effort

was made to switch oil use to another fuel whenever possible Electricity generation

was switched to include more coal and nuclear (based on EIA data) and to remove

production using oil There was great demand for more fuel-efficient cars leading to

the import of cars from Japan (a country that had been making smaller cars for

years) and the down-sizing of US cars

Figure 9 Employment and

Energy Consumption using data

similar to that used in Figure 2

and 7 but for the 1972-1982

time period

As a result the period 1972-1982 was a time when energy consumption was

relatively flat but employment rose A big part of this rise reflected the addition of

women who had not previously worked outside of the home to the work force With

the higher price of oil salaries did not go as far so having another family member

working was helpful According to Toosi the percentage of women who were part of


the workforce rose from 433 in 1970 to 511 1980 Wages of women were lower

than those of men (Figure 10 below) helping to hold down the average wage

Figure 10 US Median Wages

separately for males and females

in 2010$ Based on Census

Historical Income Tables People

Table P5 ndash Regions by Median

Income and Sex

Also the wages of lower-paid men stopped rising in real (inflation-adjusted) terms

(The wages shown are Figure 5 are median wagesndash50 of wage-earners earn more

than that amount and 50 year earn less) Wages of high-paid workers such as

business executives and physicians (not shown on the chart) were still rising

It is hard to tell what the relative impacts were of the many changes that took place

in the 1972 to 1982 time period Clearly lower average wages (with more women in

the work force) and flatter wages were a big part of the change But there were other

changes as well including more imported manufactured goods changes to fuels

other than oil and more efficient use of oil all contributing to the differences we see

between Figure 2 and Figure 7 The US became a net importer during this period as

well and thus began running up external debt (based on US Bureau of Economic

Analysis data)

Comparing energy-employment patterns in Figure 2 and Figure 7 may be confusing

for some I show the change in the relationship in another way in Figure 11 Here I

show (energy consumptionnumber of people employed) It shows that energy

consumption per employed person was rising prior to 1972 came down for a variety

of reasons in the 1972-1982 period and is now pretty close to flat (decreasing

slightly)


Figure 11 Total US energy consumption

divided by number employed Energy

consumption from US EIA number of

non-farm workers from US Bureau of

Labor Statistics

On a positive note one factor that has helped keep quality of life up is increased

efficiency in using energy Homes are better insulated now Home heating and

cooling units are more efficient Businesses have worked hard to keep energy use

down because energy is a major factor in their cost structure For example we read

about airlines retiring their less fuel-efficient jets Thus even though energy

consumption divided by number of workers is flat or trending slightly downward our

standard of living has risen considerably since 1970 or 1980

Another thing that has helped improve living standards is the amount of

manufactured goods we are now importing from China and other countries around

the world especially Asian countries The amount of debt we need to keep amassing

to buy all of the goods we buy abroad is a problem however because we are not

earning enough to pay the full amount of these goods If we could count on

economic growth forever perhaps we could simply ldquogrowrdquo out of this debt but this

seems increasingly unlikely for reasons I will discuss in later posts

The United States Hit Peak Percentage Employed in 2000

If we look at the percentage of the US population who have jobs outside the home

(or self-employed farm workers) the trend is quite alarming (Figure 12)

Figure 12 US Number Employed

Population where US Number Employed

is Total Non_Farm Workers from Current

Employment Statistics of the Bureau of

Labor Statistics and Population is US

Resident Population from the US

Census (This includes children and

others not usually in the labor force)

2012 is a partial year estimate


While the percentage of people with jobs was rising between 1960 and 2000 in

recent years it has dropped The recent drop seems to be at least in part related to

the shift in energy consumption growth (and jobs) to the ldquoRest of the Worldrdquo which

includes China India and many other developing countries and oil exporting

countries Jobs that the United States would have had seem to have been shifted

elsewhere

The percentage of US population employed outside the home or farm has grown for

a very long time The increase started in the 1800s as the use of coal allowed a

reduction to the number of workers needed in farming because it allowed more use

of metals enabled the use of electricity and helped make farmers more efficient

See my post The Long-Term Tie Between Energy Supply Population and the

Economy See also Smil (1994) and Lebergott (1966) Later women increasingly

joined the work force especially after World War II

The combination of rising energy costs (especially oil) and increased international

trade gave China and other Far Eastern countries an opportunity to ramp up their

manufacturing and service industries (call centers in India for example) Jobs

migrated to China and to other countries with low energy costs (thanks to lots of coal

in the mix) and low costs of living thanks in part to better solar heating

There had always been some foreign trade but the amount of trade increased in the

late 1970s when we started importing smaller cars from Japan as well as more oil

It increased again later especially after China entered the World Trade Organization

in late 2001 US imports of goods and services increased from $54 billion in 1970 to

$291 billion in 1980 to $616 billion in 1990 to $14 trillion in 2000 and to $27 trillion

in 2011 (US Bureau of Economic Analysis)

Other Observations

Role of World Trade Figure 4 suggests that world trade makes a huge difference in

the amount of energy consumed If we truly wanted to reduce our energy

consumption (which I doubt world leaders are really interested in) we could reduce

world trade through taxes on imports or some other mechanism The number of

people employed would likely drop as well although perhaps part of the difference

could be made up by greater efficiency and by lower wages for individual workers

The important role of world trade also brings up another issue If world trade were


for some reason interrupted or seriously scaled back this would likely significantly

reduce energy consumption (and employment) around the world

Energy Consumption vs Number of Jobs Patterns by Country will Vary I have shown

US data Patterns in other countries are likely to vary in part because of the different

specializations (amount of services compared to manufacturing for example) of

different countries and different wage levels in different countries

Good Intentions Arenrsquot Always Helpful The Kyoto Protocol with respect to Climate

Change was adopted in 1997 Figure 4 and Figure 5 suggest that adding China to

the World Trade Organization had far more impact and in the opposite direction In

fact additional carbon taxes on goods that require high energy input may have

encouraged competition in countries without such controls Furthermore reduced oil

consumption through say higher taxes on gasoline left more oil on the world

market to be used by developing countries (This is related to ldquoinelastic supplyrdquo of

oil Reducing demand in one area leaves more supply for other areas)

Figure 13 Actual world carbon

dioxide emissions from fossil

fuels as shown in BPrsquos 2012

Statistical Review of World

Energy Fitted line is expected

trend in emissions based on

actual trend in emissions from

1987-1997 equal to about

10 per year

Figure 13 shows that while Kyoto Protocol may have helped reduce emissions in

some countries world carbon dioxide emissions have grown more than what would

have been expected based on the 1987-1997 trend in emissions If the Kyoto

Protocol influenced Chinarsquos and the rest of Asiarsquos decision to ramp up exports this

decision would have indirectly affected job availability in the United States even if

the US was not a signer of the Protocol

The ldquoSmaller Batchrdquo Issue If there is not enough energy to go around at prices

people can afford to pay recession seems to be naturersquos way of fixing the situation I

compare the situation to a chemical formula or to a cake recipe If one necessary

ingredient is in short supply the economy behaves as if it is making a ldquosmaller

batchrdquo It contracts in a way that leaves out those who were most marginal to begin


withndashsuch as employees of discretionary industries and borrowers who could only

barely make payments on loans (subprime borrowers) and countries with the

highest energy costs Employment is reduced and unemployed people tend to move

in with friends or their family to cut expenses This reduces energy consumption

Increased Wage Dispersion May Reflect Another of Naturersquos Coping Mechanisms In

the animal kingdom any ldquoK-selected speciesrdquo such as a dog or cats or primates

(probably including humans) has an inborn instinct toward hierarchical behavior

The manifestation of this instinct tends to be greater as there is greater crowding

and greater competition for resources (Dilworth 2009) The intent in the animal

kingdom is survival of the fittest with those at the bottom of the hierarchy being

starved out if there is not enough to go around

It is striking to me that since the mid-1970s we have seen what could perhaps be

interpreted as increased hierarchical behavior in humans and corporations Wage

dispersion has tended to become greater since the mid-1970s when we started

encountering energy supply problems We have also seen the growth of international

businesses These large businesses have been increasingly favorably taxed

because they can choose tax havens around the world to incorporate All of these

changes tend to concentrate wealth at the top in large companies and in the wealth

of high paid workers Perhaps all of this is a coincidence but the timing is striking

Increased use of part-time and contract jobs might be considered a trend in this

direction as well Job sharing has been proposed as a way of dealing with having an

inadequate number of jobs in the older industrialized countries but this tends to act

in the same way (pushes the wages of lower-paid workers down while leaving the

top wages untouched)

Economic Models Economic models seem not to take into account the very

substantial shift in percentage of the population employed Part of economic growth

on the ldquoway uprdquo was growth in the percentage of people employed If economists

miss this change as well as the fact that the percentage now seems to be headed

down their models will be wrong Expected economic growth may disappear

The World War II baby boom generation is now reaching retirement age This

change will tend to push the percentage of population employed down further all

other things being equal


Impact on Governments If fewer people are employed this is a problem for

governments around the world Governments in Europe are particularly affected

now partly because of the generous benefits they offer The US budget deficit is

very much related to this issue as well I will write more about debt and government

funding in another post

Notes

[1] The idea of looking at employment in relationship to the economy after reading

Mario Giampietro and Kozo Mayumirsquos book The Biofuel Delusion The Fallacy of

Large-Scale Agro-Biofuel Production Earthscan 2009

[2] While total energy costs are important individual energy costs such as gasoline

cost are important as well because there is little short-term substitutability across

sectors For example coal is not an option for running todayrsquos gasoline-powered

cars and public transport is not an option in most of the US If there is a long enough

lead-time and citizens can afford the transition substitutions might be made but it is

not something we can count very much in the short term

View more quality content from Our Finite World


Oil energy dependence and energy transition

Written by Andrew Mckillop from OilVoice

Energy analysts and commentators are steadily shifting towards a common

understanding that global energy since 2008 is very different from pre-2008 and will

continue diverging To be sure declining energy intensity of the economy falling oil

demand rapid growth of renewable energy and other facets of energy transition are

often dismissed as only driven by crisis and recession Using less energy

developing new forms and types of energy changing consumer perceptions of

energy - all of these can be brushed aside as only crisis phenomena Following that

logic energy demand led by oil demand will bounce back when or if the economy

bounces back - at some unspecified future date

In fact experience since 2008 both in OECD countries and Emerging economies

shows one mega trend energy demand and especially oil demand is slowing even

faster than the economy slows down Another major change is the range and types

of new energy and energy saving options are growing very fast

These simple facts are however a complex reality with a large number of

counterintuitive spinoffs one of them being the plight of the renewable energy

industry in Europe and elsewhere Another is the little remarked or analyzed but

rapid slide in the fortunes of Big Energy corporations led by the historic oil majors

from Exxon Mobil and Shell to BP and Total or ENI Yet another is the increasingly

uncertain and financially unsustainable situation of many large power production and

supply utility companies especially in Europe but again also elsewhere

DEINDUSTRIALISATION AND ENERGY

A recent piece on The Demise of European Refineries by Maxime Lambert covers

one aspect of these themes httpwwwenergypolicyblogcom20120506the-

demise-of-european-refineries

Underlying the demise of Europes refining industries where today all the signals


are red and the industry is out of synch with all main parameters (crude supply and

types product demand by type volumes needed environmental costs financial

performance etc) is European de-industrialisation A less industrial society needs

less energy - especially petroleum even if the imported industrial goods used and

consumed in that postindustrial society are energy intense and oil intense

Staying with the example of European oil refining we have to ask why the industry

has suffered from blatant overcapacity not for a few years but decades One

reason is that each economic recession crisis or apparent crisis is imagined to be

transient with no change of underlying infrastructures or social and economic

superstructures that is financial economic and social expectations investment (and

divestment) intentions or major changes in energy policy science and technology

The static world of technocratic planning and political mamagement is in fact a flat

world hypothesis where nothing changes What we can call pre-Copernican

planning and management

Change can and does occur across the spectrum At certain times especially during

recessions the pace of change often accelerates even if the economy and society

shrink or retreat into inertia and anomie The hidden recession of the long period

since at least 2005 measured by state and corporate debt growth on an almost

worldwide scale has only become fully acknowledged and recognized - at least by

mass media and politicians - as happening from 2008 signalled by events like the

Lehman Bros collapse the US subprime rout and the Eurozone crisis Global and

regional energy demand as an energy-economic indicator however shows that

even by 2006 EU27 oil demand was starting to fall In 2012 European oil demand is

in its sixth consecutive year of decline To be sure the hardest hit countries by the

financial and economic crisis the PIIGS show the most dramatic declines of oil

consumption often in double digit percentage numbers since 2006

What we also find is that industrial output and industrial capacity especially heavier

engineering and virgin metals all show consistent and long term decline of activity

and output in nearly all European countries - and in many other OECD countries

The de-industrialisation trend was not waiting to happen in 2008 but was already

well entrenched the process was accelerated by recession and crisis only The

supporting energy evidence for this argument is massive electricity demand growth

for example has stagnated in nearly all OECD countries not for a few years but for

a decade or longer Several countries again in Europe show an ncreasingly

consistent trend of annual declines in total electricity demand Outside Europe this


trend is active in other OECD countries but the real surprise is that recent Chinese

national data shows that in July 2011-July 2012 Chinas electricity demand growth

was zero this event producing a flurry of comments by economic analysts

worldwide as to whether this was a bellwether trend or not

See for example httpwwwenergypolicyblogcom20120923energy-demand-

growth-is-passe

Under any hypothesis it shows firstly that Chinas economy is slowing rapidly and

that secondly the policy of reducing the energy and electricity-intensity of the

economy is moving ahead very fast

WHERE WILL ENERGY DEMAND GROWTH COME FROM

Until recent years even 2008 the received wisdom was that Asian locomotive

economic growth would continue driving the global economy entraining constant

energy demand growth including oil This theory has already been disproved by

economic reality especially since 2008 Chinese and Indian economic growth are

declining and their economies are becoming more energy efficient or less energy-

intense and the decline of their economic growth is being accelerated by the

recession in the OECD countries Put another way Asian economic growth has not

prevented recession in the US Europe and Japan but recession in OECD countries

is slowing down the Asian locomotive which itself is using less coal and oil (if not

gas) and becoming less energy-intensive per unit of GDP

For Europe this sets new and unexpected challenges for the climate-energy

package and member state REAPs (renewable energy action plans) Taking simply

offshore windpower development the EU27 + Norway are set on a course of

developing 140 000 MW of offshore wind capacity by about 2030 This is about 15

of Europes entire installed electric power generating capacity as of Dec 2011 in the

event of continuing falls in European power demand will it be necessary to develop

this new power capacity If it is developed what will be its financial and economic

performance

The fallback or default argument is that non-OECD and non-Asian countries

accounting for roughly one-half the worlds population of 7 billion at present will

show Asian-type rapid industrial growth and urbanization driving up their energy

demand including oil demand Against this argument however there are a large


number of counter-arguments In particular this concerns Africa with a present total

population of around 105 billion almost exactly the same as the OECDs population

but growing relatively rapidly although demographic transition to smaller families and

slower population growth is operating in Africa as in all other regions One

unexpected energy transition especially powerful since 2008 is the pace of energy

discovery in Africa including large oil finds in many countries and vast stranded gas

finds in east Africa Already a large oil exporter relative to its small oil consumption

dictated by poverty Africa has the fossil energy resources to pursue a completely

conventional energy-intense economic development trajectory if it wants to

Learning curve effects and technology changes in the energy domain shown by the

impressive pace of renewable energy development and constant reduction in unit

energy costs from renewable energy sources and systems may heavily modify the

current received wisdom that even if Asian economies decrease their energy

intensity and increase their use of renewable and alternate energy Africa will take up

the slack and compensate this decline in energy demand growth Opposing this

fallback argument that energy shortage penury and high prices are sure and

certain African economic development goals most surely include agriculture and

food production growth rather than industrialisation made more rational or

unavoidable by increasing food supply problems and the worlds large - and

increasing - industrial overcapacity in an increasing number of sectors The car

industry and shipbuilding industry consumer electronics cellphones and even the

aviation industry are all examples The woefully neglected food sector will almost

certainly become at least as important as the oil industry has been until very

recently for the developed countries including the OECD group

This region-by-region analysis is itself underlain by key assumptions some of which

are now openly questionable in particular this concerns the materials intensity of the

economy its transport intensity and the energy intensity of materials and transport

as well as related components of economic activity such as urbanization rates and

types of urban development All of these components are subject to technology

change as well as demand change driven by social cultural and demographic

change Taking a simple example of national car fleets many OECD countries are

at saturation levels of 500 - 700 cars per 1000 inhabitants in countries with

sometimes rapid ageing of the population the supply of mobility services is already

replacing the growth of physical car numbers with a downward impact on per capita

energy needs for transport and transport services


THE POST CRISIS PERIOD TO 2015

Given the massive changes in world energy that were compressed into the 2008-

2012 period we can expect or accept the potential for similar large changes through

2012-2015

These will almost certainly include a large fall in oil prices driven by the most basic

energy-economic factors that are possible oil is extremely overpriced relative to all

other energy sources Long treated as being impossible to substitute but using IEA

data the OECD group obtained 526 of its energy from oil in 1973 and 36 of its

energy from oil in 2009 Outside the OECD group oil dependence is even lower in

almost all countries and regions for example supplying about 21 of Chinas

primary energy Relative to the approximate 475 million barrels a day demand for

the world petrochemicals industry where oil really is difficult to substitute world

proven oil reserves are sufficient to cover about 725 years of current petrochemical

industry demand

Now declining interest in mitigating the claimed warming effects of the supposed

killer gas CO2 will almost certainly not prevent renewable energy development

from powering ahead because in many cases notably windpower and solar power

the fuel source is completely zero cost The certain growth of global gas supplies

will enable this cleaner and abundant fuel to replace oil and even coal current US

natural gas prices (about $250 per million BTU on average in Q2 2012) price gas at

about $17 per barrel equivalent and through 2011-2012 to date US coal

consumption for power production has declined by about 25 Present gas prices in

Europe and Asia can only decline if not to present US price levels underscoring the

policy choices and goals in Europe of developing or not developing shale gas

resources cheap gas can and does substiute coal as well as oil

By 2015 many national policies and programmes for energy saving and

development of non-fossil energy sources and systems will be attaining maturity

even if oil prices have declined probably to the oil industry EampP (exploration and

production) investment spending threshold price of around $75 per barrel Removing

high priced oil from the global energy equation apart from its beneficial effects on

global geopolitical relations and consumer confidence will also help rationalize

national and regional energy policies and programmes

In the past decade these policies and programmes have often been dominated and


dictated by the fear of $150 oil as well as irrational fears of global warming

apocalypse leading to unrealistic and uneconomic energy project choices With

generally lower energy and the removal of depeltion and scarcity fear energy policy

making and programme choices can become more rational

The major unknown and a cause of realistic fear is the state of the global regional

and national economies Continuing decline of economic activity is not impossible If

this decline continues it may attain threshold tipping points for major long-term

structural change of the economy towards the degrowth economy In regions such

as Europe this is a decreasingly irrational or increasingly likely hypothesis with

energy implications which will certainly be massive

Article by Andrew Mckillop

View more quality content from OilVoice

Doing more with dataKuala Lumpur October 24-25 2012

Finding Petroleum Digital Energy Journal is running 2 one day conferences in Kuala Lumpur Malaysia on October 24 and 25 on doing more with drilling and subsurface data

These 2 events will present the most exciting new technology to help manage and work with all aspects of data in the upstream all and gas industry

The conferences are for people who want to learn about new ideas and new technologies to make their data work harder to improve efficiency and safety of drilling ability to find new reservoirs and extend existing ones and maximise production

The event is scheduled to co-incide with the Energistics National Data Repositories conference in KL on October 21-24

Attendance is free - register now to secure your place

Reserve your place now at FindingPetroleumcom

October 24 - Doing more with with drilling data

October 25 am - Doing more with subsurface data

October 25 pm - Getting data tools implemented faster

The aim is

(i) to make it easier for people working in KL oil and gas companies and service companies to find out more about the latest new technology to help manage data and

(ii) to provide technology companies attending the National Data Repositories event with a chance to meet a local audience during the same trip

The events will be free to attend

For days 1 and 2 we will look for financial contributions from speakers - in the range 14600 MYR USD 4760 GBP 3000 for a morning slot and MYR 9750 USD 3200 GBP 2000 for an afternoon slot

Sponsorship opportunities are also available

For enquiries about sponsorship and speaking please contact our sales manager John Finder on +44 208 150 5292 e-mail jfinderonlymediacouk


Regulation of all of the above energy to cost 20x more on public lands

Written by Gary Hunt from TCLabz

More than 96 of the domestic energy production growth from shales has taken

place on private lands safely out of the reach of the Federal government bureaucrats

and regulators That energy production growth is transforming Americarsquos energy

future by increasing supply reliability and driving down the price of natural gas from

more than $13 per MMBTU to less than $3 per MMBTU in a period of less than five

years


Meanwhile on public lands production has actually slowed as the Department of

Interior and its Bureau of Land Management (BLM) press on with extensive

environment studies and new regulations even as the President professes support

for an all of the above energy strategy

The Federal government announced proposed rules on fracking on public lands in

May 2012 (43 CFR 31600-3) and has received more than 2000 comments on those

rules by the September 10 2012 deadline Interior Secretary Ken Salazar said in

May he hoped to issue a final rule by the end of 2012 likely after the Presidential

election

According to a study by John Dunham and Associates the total cost of the proposed

Federal rules will be about $15 billion to $162 billion a year or about $235839 per

well to satisfy the requirements on chemicals disclosure and certification that the well

is properly isolated to prevent leaks that might contaminate groundwater

This figure compares to a BLM estimate of $11833 per wellmdasha difference of more

than 20 times All that cost for rules that the oil and gas industry and the states of

Colorado and Wyoming claim are unnecessary unreasonable and required EampP

firms to take actions that no state currently regulating fracking for oil and natural gas

production has required

The Dunham Study disputes the BLM claim that the proposed regulations are not

major changes from existing rules citing the following examples of how the new rules

add substantial and costly new requirements for EampP activities on federal and Indian

lands

1 Mandates additional information and meet new requirements than currently

required for all well stimulation (completion) activity when applying for a permit

to drill (APD)

2 Requires a similar separate application must be filed prior to additional drilling

on an existing well

3 Requires BLM review and verification the additional drilling requirements at

each permit stage slowing down the process and driving up the cost of idle

equipment and crews


4 Requires additional cement bond logs be submitted to BLM for review and

approval prior to completing the well again idling equipment and crews and

driving up costs

5 Requires reporting specific source of water used in well completion

operations

6 Requires submittal of a detailed engineering design and other information

related to well stimulation operations to the BLM for approval These detailed

studies end up becoming the basis for environmental litigation designed to

challenge the review process and thus slow to stop EampP activities

7 Requires detailed information about how all recovered fluids from well drilling

will be captured and disposed consistent with the rules

8 Requires a successful mechanical integrity test before beginning any well

drilling

9 Requires receipts be supplied to BLM to validate that recovered fluids are

disposed of in a proper manner

Dunham also says that by adding additional requirements for new drilling activities at

existing wells many of the current 90452 wells on Federal leases will find greatly

increased costs over time Dunham calculated its estimates of the cost of these new

fracking rules on public lands by examining data from the thirteen state regulatory

authorities in the Western states covered by the study Dunham found about 12300

oil wells and 14100 gas wells currently in the process of receiving a permit or

permitted but not yet drilled

As you can imagine private energy developers are wondering if the shale drilling

opportunities on public landsmdashsubstantial as they are on the 38 million acres leased

by the US Government for energy development mdashare worth the aggravation Now a

private study of the implications and costs of the proposed Federal regulations and

environmental requirements to gain access to public lands has added up the costs It

is not a good news story

View more quality content from TCLabz


American shale EampP growth is creating a global energy independence transformation


The growth of oil and gas exploration in shales begun in North America is setting off

a global race for shale EampP development and threatens to turn the old conventional

energy order on its head

Based primarily on the phenomenal growth of domestic energy production from

shale EampP in the United States the world is waking up to realize that we are not

running out of oil or natural gas

As in every revolution there are both opportunities and risks Here in America our

politicians are promising energy independence from development of domestic

resources This more accurately should be interpreted as an end to energy

dependence upon OPEC for oil imports by substituting a more broadly competitive

global marketplace with many suppliers Energy independence is more accurately

energy inter-dependence as the world adapts to the concept of truly competitive

energy markets

SOURCE US EIA


The shale revolution is underway and every nation wants part of the action but

success threatens to diminish the market power of OPEC making global energy

markets truly interdependent and highly competitive The growth potential and wide

geographic distribution of technically recoverable oil and gas resources from

unconventional shale deposits around the world is setting the stage for an EampP rush

to develop those resources

For China the potential from a shale gas revolution is profound US EIA

estimates that China has more than 1275 trillion cubic feet (tcf) of technically

recoverable natural gas compared to an estimate for the US of 862 tcf

Developing this domestically available shale potential can assure that China

has the secure energy resources to sustain its economic growth and better

yet more widely distribute the benefits of the growth into the rural areas of the

country

For Israel and other nations in the Eastern Mediterranean a 2010 USGS

study of the discovered oil potential off the coast of Israel Syria Lebanon and

Gaza suggest that there may be as much as 17 billion barrels of recoverable

oil and 122 trillion cubic feet of natural gas and 5 billion barrels of natural gas

liquids If developed that is enough resource to make each of these nations or

prospective nations energy independent and likely net exporters This of

course also adds to the ongoing regional tension with new opportunities for

energy development disputes

For nations like those who comprise OPEC plus Russia Iran and Venezuela

the shale revolution potential is terrifying because it undermines the cartels

they have developed and erodes their pricing power with profoundly adverse

effects on their economies Russia is particularly threatened by US-backed

unconventional gas technology as evidenced by their support for lsquofear-

mongeringrsquo concerns on environmental and health problems related to

hydraulic fracturing-related practices Russia also is unfamiliar with US

fracking technology and is keen on trying to understand more regarding it and

its potential for expanding Russian energy resources

North America is the center of the shale revolution leveraging American technology

in perfecting 3D seismic technologies for EampP discovery and assessment horizontal

drilling to gain access to the resource and hydraulic fracturing to release the tight oil

and gas and allow economic recovery A debate about how America should take

advantage of this shale EampP opportunity is both timely and prudent in this


presidential election

America has Always Had plenty of Oil but Not the Will to Produce It This shale oil

and gas production growth in North America is in addition to the already substantial

conventional oil and gas resources in place and being tapped to meet American

energy needs We have never lacked for energy resources What we lack so far is

the political will to put them to full productive use Today our desperate need to get

the Us economy growing again creating jobs is changing that for the better

The USGS estimates the technically recoverable conventional petroleum resources

from 70 locations not counting Federal offshore locations total more than 32 billion

barrels of crude oil 291 trillion cubic feet of conventional natural gas deposits and

more than 10 billion barrels of natural gas liquids

Gaining access to American technology skills equipment and expertise is making

the United States and Canada a magnet for foreign direct investment in the energy

sector and the vendors that serve it Developing abundant reliable low cost access

to energy resources in the US will revitalize Americanrsquos industrial base and bring

strategic industries manufacturing and jobs home after a decade of outsourcing We

can accelerate that growth and the repatriation of jobs by making changes in our tax


laws regulatory environment and business-friendly attitudes to welcome the foreign

direct investment and more importantly get American companies to bring their

production back home


rpsgroupcomenergy

Health Safety Environment and Risk Management

RPS Energy is a global multi-disciplinary consultancy providing integrated technical commercial and project management support services in the fields of geoscience engineering and HSampE

ContactJames Blanchard T +44 (0) 20 7280 3200 E BlanchardJrpsgroupcom


Issue 7 ndash October 2012

OilVoice Acorn House 381 Midsummer Blvd Milton Keynes MK9 3HP Tel +44 208 123 2237 Email pressoilvoicecom Skype oilvoicetalk Editor James Allen Email jamesoilvoicecom Sales Gabby Kotosoba Email gabbyoilvoicecom Manager Technical Director Adam Marmaras Email adamoilvoicecom Social Network

Facebook

Twitter

Google+

Linked In

Read on your iPad You can open PDF documents such as a PDF attached to an email with iBooks

Adam Marmaras


Welcome to the 7th Edition of the

OilVoice Magazine

Having the magazine in a PDF only

format is a great way to distribute the

editions No printing costs no shipping

costs - just click and read But there

are a number of people who prefer

having a printed magazine in their

hands The beloved late Ray

Bradbury summed it up best ldquoA

computer does not smell if a book is

new it smells great If a book is old it

smells even betterrdquo Im not claiming

that a printed version of the OilVoice

magazine will have an enchanting

bouquet but I think you get the idea

Were currently investigating the

logistics of getting a few copies printed

and shipped If your business thinks it

would like a few printed copies sent to

it It will help us please let us know

with our plans

As always we have advertising

availability in the magazine Get in

touch with Gabby who will be happy to

talk you through our reasonable rates

Adam Marmaras


OilVoice


Contents



5







29




53


Featured Authors

Andrew MacKillop



Keith Schaefer



David Bamford

Finding Petroleum


Gail Tverberg

Our Finite World


Kurt Cobb

Resource Insights


Gary Hunt

TCLabz



Wolf Richter

Testosterone Pit


Jobs


Advertise


Noticeboard


Free Membership











































Outlook 2010







within a country




































(Year)

Reserves in Barrels

(Year)

Percentage

Increase





United Arab






















fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy





Contents



5







29




53


Featured Authors

Andrew MacKillop



Keith Schaefer



David Bamford

Finding Petroleum


Gail Tverberg

Our Finite World


Kurt Cobb

Resource Insights


Gary Hunt

TCLabz



Wolf Richter

Testosterone Pit


Jobs


Advertise


Noticeboard


Free Membership











































Outlook 2010







within a country




































(Year)

Reserves in Barrels

(Year)

Percentage

Increase





United Arab






















fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy





Featured Authors

Andrew MacKillop



Keith Schaefer



David Bamford

Finding Petroleum


Gail Tverberg

Our Finite World


Kurt Cobb

Resource Insights


Gary Hunt

TCLabz



Wolf Richter

Testosterone Pit


Jobs


Advertise


Noticeboard


Free Membership











































Outlook 2010







within a country




































(Year)

Reserves in Barrels

(Year)

Percentage

Increase





United Arab






















fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy





Wolf Richter

Testosterone Pit


Jobs


Advertise


Noticeboard


Free Membership











































Outlook 2010







within a country




































(Year)

Reserves in Barrels

(Year)

Percentage

Increase





United Arab






















fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy













































Outlook 2010







within a country




































(Year)

Reserves in Barrels

(Year)

Percentage

Increase





United Arab






















fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy
































(Year)

Reserves in Barrels

(Year)

Percentage

Increase





United Arab






















fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy























fields each year











way of verifying it
































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy































manipulate theirs











public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy







public









dubious information

















immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy













immediately



fracking ban







percent







short years ago








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy








of date shortly









consensus






about



















































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy












































pump









drinking it




exploration in 2008

























by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy





















by the Lander













future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy
















future


FMC-Technologies

Schlumberger



Tenaris SA

Halliburton







in our industry



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy



































































































existing oil fields








industry














oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy











oil substitutes














dropped to zero







































businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy




























businesses


















quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy












quickly as we can








































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy





































1985 levels




reported by the US

Bureau of Labor




Census Bureau












98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy








98











Administration







































spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy
























spikes








done













Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy












Energy


































Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy
















Energy data













then







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy







predicted result









Employed









1972











Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy









Administration














time period














Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy












Income and Sex












Analysis data)






slightly)






Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy









Labor Statistics

































elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy










elsewhere



















Other Observations































10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy



























10 per year



















































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy











































Notes

















































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy










































































growth-is-passe






















performance













































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy












































2012-2015










industry demand











































The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy



























The aim is















years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy












years










election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy













election













lands



to drill (APD)


on an existing well



equipment and crews




driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy







driving up costs


operations








drilling
































energy markets

SOURCE US EIA














country














































rpsgroupcomenergy



















energy markets

SOURCE US EIA














country














































rpsgroupcomenergy

















country














































rpsgroupcomenergy



























rpsgroupcomenergy




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