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Alt Text

Draw In Crude Inventories Lifts Oil Prices

Oil prices reversed course on…

Surprising Numbers From Texas RRC Oil & Gas Report

Texas has released Oil & Gas Production Data Query with its (incomplete) production numbers for December 2014. The numbers were quite surprising.

The last data for all Texas data is December 2014. The EIA data is through November. The Oil data is in barrels per day.

TexasRRCEIATotal

Though the data is incomplete, we can still get some idea what oil production was in Texas in December. Total, C+C incomplete, production numbers for December were up over 133,000 barrels per day over the November incomplete data. Of course this number will change but it is very significant. Why would Texas production numbers jump to over 2.5 times their usual number in December?

TexasRRCCrudeOnly

Texas crude only was up 109.4 thousand barrels per day according to the Texas RRC.

TexasRRCCondensate

And the rest of the C+C increase came from condensate, up 23.9 thousand barrels per day. Related: Is Oil Returning To $100 Or Dropping To $10?

All gas data is in thousand cubic feet with the last data point December 2014.

TexasRRCTotalGas

Total Texas gas production was up just 619,000 thousand cubic feet according to the incomplete RRC data.

TexasRRCGasWellGas

Gas well gas was up 267,000 thousand cubic feet on incomplete data.

TexasRRCAssociatedGas

Texas Associated gas was up 352,000 thousand cubic feet. This is a huge jump for associated gas.

Forget EROEI, ROI is the important thing.

Commenters on this blog often talk about EROEI, Energy Return on Energy Investment. It was one of the very first energy related acronyms I encountered when I first entered the peak oil fray almost 15 years ago. It is a valid concept and should be of concern to everyone. However… as far as the peaking of world oil production is concerned, it is far more of a confusion factor than anything else.

EROEI is extremely difficult to calculate. What do you count? Human labor? Only the calories actually expended by human labor should be counted. But how do you figure that out? Of course all fuel and electricity should be counted but what about the equipment? The energy expended in manufacturing the equipment should be counted. But that would be an almost impossible task because the energy expended in the manufacture of drilling and other oil production equipment must be spread out over the life of that equipment. Related: Despite The Risks Oil Shipments By Rail Have To Continue

Then there is the downstream energy expended, that is the transporting of the raw product, the processing energy and then the delivery energy expended. And if you are going to count the downstream energy, and you must, then you must figure the energy required in manufacturing of the refinery, the pipeline, the trucks, the gasoline and diesel pumps, and even the calories expended by the workers involved in all these activities.

The total energy required in all these processes is almost impossible to calculate and the exact figure would always be unknown.

What really matters, the real important entity and what is far more easy to calculate is ROI, Return on Investment. As long as ROI is strong rig counts rise and every effort is made to increase production. But if ROI drops then everything slows down. If ROI goes negative then rig counts drop and a drop in production soon follows.

Return on investment is everything. ROI is the determining factor, not just for the production of oil and gas but for the production of everything. Even the state of the economy rises and falls with what kind of return investors get on their investment.

For every action there is a reaction. When the ROI of oil production drops, production drops, then the price rises until the ROI on oil production is positive again. But this action also has a reaction. When the price of oil goes up the price of producing other commodities goes up, the manufacturing cost of equipment goes up and the delivery costs of everything goes up. All this causes the ROI of almost every other type of investment to fall. But just like in the oil patch, the price of everything else must rise until the ROI of all other investments becomes positive.

However as the price of everything else rises then the price of everything in the oil price rises also, causing oil patch ROI to drop. So the price of oil must rise higher. This in turn causes the price of everything else to, again, rise higher.

As the real cost of oil recovery and production rises the price of everything else must rise to compensate. But if that happens then nothing is gained by raising the price of oil because the price of everything else rises in an equal amount. It becomes a wash. The oil producers would still be losing money.

In order for a rise in oil prices to benefit the producers the price of, at least some things, must not rise with the price of oil. And that would most likely be wages, or the people’s ability to pay higher prices. That in turn would cause ROI on almost everything else to drop… and the economy to crash.

Are the Alberta oil sands going bust?

Every day I see another news article about the Alberta oil sands problems.

Oil slump puts diversification back in view for Alberta Premier Jim Prentice

Under pressure in the Alberta oil patch

Canada’s Oil Industry ‘In Near-Death Condition,’ Russian State-Owned Rosneft Says

CNRL’s Steve Laut Says Oilsands Face ‘Death Spiral’ If They Don’t Cut Costs

We all know what is happening in the US oil patch as well as a lot of other oil patches around the world but from the rash of news articles we have been seeing lately it looks like things in Canada are getting desperate.

And I had to post this. A coal company is financing climate change denial research.

Documents Reveal Fossil Fuel Fingerprints on Contrarian Climate Research

After finishing a study contending that solar activity is increasing global warming, scientist Willie Soon of the Harvard-Smithsonian Center for Astrophysics reported his news to a utility company that was a major funder of his work.

Scientist falsifying research papers on “risks of global warming and climate change” funded by energy industry

It was revealed that he has received an exceeding $1.2 million over the last 10 years from the fossil-fuel industry without bothering to reveal the conflict of interest in 8 out of 11 of his scientific papers that has been published from 2008. There was violation of ethical regulations in all these papers.

In has been proved through these documents that he has delivered these papers in return for their money and this same goes for describing the testimony which was arranged for the Congress.

By Ron Patterson of http://peakoilbarrel.com/ 

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