Wednesday, April 18, 2012

World's Ten Most Resource-Rich Countries

No. 1 is Russia with an estimated $75.7 trillion of natural resources, according to this list from 24/7 Wall Street, and the U.S. is No. 2 with $45 trillion. 

97 Comments:

At 4/18/2012 6:23 PM, Blogger Benjamin said...

Shows how poor Russian leadership has been, for generations.

Putin is a monkey-thug punk. I hope that nation recover from its vodka-induced stupor, and puts Putin in the hoosegow.

 
At 4/18/2012 7:31 PM, Blogger Larry G said...

5. Iran
Oil reserves (value): 136.2 billion barrels

4. Canada
Oil reserves (value): 178.1 billion barrels

3. Saudi Arabia
Oil reserves (value): 266.7 billion barrels

2. United States
Oil reserves (value):
------->>>>>>>>not in top 10

1. Russia
Oil reserves (value): 60 billion barrels

 
At 4/18/2012 7:31 PM, Blogger SBVOR said...

Dr. Perry,

Your source claims that the value of USA oil reserves is "not in top 10".

If they are speaking of "proven reserves" that would be accurate. But, the USA would be far, far, FAR ahead of the entire world if they had accounted for the VAST quantities of oil which the USA federal government has placed off limits (and is, therefore, not counted among "proven reserves"):

http://sbvor.blogspot.com/p/drill-here.html

 
At 4/18/2012 7:42 PM, Blogger Methinks said...

SBVOR, it's "proved" not "proven". DB corrected el Presidente on that at Cafe Hayek just yesterday :)

If you can't lift the oil, it's worthless.

Russia would probably have more proved reserves as well if the oil industry weren't controlled by the monkeys in government. But what strikes me is that despite all of its natural resources, the average Russian is very poor compared to the average American. Still. There's a lot in that.

 
At 4/18/2012 7:52 PM, Blogger SBVOR said...

Larry G,

1) Saudi Arabia has 266.7 billion barrels of oil (proved reserves).

2) The USA Green River Formation has (as a mean estimate) 800 billion barrels of technically recoverable oil.

http://www.rand.org/pubs/monographs/2005/RAND_MG414.pdf

3) The USA Bakken Formation has “on average, 200 billion barrels” of technically recoverable oil.

https://www.dmr.nd.gov/ndgs/Bakken/newpostings/07272006_BakkenReserveEstimates.pdf

These two formations alone give us almost four times the proved reserves of Saudi Arabia. But, there’s more than that here in the USA. See the link in my previous comment.

Get the damn federal bureaucrats the hell out of the way!

 
At 4/18/2012 8:21 PM, Blogger AIG said...

Putin is a monkey-thug punk. I hope that nation recover from its vodka-induced stupor, and puts Putin in the hoosegow

Russia loves strong-men. It has never known anything else. All the noise you hear in the west about anti-Putin protests etc, it's all for show. And if you look closely at the "show", you'll notice a heck of a lot of red banners. I don't think that's the sort of "opposition" most of us want.

Plus, as bad as Putin may be, he's still been better than everyone else in Russia...probably in the last 2 centuries.

But what strikes me is that despite all of its natural resources, the average Russian is very poor compared to the average American. Still. There's a lot in that.

The US has had 3 centuries of capitalism. Russia at best has seen signs of it in the past 10 years. Still very early.

The issue isn't whether Russians have benefited or not from all these resources, they certainly have. The issue is, how will such resources be used by a nation that has no such things private property and a legal system, and whose population has never seen anything resembling individualism, but only state control?

I'm not saying this in a "derogatory" way. My country isn't any better. But even China has a lot more entrepreneurial wealth creation.

Natural resources, are never going to make a "country"..."rich". They can build all the tall buildings in the world, and all the Porsche Cayennes in the streets, but they are never going to develop entrepreneurial and individualistic people. People, are the only resource that matters.

1) Saudi Arabia has 266.7 billion barrels of oil (proved reserves).
2) The USA Green River Formation has (as a mean estimate) 800 billion barrels of technically recoverable oil.


Well, there's problems with this comparison. First off, how much oil Saudi really has, no one knows. Second, the amount of oil you "have", all depends on the amount of oil you can get at given current technology and markets. What that landscape looks like in Saudi, or Iran, or Russia, or most of the world, is practically unknown.

And you have to ask if supply is really a "constraint". Politically, logistically etc, maybe. But likely, not physical supply.

 
At 4/18/2012 8:38 PM, Blogger SBVOR said...

”First off, how much oil Saudi really has, no one knows. Second, the amount of oil you 'have', all depends on the amount of oil you can get at given current technology and markets. What that landscape looks like in Saudi, or Iran, or Russia, or most of the world, is practically unknown.”

1) We can discard the "current technology" question. Each figure I cited represents a mean estimate of "technically recoverable" quantities (using today's technology).

2) Markets? All I ask is that the damn federal bureaucrats get the hell out of the way and LET the markets reach those conclusions.

3) "What that landscape looks like [in other countries]" is utterly irrelevant. We KNOW we have VAST quantities of technically recoverable oil in the USA which worthless federal bureaucrats simply will not ALLOW us to develop.

Fully substantiated data here:
http://sbvor.blogspot.com/p/drill-here.html

 
At 4/18/2012 8:53 PM, Blogger Methinks said...

Oh, hell no, AIG. Not in the last two centuries!

Russia at best has seen signs of it in the past 10 years.

Where? Oh, you mean when they go abroad?

And you're wrong. We have a legal system. All you have to do is bribe the right judge.

There's actually quite a lot of entrepreneurship in Russia (you can't feed your family otherwise), but a lot of it remains at the cottage industry level or otherwise under the radar because they don't want to be harassed by the government and extorted by the mafia (but I repeat myself). My aunt and uncle run one and even their bank accounts aren't in Russia. Nor do they receive mail from those foreign banks for fear of the authorities opening the envelopes.

I can say with a high degree of confidence that entrepreneurial wealth creation is both severely under-reported and severely hampered in Russia. Lack of Rule of Law and property rights is a real problem.

Anything else you want to say about my toothless, alcoholic, backwards people, AIG? Huh? Huh?

 
At 4/18/2012 8:56 PM, Blogger Ken said...

A more relevant statistic is per capita; however, I am too lazy to look this up or to calculate it myself.

Even with that, I'm not really sure how big of a deal this really is. Raw materials become "natural resources" only after people find an economic use for them. How many raw materials are considered useless or of low value because someone hasn't figured out an economic use or better economic use for something. After all, whale oil as an energy source for light was pretty useful till kerosene came along.

People who compile lists like this are under some delusion that the current known "natural resources" will remain valuable and that other valueless raw materials will remain valueless.

And even more important that all of this, which is implicit in many of the comments so far, is Julian Simon was right: the human mind is the ultimate resource.

 
At 4/18/2012 9:06 PM, Blogger VangelV said...

If they are speaking of "proven reserves" that would be accurate. But, the USA would be far, far, FAR ahead of the entire world if they had accounted for the VAST quantities of oil which the USA federal government has placed off limits (and is, therefore, not counted among "proven reserves"):...

LOL...I think that you live in a world of make believe. The energy return on much of your so-called reserves is negative. That makes the claimed proven reserves worthless.

 
At 4/18/2012 9:13 PM, Blogger VangelV said...

These two formations alone give us almost four times the proved reserves of Saudi Arabia. But, there’s more than that here in the USA. See the link in my previous comment.

This is pure nonsense. You will have to spend about as much energy to get the oil out than the energy in the oil. The net production would be zero.

Please note that we were told the same type of crap about natural gas than we are being told about oil. But as we have seen natural gas cannot be produced at a profit and the shale gas formations have turned out to be great destroyers of capital. That makes most of the shale formations liabilities, not assets.

 
At 4/18/2012 9:17 PM, Blogger SBVOR said...

"The energy return on much of your so-called reserves is negative. That makes the claimed proven reserves worthless."

If that were case (it's NOT), there would be no need for Dim politicians to prevent -- through FORCE OF LAW -- any attempt to develop these resources.

Other countries have been successfully and economically developing EACH of these resource categories for DECADES -- MORON!

The substantiated, quantitative facts are found here:

http://sbvor.blogspot.com/p/drill-here.html

 
At 4/18/2012 9:20 PM, Blogger SBVOR said...

"But as we have seen natural gas cannot be produced at a profit and the shale gas formations have turned out to be great destroyers of capital."

That's a bald faced lie (like all the rest of the "Progressive" fantasy world) and you KNOW IT!

 
At 4/18/2012 9:25 PM, Blogger Buddy R Pacifico said...

"The US has had 3 centuries of capitalism. Russia at best has seen signs of it in the past 10 years. Still very early."

Interesting to note Article 34 of the Russian Federation Constitution:

"Everyone shall have the right to freely use his or her abilities and property for entrepreneurial or any other economic activity not prohibited by the law. 2. No economic activity aimed at monopolization or unfair competition shall be allowed."

btw, does anyone know what law 2(not article 2) is in Russia?

 
At 4/18/2012 9:31 PM, Blogger Methinks said...

Incidentally, neither cottage industry nor state monopoly are foreign concepts to Russians.

From the fifteenth century (I think) onward, we were ruled by the Czar gosudar. Gosudar and gosudarstvo are commonly translated as "ruler" and "government" or "state", but the more proper translation is "dominus" and "dominion". There was no distinction in the language or the culture between the sovereign and the state.

The notion of a distinction between the sovereign and the state did not appear in Russia until the seventeenth century, but gained currency only during Peter the Great's reign in the eighteenth.

For centuries, the Czar owned everything. The land, the people (from nobleman to serf), the air they breathed. Everything.

This grip loosened slowly over time and the change was initiated by the intense stagnation it caused, making Russia uncompetitive on the battlefield. Yet, even by the time Nicolas II took the throne, the Czar was still an absolute ruler. An autocrat.

And the peasants were fine with that. They loved the czar. They weren't agitating for democracy or equality. They simply wanted more land and they were waiting, with increasing impatience, for him to give it to them. That's a big reason the "Peace, land, bread" slogan of Lenin's initially appealed to them.

The rest is familiar history, but the culture is certainly not one with a historical experience of individuality and liberty.

 
At 4/18/2012 9:33 PM, Blogger VangelV said...

If that were case (it's NOT), there would be no need for Dim politicians to prevent -- through FORCE OF LAW -- any attempt to develop these resources.

The Democrats are just playing politics. But the problem for the shale players still remains the same. Outside of a few core ares there is no way to make a real profit from shale gas and oil.

Other countries have been successfully and economically developing EACH of these resource categories for DECADES -- MORON!

What other countries have produced a lot of shale oil and gas at a profit? And I did look at your site. It is just as political and screwed up as that by apologists for the Democrats. The real proof is in the cash flows. If you bothered to look at the 10-Ks instead of the political or promotional rhetoric you would have noticed that shale has been a horrible adventure for many of the players. Gas proved to be a total disaster so the same management teams that failed on that front are now trying to convince bankers and financiers to let them try their hand on shale liquids.

 
At 4/18/2012 9:34 PM, Blogger Methinks said...

Buddy, I don't know, but the constitution of the USSR was awesome.

Of course, they completely ignored it.

 
At 4/18/2012 9:42 PM, Blogger bix1951 said...

what about coal?
other minerals?
water resources?
farmland?

and whatever?

 
At 4/18/2012 10:08 PM, Blogger AIG said...

That's a bald faced lie...and you KNOW IT!

You seem to be new to this blog. But you will soon learn that VangeIV lives in a parallel Earth, in a parallel universe. He once claimed that Silicon Valley was a miserable failure, because of all the companies that failed.

So don't worry about him. Nod your head, and move along.

Bbtw, does anyone know what law 2(not article 2) is in Russia?

The #2 is connected with the second sentence.

It's funny because it makes no sense...everything is allowed unless it's illegal :)

It is amazing that in all these centuries of human experimentation with constitutional writing, not a single constitution has been written that works as well as the US one. The Brits come a distant second, but that's only because the US was an improvement over theirs. But everyone else's, you might as well not bother reading them...they will only confuse you with their contradictions.

I wish East European countries didn't bother making such plainly stupid constitutions post-communism. I wish they had just gotten a copy of the US constitution, crossed out the words "United States of America", written their own country's name on top of it, and be done. Of course, there's no guarantee they would have followed it (in fact, they most certainly would not have)...but at least, it would have saved a lot of wasted time, effort, and God knows how many trips to and from Brussels by EU bureaucrats.

Or, even better, they could have just made a constitution that said "Everything is allowed, unless it is illegal" :)

 
At 4/18/2012 10:29 PM, Blogger gadfly said...

Coal’s big problem is that it’s dirty and there is no cheap way to clean it up. Proposals to cut carbon dioxide emissions add billions to the cost of new coal-fired electricity generation plants and at least hundreds of millions to retrofits.

Sorry, but I am not buying into any accuracy in this article if these folks cannot get past AGW and carbon dioxide as pollutant. Governments are imposing unneeded costs upon the extraction and production of all hydrocarbon fuels.

 
At 4/18/2012 10:34 PM, Blogger SBVOR said...

AIG,

I'm not new to the blog. But I don't comment often enough to remember who the Trolls are. Thanks for reinforcing what was already becoming obvious -- VangeIV is unworthy of anyone's time.

 
At 4/18/2012 10:42 PM, Blogger SBVOR said...

I'll offer one final debunking of the Troll known as VangelV and then call it a night.

The Troll claimed to have read my post. But, clearly did not. Had he/she/it done so, he/she/it would have found the long, profitable history of Brazil's PetroSix Oil Shale operation:

http://en.wikipedia.org/wiki/Petrosix

 
At 4/19/2012 2:48 AM, Blogger PeakTrader said...

The U.S. is

*The largest natural gas producer in the world.

*The largest timber producer in the world.

*The third largest oil producer in the world.

And it may have the strictest rules in estimating proved reserves:

Estimates Clash for How Much Natural Gas in the United States
February 29, 2012

"Of all the types of reserves, the most certain class of reserves are known as "proved reserves," which publicly traded natural gas producing companies in the United States have to estimate and report to the U.S. Securities and Exchange Commission (SEC).

There are strict rules about how these reserves must be estimated, since these numbers are often taken as a measure of a company's success-and so can affect their stock prices.

On top of these "proved reserves" are a variety of other types of estimates from the EIA, the USGS, and nongovernmental groups, which include "inferred reserves" and "unproved reserves," as well as "undeveloped discovered resources" and "undiscovered resources."

 
At 4/19/2012 7:18 AM, Blogger juandos said...

Hey sbvor in the 'for what its worth' column here something from rediff.com - business: 30 countries with highest proven oil reserves
Last updated on: March 1, 2012 08:31 IST

According to the article Venezuela is first but I personally find the sourcing of the article's contents questionable: United States Geological Survey

I've seen the USGS in action on several many occassions and the one overriding impression they left me with is that these people couldn't find their own ass with the help of a map and a mirror, otherwords typical government employees...

 
At 4/19/2012 7:22 AM, Blogger VangelV said...

"That's a bald faced lie...and you KNOW IT!"

You seem to be new to this blog. But you will soon learn that VangeIV lives in a parallel Earth, in a parallel universe. He once claimed that Silicon Valley was a miserable failure, because of all the companies that failed.


Now that is a bald faced lie...and you KNOW IT!

Sorry, but I am not buying into any accuracy in this article if these folks cannot get past AGW and carbon dioxide as pollutant. Governments are imposing unneeded costs upon the extraction and production of all hydrocarbon fuels.

I agree. If the fools cannot get past the AGW crap there is little value to the analysis.

Of course, this does not mean that over the short therm the politicians will not use the AGW lies to stifle development but that may be a good thing for the long run as it will serve to discredit the anti-capitalist, anti-development statists who have been politically dominant over the past few decades.

 
At 4/19/2012 8:42 AM, Blogger VangelV said...

This comment has been removed by the author.

 
At 4/19/2012 8:43 AM, Blogger VangelV said...

I'll offer one final debunking of the Troll known as VangelV and then call it a night.

The Troll claimed to have read my post. But, clearly did not. Had he/she/it done so, he/she/it would have found the long, profitable history of Brazil's PetroSix Oil Shale operation:

http://en.wikipedia.org/wiki/Petrosix


If you were actually knowledgeable about the topic you would know that this has been TALKED about for decades but has yet to yield anything that resembles a solution.

Here area few issues that you need to think about.

According to your own citation Cameron has designed "the world's largest operational surface oil shale pyrolysis reactor." (I am assuming this is a vertical reactor but if you have useful information please provide it.) The funny thing is that this project yields only 3,870 barrels of shale oil per day. That is not exactly meaningful for an operation that has been around for more than two decades and a technology that has been around for more than half a century.

This fact that the production is so limited and that Petrobras has ignored the process to engage in very risky ultra-deep water drilling tells us a great deal. It means that the company does not believe that the shale process can be used economically to yield meaningful amounts of oil. (Actually, your citation does not even claim that the process is profitable or any more than a research project.)

And then we have the problem with tailings, something that you seem to be totally ignorant of when you cite kerogen upgrading processes as a solution when the real discussion here is access to oil in tight formations. The Green River Formation will not yield much oil by drilling horizontal wells. The shale rock will have to be mined, crushed, cooked using one of several available processes, and disposed of. The volume of shale produced will be much higher than the volume extracted so the overflow will have to go somewhere. You will also have significant problems with the introduction of heavy metals and other dangerous contaminants into the surface and ground water drinking and irrigation supplies.

Now you could abandon the method that you cited and claim that you will use in-situ methods. But those require a great deal of water and still pose several environmental problems that have to be dealt with. And as with the Petrosix process there is yet to be a meaningful success anywhere in producing oil out of shale in a manner that can scale up effectively.

 
At 4/19/2012 9:41 AM, Blogger Jon Murphy said...

Good for Russia here.

The problem they face, though, is much of their natural resources are locked away in Siberia. It's so cold the metal will turn brittle.

 
At 4/19/2012 9:50 AM, Blogger VangelV said...

The problem they face, though, is much of their natural resources are locked away in Siberia. It's so cold the metal will turn brittle.

The issue is the concentration of resources. I would rather have a large deposit of oil in Siberia or the Mackenzie Delta than a shale formation that has the energy density of a potato in Colorado.

 
At 4/19/2012 10:10 AM, Blogger Jon Murphy said...

The issue is the concentration of resources. I would rather have a large deposit of oil in Siberia or the Mackenzie Delta than a shale formation that has the energy density of a potato in Colorado.

True, but if you can't get to it, what good does it do you?

 
At 4/19/2012 10:40 AM, Blogger SBVOR said...

VangelV (Space Alien from an Alternate Universe),

Again, if you had actually read my post, you would also know that the toughest environmental standards in the world for producing oil shale have already been defined:

http://www.blm.gov/wo/st/en/info/newsroom/2008/July/NR_07_22_2008.html

So, there goes all your environmental scare mongering. All we're left with is a pack of Dims who fell compelled to -- through FORCE OF LAW -- shutdown all hydrocarbon development (so they can more easily realize their goal of nationalizing the "Commanding Heights" of the global economy).

P.S.) Again, here's my overview of oil resources in the USA:

http://sbvor.blogspot.com/p/drill-here.html

 
At 4/19/2012 10:45 AM, Blogger juandos said...

"It's so cold the metal will turn brittle"...

Wait a second jon murphy, where is that bright promise of global warming?...:-)

 
At 4/19/2012 10:54 AM, Blogger Jon Murphy said...

Wait a second jon murphy, where is that bright promise of global warming?...:-)

It's in Siberia where all those no-longer-operational climate research stations are.

 
At 4/19/2012 11:18 AM, Blogger VangelV said...

True, but if you can't get to it, what good does it do you?

When it makes sense to get it you will go ahead and do it because the concentration of energy is high enough to provide a decent return. That does not happen with low energy density shale formations that have to be mined, crushed, and baked. In the real world what matters over the long run is the energy return on the energy invested.

 
At 4/19/2012 11:22 AM, Blogger VangelV said...

So, there goes all your environmental scare mongering. All we're left with is a pack of Dims who fell compelled to -- through FORCE OF LAW -- shutdown all hydrocarbon development (so they can more easily realize their goal of nationalizing the "Commanding Heights" of the global economy).


It is not scaremongering. It is reality. The crushed rock is of much higher volume than what was mined. That means that you have to pile on the waste product on the surface. The crushing allows dangerous heavy metals to leach out of the waste and contaminate the water supplies. You may not like the reality but it what it is.

As I pointed out, you do not have much credibility when the best that you can do is point to a 60 year old technology and a twenty year old project that produces only 3,000 bpd even as the owner of that project is carrying on with very risky and very expensive deep water drilling and development. If your process made sense Petrobras would be more serious about it and would leave the high risk operations to others. The fact that it has not tells us a great deal but only if we are willing to pay attention.

 
At 4/19/2012 11:24 AM, Blogger Jon Murphy said...

When it makes sense to get it you will go ahead and do it because the concentration of energy is high enough to provide a decent return. That does not happen with low energy density shale formations that have to be mined, crushed, and baked. In the real world what matters over the long run is the energy return on the energy invested.

I'll agree with you that it may benefit Russia in the long run when we develop some sort of material that allows them to drill through the permafrost and into the vast Siberian wilderness without falling apart. However, it's still a matter of when. If I am investing in oil now, I'd rather invest in shale and tar sands; resources that can be extracted and processed now.

I look forward to the day when Russia can tap into her vast natural resources, but since today is not that day, I think I'll take the real resources of North Dakota and Alberta over the unaccessable resources of Siberia.

 
At 4/19/2012 11:29 AM, Blogger Larry G said...

re: siberia.

if it was economically and technically feasible to build a pipeline to Prudhole Bay wouldn't it also be just as feasible for similar environs of Siberia?

Are there, in fact extraction wells in Siberia at the sat latitude as Prudhole Bay?

 
At 4/19/2012 11:29 AM, Blogger Larry G said...

..oops... "SAME latitude as Prudhole Bay"....

 
At 4/19/2012 11:30 AM, Blogger VangelV said...

I'll agree with you that it may benefit Russia in the long run when we develop some sort of material that allows them to drill through the permafrost and into the vast Siberian wilderness without falling apart. However, it's still a matter of when. If I am investing in oil now, I'd rather invest in shale and tar sands; resources that can be extracted and processed now.

I prefer to invest in the royalties and let others take the risk. I have not yet heard if Franco Nevada has sold off its Mackenzie Delta royalties. The last time I looked there was no value for them on the books. If the pipeline ever gets built you would be looking at billions of value added on at no new cost. I believe that the royalties were purchased for $10 million or so more than a decade ago as a long term call on energy prices going up.

 
At 4/19/2012 2:04 PM, Blogger Methinks said...

It's "Prudhoe" Bay, not "Prudhole" Bay.

 
At 4/19/2012 2:37 PM, Blogger Jon Murphy said...

if it was economically and technically feasible to build a pipeline to Prudhole Bay wouldn't it also be just as feasible for similar environs of Siberia?

Are there, in fact extraction wells in Siberia at the sat latitude as Prudhole Bay?


Good questions, Larry.

I'm not sure it would as economically feasible to build a pipeline in Siberia as it would be in Alaska. In Prudhoe Bay, the closest ice-free port would be Anchorage, some 850 miles away. Depending where you are in Siberia, you'd have to go to either Vladivostok or St. Petersburg, which could be several thousand miles away.

As far as the latitude question goes, I don't know. I'm also not sure it would be a viable comparison: although two places are on the same latitude, they do not always have the same climate (sometimes they do). I am not familular with the climate of Prudhoe Bay enough to make a judgement call.

 
At 4/19/2012 9:01 PM, Blogger SBVOR said...

Juandos,

Your link claims the USA has “19,120,000,000 billion barrels” in proven reserves.

That would equate to 19 quintillion barrels (1 billion times more than the official figure).

That silly error aside, click here for the EIA data (spreadsheet format) on proved reserves. You can easily sort that (descending, column E) and find that the EIA lists Venezuela as #5.

Of course, “proved reserves” reflects only what various levels of government have allowed to be drilled. The REAL STORY is the VAST amount of oil and oil equivalents which various levels of USA government have not allowed to be drilled.

In the previous link, the same EIA spreadsheet linked to above was my source for presenting “proven reserves”.

 
At 4/20/2012 6:12 AM, Blogger VangelV said...

Of course, “proved reserves” reflects only what various levels of government have allowed to be drilled. The REAL STORY is the VAST amount of oil and oil equivalents which various levels of USA government have not allowed to be drilled.

Your reference claims 800 billion barrels from shale. But we know that the oil companies have tried to upgrade the kerogen within the oil shale rock for decades without any meaningful success. If shale oil is not being produced economically when the price of crude is over $100 when will it be produced?

It also shows 200 billion barrels from the Bakken but that too is a big joke. The EIA was touting the Bakken not too long ago as a great source of natural gas. But we have seen that the gas could not be produced at a profit and most of the early players are dumping holdings in a desperate effort to raise enough cash to try to reposition themselves as shale liquids players. In the real world, the proof can be found in the cash flows. If you look at the 10-K filings you will find that most of the producers are cash flow negative on their shale projects. The positive cash flow from operations is not sufficient to pay for the drilling activity that is necessary to maintain those operations. That means that the companies need to find something else that is profitable and cash flow positive, need to find more suckers to lend them money or buy their shares, or declare bankruptcy and let the creditors remove whatever residual oil and gas are produced by existing wells.

 
At 4/20/2012 6:32 AM, Blogger Larry G said...

what I find interesting in this dialogue is the idea of WHO should be estimating reserves and how they should do it - not only in this country but other countries.

We don't trust the US govt estimates?

Do we trust other govts estimates?

are there NGOs that do estimates?

and the point has been made that just because the resource exists - does not meet it is economically feasible to extract it. Of course that depends in part on how much it could sell for. For many years, the oil sands in Canada were technically "recoverable" but were not economically feasible until the price of gasoline hit a certain price point.

But even then - the oil sands are expensive to extract compared to more conventional oil.

so it's not only where oil exists but is it really economically accessible.

perhaps in 50-100 years when gasoline sells for $25-$50 a gallon, it WILL be feasible.

In that case, if you agree with the premise, would you count it as exploitable reserves or not?

 
At 4/20/2012 6:58 AM, Blogger VangelV said...


what I find interesting in this dialogue is the idea of WHO should be estimating reserves and how they should do it - not only in this country but other countries.

We don't trust the US govt estimates?

Do we trust other govts estimates?

are there NGOs that do estimates?


Let the producing companies go out and look for economic deposits on their own. Having the government or some NGO give us 'free' data that is an outright lie does not help anyone do anything useful.

and the point has been made that just because the resource exists - does not meet it is economically feasible to extract it. Of course that depends in part on how much it could sell for. For many years, the oil sands in Canada were technically "recoverable" but were not economically feasible until the price of gasoline hit a certain price point.

Correct. The ERoEI in the tar sands was perfectly acceptable but when you had a surplus capacity that was significant it made no sense for the marginal producers to be supplying crude to the markets.

But even then - the oil sands are expensive to extract compared to more conventional oil.

Not really. The marginal barrel in Saudi Arabia costs more than a barrel from the tar sands. You get confused because SA has some oil that can be extracted at a few bucks per barrel. The trouble is that this oil cannot meet all of the demand and that after it is sold you have to go on to the next most expensive source.

so it's not only where oil exists but is it really economically accessible.

perhaps in 50-100 years when gasoline sells for $25-$50 a gallon, it WILL be feasible.


No because if the ERoEI is negative it will not make any sense to extract the oil to make the gasoline. If it costs you $100 to produce a gallon of oil that sells $50 why would you do it?

In that case, if you agree with the premise, would you count it as exploitable reserves or not?

 
At 4/20/2012 7:07 AM, Blogger Larry G said...

" No because if the ERoEI is negative it will not make any sense to extract the oil to make the gasoline. If it costs you $100 to produce a gallon of oil that sells $50 why would you do it?"

I totally accept that concept but assume the ERoEI is positive but barely.... and not as lucrative as other opportunities.

I'm sure that companies buy reserves that are not now economically feasible but will be when prices go up.

so investors will buy and hold such reserves ...depending.....

do investors buy and hold reserves that are not yet economically recoverable?

If they do... then should such reserves be counted as "proveable" or not?

what is the time horizon?

 
At 4/20/2012 7:21 AM, Blogger VangelV said...

I totally accept that concept but assume the ERoEI is positive but barely.... and not as lucrative as other opportunities.

Barely does not cut it. You need a margin of safety to handle the volatility or you risk going out of business.

I'm sure that companies buy reserves that are not now economically feasible but will be when prices go up.

so investors will buy and hold such reserves ...depending.....

do investors buy and hold reserves that are not yet economically recoverable?


Schulich and Lassonde paid $10 million for royalties on stranded Arctic properties that had no economic value. The idea was to purchase a cheap call on the price of gas and oil that does not run out. The hope is that eventually someone will build a pipeline to access the oil. When that happens the royalties will be worth billions.

If they do... then should such reserves be counted as "proveable" or not?

what is the time horizon?


It used to be that to prove up reserves you had to meet strict criteria. National oil companies and national associations have not met all of those criteria and much of what is claimed is now false. But keep in mind that there are proven stranded assets all around the globe. With those all you need to do is to bring the oil or gas to market.

 
At 4/20/2012 12:15 PM, Blogger SBVOR said...

VangelV (space alien from an alternate universe),

You admit we have vast quantities of domestic oil:

http://sbvor.blogspot.com/p/drill-here.html

But, you (falsely) allege it cannot be economically produced. You also fret over the environmental consequences (even though we already have in place the toughest standards in the world for producing oil shale):

http://www.blm.gov/wo/st/en/info/newsroom/2008/July/NR_07_22_2008.html

Of course, if the oil cannot be economically produced then the environmental scare mongering is a moot point.

So, I propose we put your falsehoods to the test -- let's allow the oil producers to take their best shot (under the watchful eye of the toughest regulations in the world).

Surely, you have enough confidence in your fantasy world to allow this test of your fantasies to take place. Yes?

 
At 4/20/2012 12:35 PM, Blogger Larry G said...

" let's allow the oil producers to take their best shot (under the watchful eye of the toughest regulations in the world)."

are we the ONLY country in the world that has shale oil?

Van is right about the tailings...it's not just the tailings.. it's the enormous volume of the that will leech into surface and ground waters.

Unless they have a plan to prevent the leeching.. it ain't going to happen.

 
At 4/20/2012 1:12 PM, Blogger SBVOR said...

"are we the ONLY country in the world that has shale oil?"

Based upon current knowledge, we have -- by FAR -- the most oil shale in the world. But, we are certainly not the only country that has oil shale:

http://2.bp.blogspot.com/-c6Yky_QgOkA/TnVYADkiY4I/AAAAAAAAChI/yaqA6_hs7WU/s1600/Oil%2BShale%2B-%2BTotals.jpg

Source data:

http://www.worldenergy.org/documents/ser2007_final_online_version_1.pdf

Oil Shale was first produced on a commercial scale in 1924 using the Kiviter process.

Brazil's PetroSix has been producing oil shale on a commercial scale since 1980.

Again, we already have ALL the necessary regulations in place -- see my previous comment. So, let's STFU and start drilling!

 
At 4/20/2012 5:36 PM, Blogger james said...

It really amazes me that russia is one of the most resource rich nations. Compared to the former soviet union they appear to be in quite a sweet spot.

 
At 4/20/2012 10:17 PM, Blogger VangelV said...

You admit we have vast quantities of domestic oil...

Of course you do. But you will never get back to peak production. And I believe that you are confusing kerogen in shale with oil. You might want to read up a little more on the industry and drop the ideology just a bit.

But, you (falsely) allege it cannot be economically produced.

No. I said that conventional oil and some of the oil in core areas of the better shale formations can produce oil economically. But that is not true for shale in general. Which is why most of the claimed reserves will be dropped eventually.

You also fret over the environmental consequences (even though we already have in place the toughest standards in the world for producing oil shale)...

You miss my point. If you are going to crush and cook shale rock to upgrade the kerogen to a useful product that can be sold in the market you will have to do something with the tailings. They will contain plenty of very harmful heavy metals that will require sequestration. The problem is that makes the process even less economical than it is now when you are seeing negative cash flows. Which makes the whole shale oil story that you are talking about pure fiction.

Of course, if the oil cannot be economically produced then the environmental scare mongering is a moot point.

Correct. In the absence of some very loose reporting and accounting rules and a lot of easy money the shale bubble would never have developed in the first place.

So, I propose we put your falsehoods to the test -- let's allow the oil producers to take their best shot (under the watchful eye of the toughest regulations in the world).

I fully agree. Let the companies allocate their capital any way they choose. And lets get government out of the way.

Surely, you have enough confidence in your fantasy world to allow this test of your fantasies to take place. Yes?

You do not read very well. I have been advocating free markets and very small government. Unlike you, who sounds like one of those false conservatives that are mouthpieces for the GOP I make my living by investing my own capital. Many of my investments include the energy sector, including some unconventional long-shots. But I only make investments when there is a hope of a real profit from actual operations not from finding a bigger fool to dump shares on. That approach quickly leads you away from the shale story at this stage of the game and towards solid companies with sound cash flows and actual profits.

 
At 4/20/2012 10:20 PM, Blogger VangelV said...

Brazil's PetroSix has been producing oil shale on a commercial scale since 1980.

Really? The reference you cited shows just over 3,000 bpd and no indication of any profit by Petrobras. If shale oil were so promising you have to figure out why it is that Petrobras is risking its capital on ultra-deep off shore development.

 
At 4/20/2012 11:31 PM, Blogger SBVOR said...

"you will never get back to peak production"

If government ever gets out of the way and allows domestic oil producers to develop our VAST resources, we absolutely WILL get back to peak [domestic] production.

Globally, production is continuing to rise (even if global demand is rising faster):

http://3.bp.blogspot.com/-uQSD09iUl4c/T11X5zNEAGI/AAAAAAAACvQ/4DNjBTqA8U4/s1600/2012_03_11-World_Oil_Balance-02-1024.jpg

The accelerating pace of global demand is all the more reason for government to get the HELL out of the way and ALLOW our oil producers to develop what we KNOW can be economically (and safely) developed.

"Many of my investments include the energy sector, including some unconventional long-shots"

Thanks. Now I understand why you are so inclined to dishonestly disparage the hydrocarbon sector. The oil and gas boom must be kicking the shit out of your "unconventional" crap investments.

As for Petrosix…
The larger of their two facilities produces 3870 barrels of shale oil per day. Meaning, that one plant alone could supply 2% of the daily needs of the USA.

http://www.sdnp.jo/International_Oil_Conference/rtos-A118.pdf

Yes, deep water drilling is currently less expensive than producing shale oil. But, there is FAR less oil available in deep water locations. It won’t last very long. The USA (conservatively) has 2.1 trillion barrels of in place Shale Oil -- enough to meet the needs of the USA for 288 years. Our Outer Continental Shelf has an estimated 86 billion barrels of in place oil -- enough to meet the needs of the USA for 12 years.

http://sbvor.blogspot.com/p/drill-here.html

So, Mr. Betting Man, what are you going to bet on? A 12 year supply? Or, a 288 year supply? Oh, sorry, I forgot, you already placed your bets (on losing technologies).

 
At 4/21/2012 6:07 AM, Blogger Larry G said...

"
The USA (conservatively) has 2.1 trillion barrels of in place Shale Oil -- enough to meet the needs of the USA for 288 years. Our Outer Continental Shelf has an estimated 86 billion barrels of in place oil -- enough to meet the needs of the USA for 12 years."

are these numbers pretty much agreed to by various industry and govt sources?

 
At 4/21/2012 11:31 AM, Blogger juandos said...

"are these numbers pretty much agreed to by various industry and govt sources?"...

larry g I think the term, "used" would be the probably the accurate term than 'agreed to'...

 
At 4/21/2012 11:41 AM, Blogger VangelV said...

If government ever gets out of the way and allows domestic oil producers to develop our VAST resources, we absolutely WILL get back to peak [domestic] production.

Nonsense. After Carter deregulated the industry and Reagan got out of the way the industry could not get back to previous levels of crude production. While the US had plenty of untapped conventional natural gas reserves even those are now having trouble reaching their previous production levels. Much of the hyped up gains in the US have come from shale companies that are producing at a loss. With gas rigs in decline it is only a matter of time before supply turns down. But a reallocation to shale liquids will not mean much in the longer term because the average shale well produces less than 100 bpd after about a year of production. Given the UR and the costs involved there isn't much of an incentive for reasonable allocators of capital even at current prices.

Globally, production is continuing to rise (even if global demand is rising faster):...

I suggest you check the actual data. World crude production is under 80 MMbpd and has not changed materially since 2005 even though trillions of new investment have gone into the sector. The chart you quote includes biofuels, refinery gains, NGLs, and other products that were not counted carefully previously because they did not matter all that much. For light sweet the production peak is already behind us. Anyone who does not understand that little point and deals in fantasy is not exactly credible.

The accelerating pace of global demand is all the more reason for government to get the HELL out of the way and ALLOW our oil producers to develop what we KNOW can be economically (and safely) developed.

You are kidding. Look at the EU and US and you see a severe contraction in demand for crude. Had demand been accelerating you would have $250 oil and have the GOP and Democrats fight to show which is tougher on the 'greedy speculators.'

Thanks. Now I understand why you are so inclined to dishonestly disparage the hydrocarbon sector. The oil and gas boom must be kicking the shit out of your "unconventional" crap investments.

Not at all. I am up more than 200% on my investments and get a steady dividend on my unconventional producers. While my Arctic oil royalties have yet to produce a gain they were free so I do no mind very much.

As for Petrosix…
The larger of their two facilities produces 3870 barrels of shale oil per day. Meaning, that one plant alone could supply 2% of the daily needs of the USA.


Actually, 2% of US consumption is closer to 387,000 bpd but why would we let math get in the way of a good story.

And next time I suggest that you read your own references. When we find that, "Brazilian Petrosix lump shale retort is of large and very large capacity, with high oil yield and producing high calorific gas, its investment is COSTLY, it is suitable for medium and large scale plant," the red flags should be going up. After all, you are looking at a 60 year old technology that is well understood. If it could be deployed at a profit don't you think that you could find more than one or two examples of projects that are using it? And how can it be COSTLY compared to the billions it takes for ultra-deep water exploration being carried out by the same company that is operating the Petrosix projects? The proper word is not costly but uneconomical. Once the costs have been sunk it makes sense to get your 4,000 bpd but if you want to do proper cost accounting and are looking for returns on your investment it makes no sense to invest in the process in the first place. You are better off risking the company on drilling deep targets that are thousands of feet below the ocean bottom and hope that the pressures are sufficient to allow you to lift the oil to the surface.

 
At 4/21/2012 11:49 AM, Blogger VangelV said...

Yes, deep water drilling is currently less expensive than producing shale oil.

Which is a serious problem for shale. If it cannot compete with ultra-deep water oil there is not much hope that it can provide a solution for decades.

But, there is FAR less oil available in deep water locations. It won’t last very long. The USA (conservatively) has 2.1 trillion barrels of in place Shale Oil -- enough to meet the needs of the USA for 288 years. Our Outer Continental Shelf has an estimated 86 billion barrels of in place oil -- enough to meet the needs of the USA for 12 years.

Statists like you seem to have a big blind spot. The energy companies have no trouble taking risks in developing deep water oil because it is economic to do so. They are not in any hurry to touch kerogen upgrading even though the shale processing technology is very mature and well understood. I want the market to make the decisions as the government stands aside. If you get rid of the regulations and stop the money printing that allows much of the gambling that takes place today the shale bubble would burst and coal, oil and gas consumption and production will reflect reality.

So, Mr. Betting Man, what are you going to bet on? A 12 year supply? Or, a 288 year supply? Oh, sorry, I forgot, you already placed your bets (on losing technologies).

As usual I will choose profit, not hope and fantasy.

 
At 4/21/2012 11:51 AM, Blogger VangelV said...

are these numbers pretty much agreed to by various industry and govt sources?

Not at all. Most industry insiders do not believe that you can produce shale oil at a profit because the energy density is too low and the upgrading costs are too high. And all that ash and processed rock is a huge environmental problem that cannot be ignored.

 
At 4/21/2012 1:07 PM, Blogger SBVOR said...

"I suggest you check the actual data. World crude production is under 80 MMbpd and has not changed materially since 2005"

Here's the data, you lying sack of shit:

In 2003, global supply was 79.8 million barrels per day and global demand was 79.3 million barrels per day.

See Table 1 in the following link:

http://omrpublic.iea.org/omrarchive/13feb07full.pdf

In 2011, global supply was 88.5 million barrels per day and global demand was 89.1 million barrels per day.

See Table 1 in the following link:

http://omrpublic.iea.org/omrarchive/10feb12full.pdf

Over just the last 8 years, that’s an 11% increase in supply and a 12% increase in demand. Global suppliers are doing a damn fine job of (mostly) keeping up with increases global demand.

We CAN do better if the damn federal bureaucrats and the eco-nuts at EVERY level of government would simply ALLOW our oil producers to develop our VAST resources:

http://sbvor.blogspot.com/p/drill-here.html

 
At 4/21/2012 1:27 PM, Blogger SBVOR said...

"are these numbers pretty much agreed to by various industry and govt sources?"

2.1 trillion barrels of USA Shale Oil is a figure cited by multiple sources:

See Table 3-1 in this link:

http://www.worldenergy.org/documents/ser2007_final_online_version_1.pdf

The figure of 86 billion barrels available in our Outer Continental Shelf is the mean estimate from the following source:

http://www.boemre.gov/revaldiv/RedNatAssessment.htm

The calculations regarding years of USA supply are derived from the well established USA usage of about 20 million barrels per day. Obviously oil is a global commodity. Those calculations were offered simply as a means of putting the numbers into meaningful context.

 
At 4/21/2012 1:34 PM, Blogger SBVOR said...

"Actually, 2% of US consumption is closer to 387,000 bpd"

Amazing! VangelV told the truth -- for ONCE! My mistake. It's easy to be off by a factor of 100 when doing quick percentage calculations.

 
At 4/21/2012 5:47 PM, Blogger VangelV said...

Here's the data, you lying sack of shit:

In 2003, global supply was 79.8 million barrels per day and global demand was 79.3 million barrels per day.


You really have no clue yet keep posting on the subject?

I am talking about how much oil is pulled out of the ground and include both conventional and unconventional sources. You are citing a report that shows crude, biofuels, NGL production, coal to oil liquefaction products, refinery gains, etc. Our discussion is about the production of crude. And on that front we find that, According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.

There is a big difference between crude production and reported crude and condensate production, particularly when some of the reported condensate data was never included accurately in prior years Just as kerogen trapped in shale is not petroleum biofuels are not petroleum.

We CAN do better if the damn federal bureaucrats and the eco-nuts at EVERY level of government would simply ALLOW our oil producers to develop our VAST resources:...

I agree that if you let the industry produce oil without many of the unnecessary regulations you are bound to see an improvement. But you will NEVER produce more domestic conventional oil than was produced in 1970. By pretending otherwise and ignoring the data you damage your own credibility and discourage serious people from reading your material.

 
At 4/21/2012 6:12 PM, Blogger VangelV said...

2.1 trillion barrels of USA Shale Oil is a figure cited by multiple sources:...

You have to love the guy who talks about eliminating government and regulators but believes the data that they print but he cannot fully understand.

2.1 trillion barrels of USA Shale Oil is a figure cited by multiple sources:

See Table 3-1 in this link:

http://www.worldenergy.org/documents/ser2007_final_online_version_1.pdf


First of all, you conveniently ignore Figure 2.6, which clearly shows a decline in crude production and makes no mention of shale production as a solution. If the claims were true why is it that shale oil does not show up anywhere in the models? Could it be that the analysts looked at the record and were not as impressed by the 3,500 bpd production figure as much as you were? And while I am at it, let me point out that the deep-water and Arctic production have failed to materialize.

Second, you ignore the commentary that argues against your position. Since you missed it let me provide some of it for you.

"This Commentary concludes that the world is rapidly approaching the end of the First Half of the Age of Oil, during which production grew, new fields were found and developed with the help of improved geological knowledge and advances in technology. The evidence suggests
that the peak of world discovery was in the
1960s, meaning that the corresponding peak of
production for ‘Conventional Oil’ is approaching.
The world started using more than it found in
1981 and that gap has widened since. Granted,
certain areas (e.g. Iraq) have been closed to
exploration in recent years and that increased
investment will have an impact, but the overall
position is dictated by the underlying constraints
of nature.

The evidence suggests that the Second Half of the Age of Oil is dawning and that it will be characterised by the decline of oil and all that depends on it. It is stressed that oil will not finally run out for very many years, if ever, but the onset of decline is inevitable, thanks to the resource limits of nature and the immutable physics of the reservoir. The timing of the peak currently attracts much debate, but is considered less important than the vision of the long decline that comes into view on its far side."


How unexpected; your own citation does not support your own conclusions and you forget that there is a huge difference between a government agency speculating about shale resources and proven reserves. Resources that are not economic could be worth less than zero if someone destroys capital to develop them at a loss.

 
At 4/21/2012 6:17 PM, Blogger VangelV said...


Amazing! VangelV told the truth -- for ONCE! My mistake. It's easy to be off by a factor of 100 when doing quick percentage calculations.


Or when you can't tell the difference between resources and reserves.

 
At 4/21/2012 7:23 PM, Blogger SBVOR said...

“You are citing a report that shows crude, biofuels, NGL production, coal to oil liquefaction products, refinery gains, etc”

You lying sack of shit!

The data cited include ONLY:
Crude
Processing gains (simply reduced wastage of CRUDE OIL produced)
NGLs
Biofuels

Fine, let’s eliminate the latter three and see what’s left in terms of CRUDE OIL PRODUCTION…

In 2003, global supply was 74.2 million barrels per day.

See Table 1 in the following link:

http://omrpublic.iea.org/omrarchive/13feb07full.pdf

In 2011, global supply was 78.7 million barrels per day.

See Table 1 in the following link:

http://omrpublic.iea.org/omrarchive/10feb12full.pdf

Over just the last 8 years, that’s a 6.1% global INCREASE in the production of crude oil!

As for your SIX YEAR OLD National Geographic citation:

1) Citing the CAGW hysteria mongers at NatGeo is rather like citing the Pravda of old.

2) Even the SIX YEAR OLD IEA link purporting to substantiate the “reporting” is broken.

We CAN do better if the damn federal bureaucrats and the eco-nuts at EVERY level of government would simply ALLOW our oil producers to develop our VAST resources:

http://sbvor.blogspot.com/p/drill-here.html

 
At 4/21/2012 8:06 PM, Blogger VangelV said...

See Table 1 in the following link:

http://omrpublic.iea.org/omrarchive/13feb07full.pdf

In 2011, global supply was 78.7 million barrels per day.


Amazing. You cite a paper that claims that SA sustainable capacity is 11.88 mbpd? I have news for you. The Saudis have been claiming that they will increase their supply to 12 mbpd for several years and spent hundreds of millions on new investment. And as Ghawar is starting to greatly increase its water cut and is looking to be past its peak they can't reach the 1980s production levels when they were not spending billions on water drives, supercomputers to do 3D reservoir modelling and horizontal drilling. If you read your own citations you find evidence that the game is over. And even when you read the typical optimistic pap in those citations you don't find much in the way of support for a shale oil supply solution.

It looks like you need to do some reading to figure out the difference between reserves and resources and to dig into the

 
At 4/21/2012 8:19 PM, Blogger SBVOR said...

"Amazing. You cite a paper that claims that..."

My dear troll,

The biggest difference between you and I is that I DO cite and link to my sources.

As best as I recall, the ONLY citation you've offered is a laughable link to a SIX YEAR OLD bit of propaganda from one of the biggest eco-nut CAGW hysteria mongers on the entire planet (NatGeo).

Since you utterly failed to even pretend to cite ANYTHING in your latest comment, I will take it for granted that you know you've been check mated.

Good to know! Thanks for playing -- chump!

 
At 4/21/2012 8:24 PM, Blogger VangelV said...

As for your SIX YEAR OLD National Geographic citation:

1) Citing the CAGW hysteria mongers at NatGeo is rather like citing the Pravda of old.

2) Even the SIX YEAR OLD IEA link purporting to substantiate the “reporting” is broken.


The citation is not National Geographic but the EIA report, which showed a different number for global production that what you were using. My point, which you missed because you have trouble understanding the issue, was that there is a huge difference between crude production and total liquids production. There is no such thing as a uniform petroleum barrel and the mix really matters when the key is energy (BTUs) and useful product rather than just volume.

While these liquids have a use they are not crude oil. The biggest component is NGLs, which have been selling for $50 a barrel and have about 70% as much energy per barrel as light sweet crude. Benjy's favorite ethanol, which is the bulk of the 'Other Lliquids' category has grown rapidly but that only has around 60% of the energy found in crude. As many analysts have pointed out, the category now also includes biodiesel, fuels made from coal or natural gas conversion, and even emulsions of water and heavy oil. If you look at light sweet crude production you see that we peaked in 2005 and have remained at that level since. If you look at total BTU production you find a similarly problematic picture. And no matter where you look nobody is making the claims that you make for shale oil production. The most optimistic picture comes from the increase in tight oil production from areas like the Bakken and Eagle Ford formations. The trouble is that the decline in the cheaper conventional production is offsetting some of those gains and those gains are very difficult to maintain because of the shortage of good rigs and rig crews, high depletion rates, and a number of specific technical and financial issues.

If you want to understand and learn something I suggest that you follow the links and compare the information provided with what you have cited. After you do you might have a good idea about what you don't know that you think that you know.

 
At 4/21/2012 8:39 PM, Blogger SBVOR said...

Now, as to the substantiated data on the economics of shale oil production (as opposed to VangelV’s pure, unadulterated bullshit). The Rand Corporation offers the following:

"Table A.1 summarizes the key parameters in the cost estimates for oil produced from surface retorting, presented in Chapter Three. The lower-bound estimate of $70 per barrel is based on the low end of the capital cost and operating cost ranges shown in Table A.1. Likewise, the upper-bound estimate of $95 per barrel is based on the high end of the capital and operating cost ranges."

http://www.rand.org/pubs/monographs/2005/RAND_MG414.pdf

Now, let’s examine recent trends in the price of oil:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rwtc&f=a

Now, tell me how much longer before Shale Oil becomes economically feasible on a consistent basis?

The same report from the Rand Corporation indicates:

“For potentially recoverable oil shale resources, we roughly derive an upper bound of 1.1 trillion barrels of oil and a lower bound of about 500 billion barrels. For policy planning purposes, it is enough to know that any amount in this range is very high. For example, the midpoint in our estimate range, 800 billion barrels, is more than triple the proven oil reserves of Saudi Arabia. Present U.S. demand for petroleum products is about 20 million barrels per day. If oil shale could be used to meet a quarter of that demand, 800 billion barrels of recoverable resources would last for more than 400 years.”

That has to scare the living daylights out of fools (like VangelV?) who invested in so-called “green” energy nonsense.

 
At 4/21/2012 8:58 PM, Blogger SBVOR said...

Postscript to my previous comment...

From the same Rand Corporation report cited and linked to in my previous comment (emphasis is mine):

"For in-situ retorting, costs might be competitive with crude oil priced at less than $30 per barrel, according to information released by Shell Oil."

 
At 4/21/2012 9:37 PM, Blogger VangelV said...


Now, tell me how much longer before Shale Oil becomes economically feasible on a consistent basis?


It never does. That is why you only have one facility that you can really point to and no reports of a positive economic return. Tight oil can be obtained by fracking and that is barely profitable in some of the better areas of some formations. But shale isn't profitable, which is why Petrobras is choosing ultra-deep water over shale even though it has had the Petrosix project you cited operating for two decades. It is why Shell abandoned its in-situ plans and why there are no significant projects on the planning boards right now.

 
At 4/21/2012 9:39 PM, Blogger VangelV said...

From the same Rand Corporation report cited and linked to in my previous comment (emphasis is mine):

"For in-situ retorting, costs might be competitive with crude oil priced at less than $30 per barrel, according to information released by Shell Oil."


The word is MIGHT. If it were really economic you would see many projects on the drawing boards not only in the US but in other areas of the world. Their absence tells us what we need to know about the economics in the real world.

 
At 4/21/2012 9:48 PM, Blogger VangelV said...

The biggest difference between you and I is that I DO cite and link to my sources.

As best as I recall, the ONLY citation you've offered is a laughable link to a SIX YEAR OLD bit of propaganda from one of the biggest eco-nut CAGW hysteria mongers on the entire planet (NatGeo).


You don't pay attention. My link leads you to EIA data that contradicts your claim about total crude production and shows that you include things like biofuels and refinery gains when you talk about petroleum production. The article was written in 2010, not 2006. The peak was in 2006.

According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.

In this scenario, crude oil production "never regains its all-time peak of 70 million barrels per day reached in 2006," said IEA’s World Energy Outlook 2010.

In previous years, the IEA had predicted that crude oil production would continue to rise for at least another couple of decades.


Since you utterly failed to even pretend to cite ANYTHING in your latest comment, I will take it for granted that you know you've been check mated.

Good to know! Thanks for playing -- chump!


You already showed how sloppy and inaccurate you were when you got your numbers off by 100. You now showed that you don't read very carefully. And since you cannot respond to the actual material in your own citations that support my view and reject yours I assume that you have given up trying to deal in facts and prefer to call people names.

Don't worry. There is nothing that a lot of learning and a new identity on the web cannot fix.

 
At 4/21/2012 9:48 PM, Blogger SBVOR said...

“But shale isn't profitable”

I suppose that in the alternate universe inhabited by the space alien known as VangelV that might (maybe) be true.

However, in our universe (where we substantiate our allegations), I count no less than 10 shale oil projects currently underway in the USA:

http://en.wikipedia.org/wiki/Oil_shale_industry#Oil_extraction

So, Mr. Space Alien, I suggest you contact the leaders of each of these projects and -- post haste -- convey your extraterrestrial “wisdom” upon these clearly inferior beings!

Oh, and…
Revisit my previous two comments and be sure to educate the folks at Rand Corporation and Shell.

ROTFLMFAO -- at the sheer, unadulterated, ignorant, arrogant lunacy that is VangelV!

 
At 4/21/2012 9:53 PM, Blogger SBVOR said...

"My link leads you to EIA data"

No, my dear moron...

Your SIX YEAR OLD NatGeo link (which you previously denied was your source) leads to a page which reads:

"The book requested is not in the bookshop."

You really aren't very good at this substantiating your allegations thing, are you?

 
At 4/21/2012 9:55 PM, Blogger VangelV said...

I suppose that in the alternate universe inhabited by the space alien known as VangelV that might (maybe) be true.

However, in our universe (where we substantiate our allegations), I count no less than 10 shale oil projects currently underway in the USA:...


Pay more attention. You are looking at pilot projects, primarily by companies that want to sell the technology to a bigger sucker when prices go up. How many barrels have been produced? And how many other planned projects have been abandoned and are not discussed in the Wiki article that you mention? I can remember dozens of shale projects that came across my desk and plenty of people asking for money for some new project or another. Call me when someone actually proposes a project that will lead to meaningful production and shows a positive return.

 
At 4/21/2012 9:58 PM, Blogger SBVOR said...

“But shale isn't profitable”

Worldwide, I count no less than 26 shale oil projects currently underway:

http://en.wikipedia.org/wiki/Oil_shale_industry#Oil_extraction

Please! Mr. Space Alien! Educate these fools! ROTFLMFAO!!!

 
At 4/21/2012 10:05 PM, Blogger VangelV said...

Oh, and…
Revisit my previous two comments and be sure to educate the folks at Rand Corporation and Shell.


Actually, I did talk to Shell. From what I can tell they abandoned their stupid ICP idea a while ago and are now talking about something different that can be applied in the Middle East, not the US.

Like I said, you need to actually learn something about the industry. Your knowledge seems to be based on superficial Google search information and has no depth. Anyone who has ever invested in the sector has seen many of these proposals dozens of times over the past 30 years, many times the same idea in the same area packaged as a promising new project by another charlatan looking for cash from gullible suckers who don't know better. They seem to have found a true believer in you.

 
At 4/21/2012 10:08 PM, Blogger SBVOR said...

“But shale isn't profitable”

Tell that to the Chinese:

“After 2005, China became the largest shale oil producer in the world…

The cost of shale oil production in Fushun is US$18.46 per barrel”


http://en.wikipedia.org/wiki/Oil_shale_in_China

 
At 4/21/2012 11:00 PM, Blogger VangelV said...

Your SIX YEAR OLD NatGeo link (which you previously denied was your source) leads to a page which reads:

"The book requested is not in the bookshop."

You really aren't very good at this substantiating your allegations thing, are you?


I suggest that you read that article. It was published in 2010, not 2006. The reference is to the World Energy Outlook 2010. We are now up to World Energy Outlook 2012.



Has the World Already Passed “Peak Oil”?
New analysis pegs 2006 as highpoint of conventional crude production

Mason Inman
For National Geographic News
Published November 9, 2010

"According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.

In this scenario, crude oil production "never regains its all-time peak of 70 million barrels per day reached in 2006," said IEA’s World Energy Outlook 2010.

....In previous years, the IEA had predicted that crude oil production would continue to rise for at least another couple of decades.

Now, because of rising oil prices, declines in investment by the oil industry, and new commitments by some nations to cutting greenhouse gas emissions, the new forecast says oil production is likely to be lower than the IEA had expected."..

 
At 4/21/2012 11:06 PM, Blogger SBVOR said...

VangelV,

I already debunked your NatGeo nonsense here (using IEA’s own data):

http://mjperry.blogspot.com/2012/04/worlds-ten-most-resource-rich-countries.html#c2928219785381367754

 
At 4/21/2012 11:24 PM, Blogger SBVOR said...

VangelV,

Fact facts, dipshit…

The shale oil train has already left the station. Within the next 10 years, we’ll see shale oil emerge as a very large portion of the global oil supply.

China is already the world’s largest producer of shale oil. They are producing that shale oil at a cost of $18.46 per barrel:

http://en.wikipedia.org/wiki/Oil_shale_in_China

Furthermore, from the link above:

“Professor Alan R. Carroll of University of Wisconsin–Madison estimates that Upper Permian lacustrine oil shale deposits of the Junggar-Turpan-Hami basins in northwest China, absent from previous global oil shale assessments, are comparable to the Green River Formation [where we find 1 trillion barrels or more].”

So, even if USA eco-nuts (and other purely political tyrants) prevent USA shale oil development, the Chinese will NOT be that STUPID!

We CAN do better if the damn federal bureaucrats and the eco-nuts at EVERY level of government would simply ALLOW our oil producers to develop our VAST resources:

http://sbvor.blogspot.com/p/drill-here.html

 
At 4/21/2012 11:44 PM, Blogger VangelV said...

“After 2005, China became the largest shale oil producer in the world…

The cost of shale oil production in Fushun is US$18.46 per barrel”


Not if you use GAAP accounting. The Chinese companies write off all of their capital costs up front. And you are still looking at the biggest plant in the world producing 5800 bpd.

Keep in mind that the Chinese have been eager to try any idea. When I was in Xinjiang I saw many wind turbines out in the desert. While impressive they did not produce very much power and were not economic. One of my pals owns a plant that cuts silicon wafers for solar manufacturers. His company actually helped to build the panels on the Chinese space station. He is in serious trouble because the solar experiment is China has mostly run its course.

That is something that you fail to understand. Using decades old technology in so few places and getting so little production is very telling. If it made sense the producers would be doing what you expect. That they do not tells us what we need to know.

Of course, you don't pay much attention or know very much about the actual topic. As I wrote above, you seem to depend on Google searches and a very superficial reading of whatever you find. Try thinking instead.

 
At 4/21/2012 11:52 PM, Blogger SBVOR said...

VangelV (space alien from an alternate universe),

SERIOUSLY?

Now you're comparing wind and solar follies to shale oil production?

When China abandons their shale oil production (ain't gonna happen) be sure to let us know. Until then, you are -- as always -- chock full of shit.

You're living in a fantasy world. The facts are plain to see (in my previous comment).

 
At 4/22/2012 7:38 AM, Blogger VangelV said...

Now you're comparing wind and solar follies to shale oil production?

When it comes to economics, yes I am.

When China abandons their shale oil production (ain't gonna happen) be sure to let us know. Until then, you are -- as always -- chock full of shit.

China is not abandoning wind or solar production. Once the costs have been sunk the Chinese do not consider depreciation to be a cost. And if the capital comes from some foreign company or idiots in the government they have no trouble with money losing operations as long as they get jobs and benefit from them.

The point is simple. If shale were as great as you imagine why aren't there real projects that will produce a material amount of shale oil being built in all the countries that have deposits, including the US? As your own sources point out, the technology is very old and well known. The prices are favourable. Yet, the producing companies want nothing to do with shale projects unless they can figure out a way to solve their conventional reserve decline problems. If the SEC tweaked a few of the rules I am willing to bet that we would see hundreds of small new projects tomorrow. That would make sense for management teams wishing to make their reserves look good. But until that happens the economics make no sense and there is no incentive for the producers to waste money on useless shale projects.

What next? Will you dust up the discredited abiotic arguments and tell us that the only reason why we don't have access is government?

 
At 4/22/2012 9:51 AM, Blogger SBVOR said...

“why aren't there real projects that will produce a material amount of shale oil being built in all the countries that have deposits, including the US?”

Just because you refuse to see them, does not mean they do not exist.

As of 2008, the major shale oil producers are Estonia, Brazil and China, while Australia, USA, Canada and Jordan have planned to set up or restart shale oil production.

The above link documents no less than 10 projects in the USA and no less than 26 worldwide.

FAR more projects would come online if the damn federal bureaucrats would simply ALLOW it:

The richest and most abundant deposits of oil shale are found on federal lands managed by the U.S. Department of the Interior. As such, the course of oil shale development and its environmental impacts will be shaped by federal decisions regarding how much, when, and which specific lands will be offered for lease. At present, the Department of the Interior does not have available a strategic approach for leasing oil shale–bearing federal lands.

Let’s not forget, fracking is another way of producing shale oil:

The Energy Information Administration (EIA) reported that oil production from shale formations was approximately 275,000 barrels per day (B/D) in 2010, up from virtually nothing in 2005, and triple the 2008 production level.

In previous comments, I have substantiated that China is producing shale oil at a cost of $18.46 per barrel and Shell believes they can, in the USA, produce shale oil at a cost of $30 per barrel. Bearing that in mind:

If low-cost shale oil production methods can be achieved, direct economic profits in the $20 billion per year range are possible for an oil shale industry producing 3 million barrels per day.

Face it, dipshit, the shale oil train has left the station and is gathering speed. You’ve been left behind, living in an ideologue’s fantasy world.

 
At 4/22/2012 11:51 AM, Blogger VangelV said...

Just because you refuse to see them, does not mean they do not exist.

“As of 2008, the major shale oil producers are Estonia, Brazil and China, while Australia, USA, Canada and Jordan have planned to set up or restart shale oil production.”

The above link documents no less than 10 projects in the USA and no less than 26 worldwide.


LOL...Did you read the Wiki page you referenced? You are citing mostly research by companies that are trying to sell equipment, not major projects that will produce meaningful amounts of oil. After decades of operation for some of these projects the total global shale production comes out to around 20,000 bpd. (The world uses around 83,000,000 barrels per day.) That production doesn't even register in the data, which is why most of the material that you cited didn't mention shale oil as a solution.

FAR more projects would come online if the damn federal bureaucrats would simply ALLOW it:

“The richest and most abundant deposits of oil shale are found on federal lands managed by the U.S. Department of the Interior. As such, the course of oil shale development and its environmental impacts will be shaped by federal decisions regarding how much, when, and which specific lands will be offered for lease. At present, the Department of the Interior does not have available a strategic approach for leasing oil shale–bearing federal lands.”


The problem for your case is that there are no commercial producing projects on private or state land in the US. You would think that in the half decade after the report was published someone would have taken advantage of an economically sound method to produce oil at $100 bucks a barrel.

Let’s not forget, fracking is another way of producing shale oil:

“The Energy Information Administration (EIA) reported that oil production from shale formations was approximately 275,000 barrels per day (B/D) in 2010, up from virtually nothing in 2005, and triple the 2008 production level.”


You are talking about two different things.

Shale oil comes from upgrading kerogen, which is what most of your most recent citations were about. Since that method is not economic and you can't explain why global production is around 20,000 bpd you are switching the debate towards tight oil in shale formation, which is extractable at a profit in some limited locations but not in the average shale formation that is covered by the USGS resource claims.

It is possible to make a decent profit in the sweet spots of the best shale formations if you have the discipline to stick to activity that makes economic sense. But the nature of the leasing programs does not give most of the shale companies that luxury. To keep their leases on the books they need to drill even when there is no profit being made and cash flows cannot fund planned capital spending programs. This has been discussed previously and should be familiar to any investor in the sector.

 
At 4/22/2012 12:47 PM, Blogger VangelV said...

In previous comments, I have substantiated that China is producing shale oil at a cost of $18.46 per barrel and Shell believes they can, in the USA, produce shale oil at a cost of $30 per barrel. Bearing that in mind:

“If low-cost shale oil production methods can be achieved, direct economic profits in the $20 billion per year range are possible for an oil shale industry producing 3 million barrels per day.”


China is only producing 6,000 bpd from shale. Chinese companies are paying a lot more than that for reserves when they acquire foreign oil reserves. A reasonable person would ask why is it that if Fushun Mining Group could produce oil at $18.46 per barrel why it isn't it building many more such facilities. But an unreasonable person who prefers hype and fantasy to logic and perspective does not bother asking questions that would damage the narrative.

I am familiar with some Chinese companies including a few that operate in Liaoning Province. I am also familiar with the accounting practices in the state companies. The funny thing is that the cost of capital is ignored and there is no depreciation taken into account when calculating the cost of production. The cost is not $18.46 per barrel when doing the calculations the same way that we do them here. If it was you would have an explosion in facility construction and much more than 6,000 bpd of production from Chinese shale formations.

Actually, Fushun Mining Group has done some indirect damage to a number of Western mining companies. Thanks to the terrible damage it has done to the environment in Liaoning the provincial government has stopped the development of some very profitable mineral reserves. An example is the Mundoro Maoling Gold Project. Investors in Mundoro lost when when they could not get permission to proceed with the project and wound up selling to China Gold, which had much more clout with the government and could take the time to negotiate/force all of the required permissions.

My guess is that you will not see much more shale development out of Fushun Mining Group unless China becomes desperate and the funding comes from a partner with deep pockets who is willing to lose money in order to claim reserves that could not be economically developed. While there are such companies it is doubtful that in the age of the internet the scam can be very successful. It looks as if shale production will remain marginal for decades.

 
At 4/22/2012 1:19 PM, Blogger SBVOR said...

VangelV (space alien troll from an alternate universe),

Funny, you consistently counter substantiated evidence with unsubstantiated allegations of personal experience provided by an anonymous poster.

In other words, not only are you relying upon the logical fallacy of an appeal to authority, you are relying upon the logical fallacy of an appeal to an anonymous "authority" (an "authority" which brazenly defies all available data, evidence, logic and reason).

In other words, you're just a silly troll and I should not have fed you for as long as I did. I've left enough evidence behind in this thread to thoroughly debunk your nonsense. So, we'll just leave it at that and I'll bid you farewell and good riddance.

 
At 4/22/2012 4:04 PM, Blogger VangelV said...

Funny, you consistently counter substantiated evidence with unsubstantiated allegations of personal experience provided by an anonymous poster.

The evidence, which shows that total shale oil production is 20,000 bpd even though the retort technology has been used for more than half a century supports my claim that shale oil is not important at this point and not profitable.

You have no evidence showing what it really costs the Chinese or Petrobras to produce oil. One would argue that in a rational world if this process was economic the companies would be eager to produce a lot more oil from it. The fact that all you can point to is a few small test facilities supports my view, not yours.

I have actually worked in China and have looked at the accounting practices. As such I am not fooled by claims that are contrary to what is observable on a daily basis. Why exactly is Fushun Mining Group limiting its production to 6,000 bpd when it makes $80 of profit on each barrel again? Are the brilliant Chinese so stupid that they can't figure out that there is a lot of money to be made at $115 a barrel price for Brent? And why aren't other companies doing the same thing?

There is no logic that can support your claims, which come from Wiki pages. In fact your own link supports my claim and contradicts yours.

It shows that according to the World Energy Council, the 2008 global shale oil production was 930,000 tonnes which is equal to 17,700 barrels per day.

How does that compare to total conventional oil and gas liquids? Well, the 2008 data shows total production of 3,950,000,000 tonnes, which comes out as 82,000,000 barrels per day. Only in your politically dominated world of delusion is 17,700 out of 82,000,000 a significant amount.

Try reading your own sources and look at the scales. Even for a guy who easily overlooks results that are off by 100 times it is hard to ignore just how insignificant shale oil production is when compared to conventional production or even tight oil production from shale formations.

 
At 4/22/2012 4:07 PM, Blogger VangelV said...

In other words, you're just a silly troll and I should not have fed you for as long as I did. I've left enough evidence behind in this thread to thoroughly debunk your nonsense. So, we'll just leave it at that and I'll bid you farewell and good riddance.

If you can't tell just how small 17,700 is when compared to 82,000,000 you are beyond hope. If you can't take the time to read the very links that you have provided and understand just how insignificant shale oil production really is compared to the production from conventional sources you have a serious problem that can't be fixed by doing a bit more reading.

Look in the mirror. What you think is right isn't and you have a very long way to go before you can contribute to a meaningful debate on the subject.

 
At 4/22/2012 8:17 PM, Blogger Hydra said...

I don't see the point of all this. Russia has tremendous resources. All the other stuff is a minor impediment compared to having none.

 
At 4/24/2012 4:46 PM, Blogger SBVOR said...

Completely mischaracterizing an opponent’s assertions is a favorite straw man tactic among trolls. In his previous two comments, VangelV took that tactic to the extreme.

So, just to set the record straight…

I never suggested that shale oil production currently represents a large portion of the global oil supply. What I did suggest is that:

“Within the next 10 years, we’ll see shale oil emerge as a very large portion of the global oil supply.”

VangelV claims (incorrectly) that the world has already reached peak oil production. What is true is that oil production is -- of necessity -- increasingly turning to more costly and more challenging production techniques. That is a trend which will -- over time -- make the production of shale oil more and more attractive.

And, that is precisely the point which I thoroughly substantiated in this comment:

http://mjperry.blogspot.com/2012/04/worlds-ten-most-resource-rich-countries.html#c1665635450262979777

At some point, the trillions of barrels of in place shale oil will -- of necessity -- become the preferred source for producing oil for hundreds of years to come. We can debate whether that point will be reached in 10 years or 80 years. But, it is indisputable that -- at some point -- shale oil will become a very significant portion of the global oil supply. Eventually, it will -- of necessity -- become the primary portion of the global oil supply.

Click here for the peak oil post from which the previous link was extracted.

 
At 4/24/2012 8:20 PM, Blogger VangelV said...

I never suggested that shale oil production currently represents a large portion of the global oil supply. What I did suggest is that:

“Within the next 10 years, we’ll see shale oil emerge as a very large portion of the global oil supply.”


Why? If prices of $100 plus did not attract any investment in shale oil what would change it? And if you are close to zero today it is impossible to have, "a very large portion of the global oil supply" come from shale oil unless you are looking at several trillion of new investment today. Where is this investment?

VangelV claims (incorrectly) that the world has already reached peak oil production. What is true is that oil production is -- of necessity -- increasingly turning to more costly and more challenging production techniques. That is a trend which will -- over time -- make the production of shale oil more and more attractive.

Look at the actual crude production without refinery gains, ethanol, biofuels, etc. Today's production is around the same level as 2005 (a bit lower actually) even though there was nearly a trillion in new investment. That sends up red flags that you are ignoring.

At some point, the trillions of barrels of in place shale oil will -- of necessity -- become the preferred source for producing oil for hundreds of years to come. We can debate whether that point will be reached in 10 years or 80 years. But, it is indisputable that -- at some point -- shale oil will become a very significant portion of the global oil supply. Eventually, it will -- of necessity -- become the primary portion of the global oil supply.

No. The energy density of shale is too low. Unless you can figure out a way to set a nuke to upgrade a lot of the oil in a formation you are not going to get a positive return on the energy invested.

 
At 4/25/2012 9:30 AM, Blogger SBVOR said...

And, the lies just don't stop...
Sure sign of a bonafide Troll

 
At 4/27/2012 7:45 AM, Blogger VangelV said...

And, the lies just don't stop...
Sure sign of a bonafide Troll


Good. You have looked in the mirror and admitted what you are. Recognition of one's ignorance is the first step. Good luck on the journey.

 

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