In it’s World Energy Outlook 2018 issued on November 13, the IEA stated US Shale will need to add another "Russia" before 2025, or roughly 11 million barrels per day if forecast energy demand is to be met. Given the recent crash in world oil prices due to a number of competing geo-political factors (as is usually the case), and the angst in the patch, I thought it interesting to test this thesis. As an aside, the OECD storage levels were at the five-year average in October at 2.848 billion [Read more]
Rosy outlook for WTI as EIA overstates recent shale production
You may recall in my two previous posts on this subject that I sensed EIA production estimates were too optimistic based on large step change (300,000 BOPD or more) production estimates in the weekly Petroleum Status Report (PSR). Now that Texas Railroad Commission (TRC) third month production numbers are in, I can definitively comment on production during the above time frame. Based on the EIA PSR, US production has increased from 9,430,000 BOPD on August 1, 2017 to 10,251,000 BOPD at the [Read more]
Could the Columbia Basin Trust serve as a model for seeing Trans Mountain built?
Two sides. Two entrenched positions. No middle ground. Can there ever be a win-win solution? Perhaps we can look to the past for an example of a beneficial solution. In 1964 the Columbia River Treaty was signed by Canada and the United States to develop the Columbia River and its tributaries for hydro electricity. This led to a series of dams on the Canadian side and the Libby Dam on the Kootenay River in Montana. Citizens of British Columbia were not consulted and this led to many years of [Read more]
EIA Production estimates are way off the mark and so too may be future United States energy dominance
The term energy dominance has been eschewed by the US Department of Energy as the end game of the shale revolution with the resurgence of production to all time highs (oil, natural gas and NGL’s). Politicians and the media are singularly focused on when, not if US oil production will eclipse Russia (at 11.3 million bpd) and Saudi Arabia at (10.0 million bpd constrained). This viewpoint is understandable as oil is the largest hydrocarbon energy source and is fungible and easily transported. [Read more]
How do actual state production volumes stack up against EIA weekly and monthly production estimates?
In a previous article I wrote, I reckoned, based on thirty-five years of experience, that the EIA estimates were too optimistic. This thesis was borne out of comments made by IEA boss Fatih Birol. Birol was quoted as saying US oil production grew by 864,000 barrels per day, according to weekly estimates, since October 2017. It was actually only 658,000 barrels per day from November 1, until the first week of February according to the weekly EIA reports. When I heard what Birol said, my [Read more]
Confused by EIA Production Estimates? Join the Club
Fatih Birol, Chairman of the International Energy Agency was recently quoted as saying US oil production grew by 864,000 barrels per day, according to weekly estimates, since October 2017 (it was actually only 658,000 barrels per day from November 1, until the first week of February) and that it was astonishing. The comment was made after the EIA reported a weekly increase of 332,0000 barrels per day in the Feb 7, 2018 weekly Petroleum Status Report. The definition of astonishing is “extremely [Read more]
Andrew Weaver’s green hypocrisy and BC’s natural gas opportunity
Andrew Weaver, the leader of the BC Green Party, is against the development of LNG because it would impact BC’s CO2 reduction targets as a result of CO2 emissions from upstream activities. While it is true that upstream activities do produce CO2 from diesel consumed during drilling and completions, the CO2 reductions in consuming countries (who by the way are bringing on dozens of new coal plants each year) more than offsets upstream CO2 emissions. So my question to you Mr. Weaver is: Does [Read more]
OPEC vs. US shale, where do oil prices go?
In a perfect Goldilocks world there would be a perfect price; not too hot ($80 per bbl), not too cold ($40 per bbl) but just right ($60 per bbl). We all know that forecasting price is a fool’s game and most prognostications become obsolete the moment they are written. Why? Because the production of oil and gas does not operate in an unfettered universe where instantaneous production and demand are in sync. Part of the reason for is because of varying project timelines from long lead times [Read more]
Column: Canadian Unconventional Drillers are a Yuuge Bargain
It is somewhat understandable that high quality Canadian unconventional drillers are being shunned when investors have the option of jumping into Bitcoin, or the late stage NYSE stock rally. Clearly, these latter two investment vehicles have no risk and are a guarantee of high returns as witnessed by one of the longest winning streaks on record. The price rise of Bitcoin speaks for itself. Taking my tongue out of my cheek, Iike many older folks who were around in 1987, 2000 and 2008/9, I am [Read more]
Why the IEA and EIA have their supply/demand forecast for 2018 wrong
The market has become decidedly bearish towards oil prices in the past six weeks as the US EIA has released several consecutive weekly production increases. In case you don’t know the EIA publishes weekly estimates of US oil production in its petroleum inventory report and forward month estimates in its monthly drilling productivity report. For example, the December drilling productivity report will estimate January 2018 production. Based on recent bullish US production growth estimates, the [Read more]