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Re: Peak everything

Hi Don,

 

Well, I see that the north american rig count is down 2.2% yoy so the increase in production  isn't coming from the frack side, at least in the next year or two.

 

That's because those wells have a totally different production profile than conventional oil. You spend a whole lot of money, drill it and frack it, and then start getting maybe 1000 bpd. The best flow you'll ever get out of it is on the first day or nearly and then it declines to stripper or capped within a couple of years.

 

It isn't like the old conventional world where somebody got lucky putting a pipe in the ground to 2000 feet and they started sucking 50,000 bpd out of it with peak coming at 150K 8 years down the road and they're still stripping 100 out 20 years later.

 

That means that you have to keep drilling more and more to increase aggregate production and the rigs aren't there- even if rigs are moving out of the nat gas plays in the east, where it isn't profitable to drill right now, and into Bakken, Eagle Ford and other shale plays.

 

If we were to get to where you suggest- meeting or exceeding our current domestic usage- a back of the napkin calculation suggests it would require something like 8-10X the rigs.  That assumes that conventional oil production remains flat, which it won't.

 

If we were running 8-10X the rigs it would in fact be a huge boom for drillers, steel manufacturers and service industries. I'm guessing we'll try but probably a whole lot of capital goes there to die as subsequent sites yield, maybe 500 bpd per well vs. the 1000 (at virtually the same, or greater, cost per well) and thus require $150 to break even, and on and on and on.

 

If that did turn out to be the case, we'd be better off to give people shovels and pay them to dig holes and fill 'em back in.  Future generations will have better things they could have done with that last bit of expensive oil and gas than blow 80% of the energy off as waste heat while they're using a 3000 pound vehicle to move one person to Walmart 10 miles away.

 

 

 

 

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Senior Advisor

Re: Peak everything

The only thing I know about it is what he tells me. I do know he is incredibly busy and doesn't have the help he previously had cause other companies keep hiring them away.

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Re: Peak everything

I would certainly agree.

 

So why not move to a 100% recycled, renewable energy society?

 

That would create a huge amount of employment. The reason why we don't is- using a micro-example- let's say that you put a tax that provided for the future  recylcing of the item and packaging that amounted to 20 cents per unit on a $10 plastic, made in china googaw at Walmart.

 

Walmart is pissed because, let me name the reasons, it reduces demand by 2% and they need to hit their profit projections next quarter or the CEO and board don't get their multi-million dollar bonuses. Da gummint, freedom, red tape, unamerican, jobs, jobs, jobs they cry!  And not only do they cry but they and the association of amalgamated douchebags that represents their interests in washington passes around some serious cash to make sure it doesn't happen AND makes sure they know that they will mobilize thousands of concerned citizens to  them out at the next primary or general election by linking it to one of their favorite social hot button issues (recyclers kill babies, take guns etc.)

 

The landfill and associated industries ( a huge lobby), ditto.  And others too numerous to mention, seeking to protect what they have no matter what.

 

Ditto on agribusiness. They don't wouldn't want a percent or two lopped off their near term margins by paying for disposing for their packaging- they much prefer the system whereby they can externalize those costs for  free and the government subsidizes their customers directly with food stamps.

 

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Senior Contributor

Re: Peak everything

We already have too much tax and bureaucracy that causes power to be concentrated in Washington which causes the very corruption you describe.  Let the free market run recycling.  Government would just screw it up.  Perhaps govt could encourage the recycle programs, but don't send any money to DC!

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Senior Advisor

Re: Peak everything

Are we talking about oil production peaking because of demand or supply?  Oil is energy and there are many movements afoot to alter how we use and generate energy.  Oil by itself may not be the marker we should be watching.

Also, energy demand can vary considerably.  More fuel efficient cars reduce demand, as does efficiency in insualtion, heating and so forth.  Wind, solar, geo-thermal, nuclear and other enerfgy plays in to the picture.

If 1/3 of food produced is wasted or goes bad, think of how the "peak corn" would be affected by cutting even half of the waste away.  These theories are cute.  Are they useful?  Or do thtey get us looking at one hand while the other hand picks our pocket?  

Keeping one's eye on the ball is important.  Now, which ball should we watch?

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Senior Contributor

Re: Peak everything

What theories are you refering to?

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Veteran Advisor

Good thing oil is not going below $80/barrel......

just a reminder of how little we know sometimes.

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