"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 15 hours Global Debt Hits 225% Of GDP
  • 16 hours The World’s First Trillionaire Will Be A Space Miner
  • 17 hours How Student Debt Could Cause The Next Real Estate Crisis
  • 18 hours This $550 Billion Industry Is Betting On Bitcoin
  • 19 hours One Commodity Set To Soar On Russian Sanctions
  • 21 hours China’s New Car-Market Rules
  • 23 hours Oligarch Risk: The New Red Flag For Investors
  • 2 days Five Things To Consider Before Investing In An IPO
  • 2 days Investors Bullish As Earnings Season Kicks Off
  • 2 days Nearly One-Third Of U.S. Lottery Winners Declare Bankruptcy
  • 2 days Is Facebook Still A Buy?
  • 2 days Will Blockchain Stocks Ever Bounce Back?
  • 2 days Geopolitical Tensions Fail To Boost Gold Prices
  • 2 days China's Economy Soars Despite Trade War Fears
  • 2 days The Biggest Threat To The Economy
  • 3 days What Does A Billionaire's Bucket List Look Like?
  • 3 days Is The Global Economy Growing Or Slowing?
  • 3 days A Sanctions War Could Cripple U.S. Corporations
  • 3 days British Pound Soars To Highest Level Since Brexit
  • 3 days Markets Bounce Back As Geopolitical Fears Subside
Could Tesla Be Profitable By The End Of 2018?

Could Tesla Be Profitable By The End Of 2018?

Tesla has struggled to get…

Oligarch Risk: The New Red Flag For Investors

Oligarch Risk: The New Red Flag For Investors

Investors are scrambling to diversify…

Oilprice.com

Oilprice.com

Information/Articles and Prices on a wide range of commodities: We have assembled a team of experienced writers to provide you with information on Crude Oil,…

More Info

Has The U.S. Reached 'Peak Oil' At Current Price Levels?

Last night the EIA once again capitulated on the myth that rig counts don't matter and the productivity of wells would largely offset, leaving the industry on a continuous path to higher output. The current consensus of 500,000 B/D additional growth in 2015 US production now appears very much at risk.

Look how far we have come, folks, from all that media hysteria this past year. Yesterday, Reuters even wrote an article stating that the EIA prediction of a sequential decline in oil production in May vs. April would be the first, if proven, true prediction. Meanwhile, fact checking would indicate that this, in fact, occurred last week as reported here. In any event the EIA now thinks that production will decline 57,000 B/D in May counter to earlier expectations that the Permian would largely offset declines in the Eagle Ford and the Bakken. This is despite higher productivity of existing wells proving that rig count does matter and the market has underestimated the effects of high decline rates.

Further, the hysteria about Cushing overflowing with oil also appears unlikely to occur, as a result. Yet another in a string of attempts by the media to misconstrue the facts.

Now as a topper, we hear from the North Dakota Resource Management that amazingly February oil output fell 1% sequentially in the month despite producing wells increasing! Thus even the theory that well productivity would increase is dispelled. To reiterate, look for EIA to revise its oil production estimates for 1Q after the crisis wanes later in 2015. The warning in an article here sounded that producers reaching deep into the lower cost, most productive regions (which is clearly occurring in Bakken), would come at a price.

That price is depletion of those regions at a faster rate, leading to cost pressures down the road. If prices don't rise to offset those higher drilling costs then production will start declining. A further point, the talk of all these uncompleted wells potentially coming on line during 2015 can now be looked upon as not increasing output, but as an effort to maintain it which was the theory here all along (another media theory dispelled makes what, 4?).

One has to wonder if "Peak Oil" at the current price deck in the US is very real indeed. Look for draws and not inventory additions to start in earnest in May. The next media spin will now focus on future risks to oil supply in 2016 to keep the oil curve flat, whether it be the rise in the US dollar or Iran. The short term risks appear to be clearing so the attention will be turning on preventing prices from rising too high. Just this morning, Dow Jones ran an article quoting the Citibank oil analyst that days of triple digit prices are in past. Thump...that's the sound once again of someone falling off their chair in utter amazement as to what is occurring to distort reality.

 


Source: http://oilprice.com/Energy/Crude-Oil/Has-The-U.S.-Reached-Peak-Oil-At-Current-Price-Levels.html

By Leonard Brecken for Oilprice.com

 

Back to homepage

Leave a comment

Leave a comment