Wait a minute refinery gains are now a form of production? Biofuels are petroleum? NGLs are as good as crude?
There is no doubt that US crude and condensate production have increased tremendously and stand as a testament to good old fashion American engineering but including the 4.8 million barrels of non-crude in the total is more than a little bit of a stretch.
Refinery gains are an expansion in volume not energy content and in fact on a net basis require energy input to accomplish. Since the rest of the world doesn’t consider “refinery gains” this should be ignored, think in terms of energy content.
In the case of biofuels without all the natural gas (fertilizer), diesel (farm equip. & transport of biomass) and other petrochemical inputs like pesticides it wouldn’t be possible. As many have noted it is questionable whether there is even a net energy gain, especially in the case of corn based ethanol.
The NGLs like propane and ethane play a part but not in the all-important markets of liquid fuels like diesel and gasoline.
Finally if we are such leaders in global production why are we still importing 6.5 million barrels of crude per day? This issue was covered in the October 4 issue of the MRR.
So even if we take this on face the US still depends on the global export market for just under half of the crude it consumes. Apparently the study didn’t bother to cover the other half of the story. Importantly it was the half where the US is still the world’s Largest Liquids Consumer.
Note: There will be no Master Resource Report published on November 1, 2013
In this video Art Berman, Labyrinth Consulting Services, shares research into the economics of drilling and producing unconventional reservoirs in the United States during a presentation to the Houston Geological Society. He discusses the Eagle Ford, Haynesville, Barnett and other shale gas plays. Berman presents graphs that show shale gas uneconomic to drill and produce at current gas prices. He says the public is misled by energy company statements that gas reserves are large and that companies are making a profit from shale gas.
The video is 1 hr. 14 min. which may seem long but it is worth every minute.
Art and I will be participating in a special session at the Geological Society of America’s Annual Meeting in Denver at the end of this month. It should be an eye opening and interesting session to say the least.
Note: Opinions expressed in this video are solely those of Art Berman and are not intended as investment advice.
After Art’s serious presentation here is something fun.
The process not only included heating the rock but also a freeze wall around the area to contain the process. That is right a box of frozen rock surrounding rock that is being heated. Doesn’t sound like a very good process and it appears Shell has arrived at the same conclusion.
The key here though is that this oil shale and not the type of shale oil or tight oil seen in the Bakken. They are dramatically different. Kerogen is a precursor to crude oil while the fields in the Bakken produce true crude oil.
However, this doesn’t mean it is completely over for oil shale. ExxonMobil is testing some in situ heating itself to convert the kerogen to oil.
The US government has estimated that the oil shale resource is over a trillion barrels of oil. Now this assumes the kerogen can be converted to oil and extracted from the rock profitably. Remember don’t confuse a resource with reserves and reserves with profitable production. This science project is likely to continue for a long time yet.
Note: Clients and advisers at Ravenna Capital Management currently hold positions in Shell and ExxonMobil.
The EIA yesterday reported that working gas in storage had a net increase of 46 Bcf over last week. This put the volume of gas in storage 5.4% below last year and 0.5% above the 5 year average shown by the black line in the graph below. When compared to the previous five year average which leaves out the extrodinarily warm winter of 2012 the gas in storage is 2.5% above.
One of the probable reasons for the lower than expected storage build was the combination of hot weather and the shut down of some nuclear power plants for scheduled maintenance placing more demand on gas generation.