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EmpiricalBear

Peak Oil Just Crashed

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Wow, that's a very balanced report from the BBC about Venezuela and the US. They usually gloss over the fact that Chavez was democratically elected. Perhaps it's okay to say so now Rumsfeld has admitted it along with his insight about Hitler but maybe there's some kind of rogue element at the BBC.

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theres a lot of deep sea oil off brazil, falklands and probably deep in the middle of the pacific. as the need grows the technology will improve. the deepest oil legs in the world are almost a mile down and are in the gulf of mexico.

so there.

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Guest Charlie The Tramp
In an interview with BBC Newsnight's Greg Palast, Mr Chavez - who is due to host the Opec meeting on 1 June in Caracas - said he would ask the oil cartel to set $50 a barrel as the long term level.

Chavez said enough oil for 200 years.

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I'm not so sure about this, it seems Chavez is postering for the next OPEC meeting. According to Newsnight he wants them to recognise the fact that Venezuela has greater reserves than Saudi! Now, if you know about OPEC you can't fail to realise that a country's production quotas are based upon their stated reserves, hence these figures are always fudged and never decrease, in actual fact they arbitrarily increase without reason even when no new fields have been discovered, OPEC reserve figures have never decreased despite decades of production.

Ever since Chavez chucked the oil majors out of the country the fields have fallen into a terrible state apparently, sitting on reserves isn't that great if production volumes are falling and if you don't possess the latest extraction technology.

Additionally, their oil is heavy sour.

Chavez said enough oil for 200 years.

He also does a non-stop weekly TV broadcast that stretches for over 6 hours, whilst wearing white trainers and singing Sinatra. :rolleyes:

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Here's a lesson in economics for you bears. At a low price, supply is withdrawn. At a high price, supply is offered.

Venezuela & Canada are the perfect examples of this.

Great... so when their production really comes online prices will fall ;)

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Here's a lesson in economics for you bears. At a low price, supply is withdrawn. At a high price, supply is offered.

Venezuela & Canada are the perfect examples of this.

so let me get TTRTR 'economics' straight. If nobody offers you enough rent to cover your expenses you withdraw your flat from the rental market. This works how?

Edited by RobertPaulson

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Here's a lesson in economics for you bears. At a low price, supply is withdrawn. At a high price, supply is offered.

Venezuela & Canada are the perfect examples of this.

Its a wonder there are so many mp3 players on ebay then.

Although what you've said is applicable in some situations what you're stating is misleading, infact it depends how you intepret it, buy low sell high .. isn't that what alot of posters here have been getting at?

This also holds true which is contradictory to your statement ... if supply increase prices drop. Raise the price and demand falls which in turn increases stock/surplus/supply which devalues it.

In a market if the reason for surplus is the price then the price must correct otherwise it wouldn't be a market.

What your saying is right from a sellers point of view, wrong from a buyers point of view, whoever wants it the most will generally move which is why sentiment in the housing market is such a big deal. If people just arn't that botherd about owning the price will fall.

You know all this anyways, you're just trying to make a point out of nothing :lol::)

EDITED:

Check out my better use of grammer! (yes i see you're reading this thread :lol: )

EDIT 2:

Bah its punctuation not grammer, well the thought was there

Edited by theChuz

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so let me get TTRTR 'economics' straight. If nobody offers you enough rent to cover your expenses you withdraw your flat from the rental market. This works how?

Gee, um, selling?

A property up for sale is generally off the rentals market instantly whether it sells or not. Supply instantly withdrawn.

Great... so when their production really comes online prices will fall ;)

Their production is online. Funny that we haven't seen the predicted $100 barrels isn't it?

This also holds true which is contradictory to your statement ... if supply increase prices drop. Raise the price and demand falls which in turn increases stock/surplus/supply which devalues it.

This is EXACTLY what I am saying, not contradictory at all.

In all markets, there is a point where sellers will refuse to sell (why sell at a loss), where buyers can't get enough (think 4WD boom), or where sellers are rushing to market (Venezuela & Canada), but where buyers are reluctant (think the rise of the Prius & GM near to going bust).

There is a constant balancing act going on in all markets. I bet they're digging up gold at a great rate right now to satisfy DrBubb & his followers for example.

You bears always see the extremes, but I see different shades of grey.

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This is EXACTLY what I am saying, not contradictory at all.

In all markets, there is a point where sellers will refuse to sell (why sell at a loss), where buyers can't get enough (think 4WD boom), or where sellers are rushing to market (Venezuela & Canada), but where buyers are reluctant (think the rise of the Prius & GM near to going bust).

There is a constant balancing act going on in all markets. I bet they're digging up gold at a great rate right now to satisfy DrBubb & his followers for example.

You bears always see the extremes, but I see different shades of grey.

I don't know if you have ever bought or sold shares but im sure you can use a degree of empathy with it anyway. Owners will refuse to sell at a loss unless it looks like they will lose more in the future, sell now for 5K less or sell in 12 months for 20K less. That depends on sentiment, its also how we go form a sellers market into a buyers market.

Here's a lesson in economics for you bears. At a low price, supply is withdrawn. At a high price, supply is offered.

Which is why i said it was misleading, it is not a lesson for bears if they have been saying the same thing (interpretation) all along. Which is why i could only assume that it is to be interpreted differntly from what the bears have been saying.

In all markets, there is a point where buyers will refuse to buy. Yes a constant readjustment. I don't see a lesson for any bears on this just a confirmation. I guess it all depends on how we (both of us) decide to spin the sentence because of our predispositions. :)

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Back onto the original topic though, Peak Oil never meant we'd run out instantly.

It's a matter of oil continually adjusting to higher prices. This does result in more marginal supplies becoming economic. We do have reasonable supplies of oil for the moment.

But we all know our economics here don't we? We're adjusted to energy prices sitting within the overall economy in a certain way. Inexorably rising oil prices will change that balance and will start to affect how we do things. For example it will not be economic to fly in apples from New Zealand, we will grow them locally. Same goes for a lot of manufacturing. Could be a really good thing in many ways. A return to a real economy from service sector nonsense.

Oil prices going up gradually for 20 years from their current steepish level is probably the absolute best case scenario, as it gives us both time and incentive to switch to other sources, hopefully without causing economic and political turmoil to the extent that a significant portion of us die.

Edited by CaptainClamp

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theres a lot of deep sea oil off brazil, falklands and probably deep in the middle of the pacific. as the need grows the technology will improve. the deepest oil legs in the world are almost a mile down and are in the gulf of mexico.

so there.

concrete gravity platforms are the future

just tow it out there and guy rope it to the seabed, then send a load of verticle pipe down till you hit the bottom, weld the joints together then guy rope that to the guy ropes

then cement it and send down the horizontal drilling tools.

no need for jack up drill legs

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so let me get TTRTR 'economics' straight. If nobody offers you enough rent to cover your expenses you withdraw your flat from the rental market. This works how?

Gee, um, selling?

right. Good job that won't happen to everyone at the same time then

concrete gravity platforms are the future

just tow it out there and guy rope it to the seabed, then send a load of verticle pipe down till you hit the bottom, weld the joints together then guy rope that to the guy ropes

then cement it and send down the horizontal drilling tools.

no need for jack up drill legs

:blink:

Edited by RobertPaulson

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Their production is online.

It is for now :-

Venezuela takes back oil fields

"Venezuela has taken control of two oil fields operated by French firm Total and Italy's Eni.

The government said it had taken the step after the failing to agree a deal with the two firms which would give it a majority stake in new ventures.

President Hugo Chavez has been working to strengthen state control over oil production in the country."

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I read today that Venezuela's oil (the massive 200 year stuff) is only really economic to extract at $50+ a barrell. Below that they lose money on it.

It's probably true we've hit another peak oil. What happens now is that harder-to-extract oil gets to be more economic.

Oldies on this site will remember when North Sea Oil first came online in the 70s after a massive OPEC price hike. All of a sudden it become economic to tow enormous erections into the North Sea and sink them into the underlying deposits. ooh err Matron.

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to answer the OP. The issue with non-conventional oil is the fact the you hardly get any gasoline out of it, the reason WTI is the main quoted oil price is due to the fact it is the most useful - you can still buy oil for $20 a barrel today, but it will be a barrel of sour, you can bet the oil already coming out of the orinico belt is not selling for $67bbl. The cost of getting this stuff out of the ground is only step one, transportation is also not via pipeline but truck (in the case of tar sands) and refining capacity is an issue that is unlikely to go away (look at new build in refineries over the past 5 years, record prices but hardly anyone is forthcoming - still hardly surprising if you think world production is near its peak).

Additionally most of the data I have seen suggests very small extraction rates in the near/medium term (best case for Canadian Bitumen is circa. 2m bpd by 2013), certainly not enough to replace declining mature fields. This oil will be very important in the future, but only when petroleum products are vastly more expensive than they are today and it won't prevent a peak within the next 5-6 years IMHO.

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This 200 year statement has nothing to do with peak oil. Correlating the two illustrates just how poor understanding of this subject still is. Peak oil is all about flow rates and virtually nothing to do with URR. Chavez could have a trillion barrels of heavy oil and still we could have peaked in 2005. Now if he had said they could ramp up extraction from 2.7mbpd to 20mbpd over the next 15 years – that would be something to talk about. He didn’t though.

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This 200 year statement has nothing to do with peak oil. Correlating the two illustrates just how poor understanding of this subject still is. Peak oil is all about flow rates and virtually nothing to do with URR. Chavez could have a trillion barrels of heavy oil and still we could have peaked in 2005. Now if he had said they could ramp up extraction from 2.7mbpd to 20mbpd over the next 15 years – that would be something to talk about. He didn’t though.

Yep! The oil shale deposits of the US Green River formation are estimated to be larger than the worlds total crude reserves. It's not viable <$100 barrel.

The heavy oil of the Orinoco basin requires steam injection to force it up to the surface.

They used to market it as 'Orimulsion' for the power station market, its cheapness was outweighed by its noxious sulphurous emissions.

It is piss poor oil and requires extensive processing to make acceptable secondary fuels. Current production is about 500,000 bpd, 0.6 of world daily production.

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I've had quite a bit to do with the natural bitumen (extra heavy oil) in the Orinico belt in Venezuela. Was doing consulting looking at non-conventional means of sulphur extraction from it in 2000 and also was the promoter of a plan to use this desulphurised oil for electricity generation. Also looked at acquiring an existing oil refinery that Shell planned to close at the time (in Australia, Shell has since modernised and kept the refinery) as well as identifying suitable power stations.

My understanding, which comes directly from information provided by PDVSA (the Venezuelan state oil company) is this:

Reserves in the ground are about 1.3 trillion barrels of oil in place.

About 273 billion barrels of this oil are recoverable. This is achieved using water + "detergent" injection and it flows from the ground as an oil/water emulsion mix. The 273 billion barrels is oil, not including the water.

In order to produce conventional "oil" it is necessary to upgrade the oil in very expensive processing plants. This also reduces the produced oil volume somewhat, giving a real recoverable reserve (upgraded to light sweet crude which is what the market wants and refineries can process) somewhere in the order of 230 billion barrels. This is equal to about 7.5 years world oil consumption at present levels of demand. It is 5 - 6 years' supply at forecast (2020) demand levels (depending on which forecast you choose).

The maximum production rate is governed by the economics of the processing plants. It would be prohibitively expensive to build a plant that could not run flat out for at least 30 years. This is typical of industrial plants in general, not just those relating to oil upgrading. There are also significant geologically driven extraction rate limits for natural bitumen.

Overall this gives a maximum production rate of no more than about 10 million barrels per day bitumen. Depending on the extent of upgrading and the process used, this is around 8.3 million barrels per day of medium crude oil that can then be refined to petrol, diesel etc.

So, in short, the bitumen reserves in Venezuela could realistically sustain 2% per annum growth in oil demand for about 5 years before supply is at the economic limit. This would require massive investment delivered right now at a truly massive pace which is unlikely to be achievable in a physical sense (the world doesn't have enough drilling rigs, and they take quite some time to build, for a start).

Plants built thus far produce about 0.5mmbpd of upgraded crude oil. These will use about 6.6 billion barrels of the bitumen resource over the next 30 years (or 10 billion barrels over their maximum realistic life of 50 years). Add in the bitumen sold thus far as Orimulsion (for use in power stations) and the remaining resource is about 260 billion barrels of recoverable uncommitted bitumen.

From a chemical perspective, the bitumen is approximately 3.85% sulphur which is not ideal but can be overcome via conventional refining (at considerable cost). The Orimulsion product used in power stations contains 2.7% sulphur (and 30% water).

Provided that electrostatic precipitators (ESP) and flue gas desulphurisation (FGD) are fitted to the power plant, emissions are not problematic. The failure to use these controls at the 3 UK plants which burned Orimulsion was responsible for considerable acid mist and heavy particle fallout in the vicinity of those plants and ultimately led to their closure. Other countries have had far fewer problems in terms of environmental impact although from an economic perspective, Venezuela has in recent years moved away drom the selling of cheap Orimulsion in favour of classifying the natural bitumen as crude oil and pricing it accordingly.

In Short, the Orinoco Belt natural bitumen (extra heavy oil) is a useful resource in global terms and is likely to be of major economic importance to Venezuela in the future. But it is not a solution to peak oil. Heavy oil extracted through drilling (as is the case in Venezuela) is notoriously slow to extract. Indeed there are heavy oil fields in the US dating back 100 or so years which have never achieved high flow rates. This does, of course, mean that they last rather a long time so no surprise that they are still pumping after all these years.

That Venezuela is claiming that the resource will last 200 years is in itself pretty much an admission that they won't be achieving high production rates. Indeed if you do the maths then you will find that they are simply stating that the total reserves are 200 times the present annual production rate. It's a help but not a solution.

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And they don't have any gas do they?

Chap on the breakfast news talking about the monopoly of supply in europe and all those cheeky french companies keepoing the gas for themselves rather than selling it on for a profit ... he did say there wasn't enough gas to go round...

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I've had quite a bit to do with the natural bitumen (extra heavy oil) in the Orinico belt in Venezuela . . .

Smurf, thanks for this technical reply which I find extremely helpful.

Just one question, the difference between 1.3 trillion and 273 billion is a lot of oil. Would any of this be recovereable if oil prices were, say, infinite?

Anyway, I visited Tasmania once for a week. Entrancing.

Edited by BoredTrainBuilder

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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