The Oil Drum | DrumBeat: August 3, 2006

223 comments on DrumBeat: August 3, 2006

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Oil CEO on August 3, 2006 - 9:36am

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odograph on August 3, 2006 - 9:55am

wow.

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Coilin on August 3, 2006 - 10:00am

According to the EIA's statistics, Chinese oil production is still increasing despite the Daqing having peaked.

Does anybody have any idea when total Chinese oil production might be due to peak? Has anyone carried out a Hubbert linearisation of Chinese oil production?

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PeakTO on August 3, 2006 - 10:33am

Great work Oil CEO.

When presented like that you can see a definite shortfall.

More than half way through the year and we have a net decrease of Half (.5) a million barrels per day.

I recall that either the EIA or IEA revised new demand to around 1 Million new barrels per day. So, either a supergiant is coming online in September, or its going to be a very expensive and cold winter.

A question for the more wise, if you reduce gasoline demand can you produce more heating oil from a barrel of oil? ie. I don't know if you can change the mix of extractables from a barrel of crude.

BTW, when do we decide peak has occurred? It's starting to look like Deffeyes was right, maybe.

===========
It's all about population!

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Consume More on August 3, 2006 - 10:51am

IEA says June production averaged 85.2 mb/d on increases from GOM, Canda, Russia, China, Iraq. If this stands it would exceed December '05.

PDF: http://omrpublic.iea.org/currentissues/full.pdf

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PeakTO on August 3, 2006 - 10:56am

Isn't the IEA always high, and the EIA more conservative?

=======
It's all about population!

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Darwinian on August 3, 2006 - 11:57am

Isn't the IEA always high, and the EIA more conservative?

Yes Exactly! The IEA data is always premature and usually too high. But there is a huge discrepancy between the EIA's Short Term Energy Report and the IEA data. The EIA's Short Term Energy Report had OPEC production, December to May down by 855,000 bp/d. But the IEA, for the same period, had OPEC production up by 300,000 bp/d. That is a discrepancy of 1,155,000 bp/d. It is hard to reconcile that kind of difference.

December to June the discrepancy closes from down by 555,000 bp/d (EIA) to up by 500 bp/d, (IEA) a difference of only 1,055,000 bp/d. Still a difference too large to be reconciled.

But you must wait until the EIA publishes its International Petroleum Monthly to get data that is checked and cross checked and far more accurate than the IEA's premature data. The latest issue has the May data. That data has OPEC production down by 607,000 bp/d, December to May and World production down by 981,000 December to May, crude + condensate.

There is absolutely no chance that the world will produce more crude oil in June 06 than in December of 05. I am expecting a slight increase in June however but a subsequent drop in July.

http://www.eia.doe.gov/ipm/contents.html

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jim burke on August 3, 2006 - 11:58am

Did anyone notice that Iraq's figures are exactly the same three months in a row?

OPEC has been taking hits for publishing bogus data on oil production; the US colonial masters dont' seem any different.

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fallout on August 3, 2006 - 2:15pm

Copy and Paste.

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fleam on August 3, 2006 - 6:07pm

Wait a minute..... Oil CEO????

How can this character post good research like this one moment, and act like a drunk 13-year old the next moment?

Hey Oil CEO!!!! Matt's site RULEZ!!! Matt is da Man!! You have to go read Tainter and dieoff.org!!!! No one site is Number One they're all different views of Peak Oil!!

Cussing and lunacy should soon follow.....

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oldhippie on August 3, 2006 - 9:11pm

Yeah, like Jekyll and Hyde. And downthread there's discussion of Israel and Jews and Lebanon and OilCEO doesn't take the bait. I have lots of respect for OilCEO when he posts on oil but that other persona is wild.

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Oil CEO on August 4, 2006 - 1:07am

The other persona? Where on earth did you get the idea there were just two?

Bait. I don't think so. It's you little fishies that are always falling for the bait. Two down. Where's smekhovo?

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fleam on August 4, 2006 - 1:32am

You know what? I think your name is Oil CEO but some kid was on here as Oil_CEO or OilCEO and was well, acting like a little kid.

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Oil CEO on August 4, 2006 - 2:24am

Cool. Are you the same fleam who smoked a little dope, read a little Chomsky, decided he understood the world better than everybody else and started calling Jews Nazis and Americans... what was it?...NaZionists?

Correct me if I'm wrong. I wouldn't want to misrepresent your views. That was you, right? Not some other fleam?

Funny thing was, I was going to write a cute little, humorous piece in the attempt to put this behind us. I read your initial response to my "Oil" post just previous to having to go out. Didn't have a chance to respond. Unfortunately, oldhippie preempted this attempt.

Take the fig-leaf, dude. (Yeah, I'm trying to teach a lesson in diplomacy - unless you'd rather get steamrolled, of course).

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fleam on August 4, 2006 - 2:45am

Go on, tell us all about how you can "fucking" read what you like, etc etc etc it's cute,

And watch Dad's Seagram's 7, you'll have one heck of a headache later.

You ZioNazi.

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Oil CEO on August 4, 2006 - 3:10am

Oh, here we go with the foul language. Should have capitalized that. Sorry I mispelled that Nazi thing of yours. Can never get that stuff straight. Remind me which way the wings on the swastika are supposed to rotate. Try again tomorrow. I think you should try starting a site called "The Water Cooler." You can lead-off with commenters contributing made-up stories of Palestinian "moms" trying to cook soup while their sons watch with wide eyes as Jews across the barbed-wire play in the sprinkler. Bring it....Oh, OK, I'll give you one more chance. Take the fig-leaf. I'm serious. Where's smekhovo? Figure he would have stopped by to back you up by now. Call me a nitwit or something constructive. He's usually good for at least 8 words.

Take the fig-leaf and stop reading the Chomsky.

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Mad Maxout on August 3, 2006 - 7:52pm

If you reduce demand for gasoline, you probably could make more diesel per barrel of light, but my guess it'll be easier to make diesel from heavy so to get more diesel we merely import more heavy! Heating oil (and jet fuel) are quite similar to diesel, a lot closer than to gasoline. Now, getting heavy sweet crude, that might be a challenge.

If my guess is correct, reducing gasoline demand and increasing diesel demand will move the prices of light and heavy crude closer. But sour will be cheaper per barrel than sweet becuse sour is a pain to refine to get the sulfur out.

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Starship Trooper on August 4, 2006 - 4:12pm

A question for the more wise, if you reduce gasoline demand can you produce more heating oil from a barrel of oil? ie. I don't know if you can change the mix of extractables from a barrel of crude.

The answer is yes. By changing the feedpointon distillation columns, reflux rate, etc, we can change the characteristics of the basic mix. We also use various cracking and reforming techniques. That's why there is a "switchover" of refineries to increase distillate oil production.

In theory, with enough processing you can make any crude come out with whatever final product you want. However, the energy requirements to stray that far away from the natural distillation curve starts becoming quite large.

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wstephens on August 3, 2006 - 11:30am

Down 509 divided by 84776 gives -0.60 percent. We are down less than 1% from the top, correct?

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Oil CEO on August 3, 2006 - 11:58am

It all depends on how you want to measure things. I only went back to January here. The official EIA peak is December 2005 at 85,051 - so that would make it about a .9 percent decline by your count.

May of 2005 comes in close at 85,008. Keep in mind that the EIA revises its figures every month by as much as 500,000 bpd, and will frequently re-revise them later.

The margin of error is huge. The more I work with these numbers, the more I come to believe they are useless and that we are wasting our time depending on them for anything.

I like moving averages. If you use a six-month trailing moving average and then compare these figures to the corresponding month twelve months ago, you won't find any declines in the last two years. Although we are starting to cut it close. May comes in at 100.29%(.29% above May 2005's 6-month SMA) using this method - the lowest in the last 2 years at least. To put that in perspective, using that method, we were seeing up to 5% gains per month in 2004.

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Darwinian on August 3, 2006 - 12:31pm

May of 2005 comes in close at 85,008. Keep in mind that the EIA revises its figures every month by as much as 500,000 bpd, and will frequently re-revise them later.

I consider this a gross exaggeration. The IEA often revises its figures by almost 500,000 bpd but never the EIA. I do not believe anyond follows the EIA dater closer than I and I have never seen a revision anywhere even close to half a million barrels per day.

The EIA revises its totals because it gets revisions from each individual country. These revisions are usually in the range to 10 to 20 thousand barrels per day or less. Sometimes these revisions will go back several months. But they never amount to more than peanuts as far as the totals go.

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Oil CEO on August 3, 2006 - 1:01pm

February 2006 was initially reported as 84,330. It has been revised to 84,776. Four questions.

Is 446,000 barrels-per-day peanuts?
How close is 446,000 to my initial estimate of 500,000 - which you characterized as a "gross exaggeration"?
Why did you put the word "never" in bold?
Do you work for the EIA statistics department?

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Darwinian on August 3, 2006 - 1:45pm

Well no, the last backup I has the data for March 06. That report has February 06 data, all liquids, at 84,410. That puts the revision for all liquids at 366,000 bp/d. A lot more than I have ever seen before but still a long ways from half a million.

Which is another point. All liquids is crap! It includes propane, butane, ethanol, biodiesel, refinery process gain, and a host of other things that have nothing to do with crude oil. The revision for February 06, crude + condensate was miniscule, as it always is with the EIA data. Same report:
Crude + condensate
Feb. 06 73,807,000 bp/d
Revized latest figures
Feb. 06 73,825,000 bp/d
A revision on 18,000 bp/d.

And this is an extremely large revision for crude + condensate. I have never seen a revision much larger than this for crude + condensate. I put that in bold because I wished to.

Revisions in crude + condensate are always peanuts.

No I do not work for the EIA but I gather and keep data every month. I back up my data every two or three months. The data above is from my last backup as compared to the latest data.

Okay, I apologize for not realizing how crappy the data for "All Liquids" really was. My bad, but it gives me another reason for using only crude oil in my data, never biodiesel, ethanol, propane or butane. The EIA gathers these figures for crude + condensate only by totalling up the data from each nation. Therefore there can be no revision greater than the total revisions for the individual nations. And there is usually only one or two nations revised with each report. Therefore the total revisions is always only peanuts as far as the total goes.

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Oil CEO on August 3, 2006 - 2:01pm

I posted a couple more graphs on the next thread the Stuart posted. They plot crude+condensate and all liquids on the same graph. The discrepancy between the two has been growing for some time. I agree that it makes a lot of sense to focus more on crude only.

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wstephens on August 3, 2006 - 1:12pm

What is the standard deviation of the EIA series over, say, 5 years (STDEV function in Excel)?

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Oil CEO on August 3, 2006 - 1:39pm

3.166 million barrels per day since Jan 2001.

4.506 million barrels per day since Jan 1995. Does that seem right? I'll send you a copy of the spreadsheet if you've got an email drop.

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wstephens on August 3, 2006 - 5:30pm

If about 2/3 of the measurements are within +/- 3.166 mbpd (or 4.506 mbpd on the Jan numbers) then that STDEV would seem right. You will have to judge.

The idea is to try to guage "significant" deviations within the data. I'm just trying to be a math nut here. A report of around +/- 3.166 mbpd would be a "1 standard deviation" event. A report of around +/- 6.332 would be a 2 standard deviation event, which should occur no more than 1 time out of 40 (2.5% of the time).

If the data is "normal" you'd have to pretty much ignore any event less than 1 standard deviation -- from a noise standpoint. And you'd have to ignore *sequential* events as well, unless you change timeframes and re-normalize your data.

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Darwinian on August 3, 2006 - 6:00pm

I don't really understand what knowledge you are gaining here. Because oil production is increasing almost every year except a few, or has been so far, the more years you include the greater the standard deviation will be. Doing the function for the last five years on crude + condensate, including this year, I get 3.027 million. But doing it on every year since 1970, I get 6.727 million. But since the data is generally increasing, this tells me nothing.

Or does it and I am just too dumb to see it?

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wstephens on August 3, 2006 - 9:39pm

If the STDEV increases as you go back and include more data then the data was more volatile back then. Increasing and decreasing don't have anything to do with it because the changes are squared when doing to calculation.

What you are gaining in the calculation is a sense of perspective on the noise. Rather than get caught up in a prediction based on a short series of sequential, but possibly normally distributed numbers, you look for a significant change based on the statistics of the series.

Since (or if) the data is really getting less volitile then it could be easier to see a true downturn.

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Darwinian on August 3, 2006 - 11:24pm

Well hell. I read a book called "The Bell Curve" and it described a standard deviation as the average difference between any two points in the sample. That is if all your data points are close to gether, then the standard deviation would be small. But if there was a very wide difference between the data points, then the standard deviation would be large.

So, beginning in 1970 the total world crude production was just over 45 mb/d and this year it is averaging over 73 mb/d. So the average difference between now and 1970 would be much greater than between now and 2001.

And I just proved this on my Excel spreadsheet. I placed the numbers from 1 thru 50 in a colum and did a "stdev" on the entire column. My answer was 14.577. Then I did the same "stdev" on just the last five data points. My answer was 1.58. And since every point increased by juse 1, according to your definition, I should have gotten the same answer for both.

No. One standard deviation is the average difference between any two data points of the complete set of data points.

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wstephens on August 4, 2006 - 7:10am

You have to look at the STDEV of the *changes*, and the changes are all 1. In that case the STDEV is 0. What you have calculated is the "average difference" from the mean (which in that case is 25.5). You are correct that that is not particularly meaningful.

Sorry about leaving "the changes are squared" detail out until my last post. This was not particularly clear by me. I'm so familiar with this junk that I assume that what I'm saying is immediately clear.

Can you try again with the changes in the data?

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Rick on August 3, 2006 - 8:49pm

Good points. Looking at the variability of these numbers is important, especially since the data is weak. Put another way: if one believes the ultimate monthly peak production will be 86 or 88 or 90mbpd, our current output is not significantly different. Statistically, we are at peak.

I was speaking with another PO person, who feels we may get a "cushion" of another 1mbpd of net new production, which sounds plausible to me. But this is only about 1.2% of daily production, and a fraction of one standard deviation. We have too much noise, and not enough signal.

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Freddy Hutter on August 3, 2006 - 11:36am

One must consider when looking at these stats that Q2 is always the lowest production quarter of the year. Always.

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Coilin on August 3, 2006 - 12:23pm

Except in 2005 when it was the highest quarter, and except in 2004 when the first quarter was the lowest quarter...

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Consume More on August 3, 2006 - 1:01pm

...Q2 is always the lowest production quarter of the year. Always.

And yet I see this graph at trendlines.ca:

Either I'm misinterpreting what I see here, or "always" means different things to different people.

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Hurin on August 3, 2006 - 1:35pm

Maby that site was made by Freddy's lying twin.

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GreyZone on August 3, 2006 - 2:22pm

Oh that's rich, using Freddy's own website to disprove Freddy. Well done!

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tandersonbrown on August 3, 2006 - 1:58pm

Hello TOD'ers,
First time post. I'm meeting today with Senator Russ Feingold's staff, not as a lobbyist or as a member of a special interest group, but as a constituent from Wisconsin.
I sent a letter to him a month ago detailing my concerns in relation to peak oil. I stated that Ethanol production was non-viable (EROEI) and damaging to cropland. I spoke of bolstering rail services, both for industry and transit. Finally, I asked him to acknowledge the challenges ahead and to create policies that inform and assist his constituents during the coming decline.
I received a letter back from his office that was a stock response regarding "Alternative Fuels". In it, he states his efforts for bolstering the Ethanol industry. HaHaHaHaHa! I feel more strongly than ever that we won't be getting any help from our federal government when TSHTF.
I need some help from you. If you were given the chance to meet with Feingold's staff today at 4pm, what would you discuss during the meeting?
Thanks,
Tom Anderson-Brown

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Consume More on August 3, 2006 - 2:29pm

Seems like Feingold's already doing a lot of good things. Not sure there's any reason to suggest otherwise.

As he is a senator from a corn-producing state, I can understand his interest in promoting the ethanol industry.

You might point him to the Cornell-Berkeley study:

http://www.news.cornell.edu/stories/July05/ethanol.toocostly.ssl.html

He supports higher gas mileage requirements, no ANWR drilling, reduced reliance on foreign oil, and alternative energy. Presidential timbre?

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westexas on August 3, 2006 - 2:34pm

Texas oilman Boone Pickens, a lifelong Republican, has proposed increasing the gasoline tax up to where we would be paying the same price for gasoline as Europe, offset by cuts to the Payroll (Social Security + Medicare) Tax. The primary purpose is to encourage conservation by offering a carrot and stick approach. Those concerned about Global Warming would also endorse this approach.

I would ask the good senator to reach across the partisan divide and embrace this proposal by a lifelong Republican.

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Will on August 3, 2006 - 2:40pm

I would give them printouts of RR's ethanol commentary. They are direct and unambiguous. The numbers are damning. I would ask them to respond.

I would have Patzak and Pimental ready to go if they say they've never heard of RR.

I would read RR's comments on those two Khosla threads last week. He did a lot of prep for that phone call and shared his talking points. Lot of material, well organized there.

Good luck!

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Prof. Goose on August 3, 2006 - 2:51pm

Tom, I'd give them the following pieces:

"The Politics of Oil: The Discourse Must Change" post:

http://www.theoildrum.com/story/2006/4/26/121441/891

Our recent analysis of the Deep Ocean Energy Resources Act (DOER):

http://www.theoildrum.com/story/2006/7/12/101236/478

Our recent posts debunking venture capitalist Vinod Khosla on the efficacy of ethanol:

http://www.theoildrum.com/story/2006/7/24/202222/351
http://www.theoildrum.com/story/2006/7/29/205642/963

and of course, our "first time here?" intro:

http://www.theoildrum.com/storyonly/2006/3/1/3402/63420

that's about as good of a summary as I can give you.

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Prof. Goose on August 3, 2006 - 2:53pm

and Stuart's post today wouldn't be bad either, just for the chart's power if nothing else.

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Hurin on August 3, 2006 - 3:14pm

I'm not sure this is the right approach. If I were a politician and a guy came into my office, starting to talk doom and gloom, and showing a huge stack of papes into my face. I think my reaction would be to call security.

Maybe you should just explain what EROEI means, and give him two or three reasons why the numbers don't add up.

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vermont on August 3, 2006 - 6:21pm

I recommend providing a copy of the Hirsch report as well...either the abbreviated version (http://www.d-n-i.net/fcs/pdf/hirsch_world_oil_production.pdf) or the long form (http://www.julianj.v21hosting.co.uk/hirsch0502-DOE-US-report-with-peaking.pdf).

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Samsara on August 3, 2006 - 3:24pm

Give him the Roscoe Bartlett speech, Ask him if he was there ANY of the 3 or 4 TIMES he gave it IN FRONT OF CONGRESS. (since this topic is "Very Important to him").

Peak Oil Presentation in the US Congress
http://www.energybulletin.net/4733.html

http://www.energybulletin.net/12751.html

Congressman Bartlett discusses peak oil with President Bush
http://www.energybulletin.net/7024.html

Transcript: Third Peak Oil Presentation by Congressman Bartlett
http://www.energybulletin.net/5948.html

Transcript: Fourth Peak Oil Presentation by US Congressman Bartlett, collegues.
http://www.energybulletin.net/6082.html

Ask him (since he is SOOOO Informed) if he has ever even HEARD of Rep. Roscoe Bartlett?

John

P.S. You're wasting your time.... :-)

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geewiz on August 3, 2006 - 10:36pm

Personally? I'd give them all a good ear full. Throw in a few curse words too. (makes me feel better). Then i'd get my daughter to kick them all in the shins, while i spat on them.

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223 comments on DrumBeat: August 3, 2006

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“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”

—Max Weber, 1905