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Oil and credit
Posted: 02 Jul 2013, 21:05
by raspberry-blower
The link between oil production and credit supply is discussed over at the Automatic Earth - and why they will never meet.
How would you go about this? We can say that our civilisation depends on burning fossil fuels. So if 86% of global energy needs are derived from fossils, then of $130 trillion in debt (Kyle Bass's Hayman Capital), $112 trillion went towards coal, oil & gas. Of that 1/3rd went to oil, so that's $37 trillion.
Now between 2002-2011, 6.5 Mbpd came online. So extra debt per marginal barrel of oil is $37 trillion/ 6.5 Mbpd x 365 x 9 years = $1,730 dollars in additional debt per additional barrel?
Marginal debt per marginal barrel of oil is soaring!
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Pretty silly analysis as usual (It's understandable, it's the immortality drive at play, escape from finity)
7.5 Mbpd is what the US produces. A 10% decline rate has to be offset every year. So in 5 years they'll need to find 3.8 Mbpd new oil + 3.75 Mbpd to replace declining production. So one new Saudi Arabia net export equivalent in 5 years?
Oil and Credit
More QE, vicar?
Posted: 03 Jul 2013, 12:44
by emordnilap
Code: Select all
the average well in the Bakken play has a 40% yearly decline rate
Very relevant for potential frackers in these islands.
Posted: 12 Jul 2013, 22:34
by JavaScriptDonkey
emordnilap wrote:Code: Select all
the average well in the Bakken play has a 40% yearly decline rate
Very relevant for potential frackers in these islands.
Given that what is being mined isn't contained in a free flowing underground lake that is hardly news.
It looks like with fracking you
expect to drill very, very many more wells that you would with conventional oil.
That doesn't mean the resource is rapidly depleting just that it doesn't flow so you have to move the holes.
Fracking has issues but I don't think this is one of them.
Posted: 12 Jul 2013, 22:45
by clv101
This very much is one of them.
The rapid decline rate means the financing is a completely different animal. With conventional oil, production in a given year is dominated by the cumulative production brought online in the past, decline is a secondary factor. With fracking production in a given year is dominated by the production brought online within the last couple of years. What you did five years ago counts for ~naught. With fracking production is more a function of the presently available money, drilling rigs etc. This is why there's a real risk of a bubble - if the capital drys up, the production will respond by crashing rapidly.
The rapid decline rate is one of the key issues associated with fracking.