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Oil Markets Are Balanced But Bracing For Brexit
This week’s key data from the oil and gas industry shows that fears of a Brexit continue to weigh on oil, as the dollar strengthens due to market uncertainty. We also see the rig count continue to climb, although still at a relatively slow rate. (Click to enlarge) (Click to enlarge) Chart of the Week • The Bakken in North Dakota saw natural gas production explode over the past decade, and because of inadequate pipeline and processing infrastructure, natural gas flaring also surged . • But since the collapse of oil prices two years ago, flaring has fallen substantially, both in percentage terms and on an absolute basis. • As of March 2016, the industry flared 10 percent of the natural gas produced in the U.S., down by about one third from early 2014 levels. Much of that has to do with the sharp decline in drilling. • But […]
Pacific Gas & Electric to Close California’s Last Nuclear Plant by 2025
California’s last nuclear power plant will close in 2025, after Pacific Gas & Electric Co. reached an agreement with labor and environmental groups, the parties said Tuesday. The San Francisco-based utility, a subsidiary of PG&E Corp., will withdraw its application to renew the nuclear licenses for the Diablo Canyon Power Plant in San Luis Obispo County. The plan calls for shutting down one of the property’s reactors in November 2024 and its second reactor a year later. The Diablo Canyon facility, which started operating in 1985, accounts for 9% of California’s annual electricity production, the company said. PG&E will begin to invest in a new portfolio of energy efficiency, renewable energy and energy storage to make up the lost production. The company said it will commit to having 55% of its energy portfolio produced by renewable energy […]
California In Power Grid Emergency: “All Customers Should Expect 14 Days Without Power”
The entire Los Angeles metropolitan area and most of Southern California can expect blackouts this summer. The power grid is under direct threat as a result of the unprecedented, but little reported, massive natural gas leaks at Alisco Canyon that was ongoing for four months as an intense summer heat wave sets in. According to Reuters : California will have its first test of plans to keep the lights on this summer… With record-setting heat and air conditioning demand expected in Southern California, the state’s power grid operator issued a so-called “flex alert,” urging consumers to conserve energy to help prevent rotating power outages – which could occur regardless. Electricity demand is expected to rise during the unseasonable heatwave on Monday and Tuesday, with forecast system-wide use expected to top 45,000 megawatts, said the California Independent System Operator (ISO), which manages electricity flow through the state. That compares with […]
Peak Oil Consumption Dead Ahead
I have no idea nor will I take any guess as to the price of oil going forward. There are too many variables to make an educated guess. If you want a bullish or bearish POV on price…this isn’t likely the article for you. All I do know is the world is likely very near peak oil demand. Details and evidence follow… The combined 34 OECD nations (list HERE ) plus China, Russia, and Brazil represent 70% of global oil consumption while they represent about 40% of global population (chart below). In comparison, Africa and India (combined) make up 8% of oil consumption despite being 33% of global population and certainly beyond 2/3rds of all present net population growth (all population data is via OECD. stat HERE …and oil consumption via EIA HERE ). The chart below shows the EIA (Energy Information Administration) historic and estimated global oil consumption […]
Why We Can Expect Cripplingly Higher Oil Prices In The Near Future
The break-even price for Permian basin tight oil plays is about $61 per barrel (Table 1). That puts Permian plays among the lowest cost significant supply sources in the world. Although that is good news for U.S. tight oil plays, there is a dark side to the story. Just because tight oil is low-cost compared to other expensive sources of oil doesn’t mean that it is cheap. Nor is it commercial at current oil prices. The disturbing truth is that the real cost of oil production has doubled since the 1990s. That is very bad news for the global economy. Those who believe that technology is always the answer need to think about that. Through that lens, Permian basin tight oil plays are the best of a bad, expensive lot. Table 1. Weighted average break-even price for top operators in Permian basin tight oil plays. Source: Drilling Info, company […]
Move Over Oil – Lithium Is The Future Of Transportation
Just a few years ago, we would have scoffed at the idea that electric vehicles could be mainstream anytime soon, or that the global appetite for lithium-ion batteries and mass power storage would be so voracious, and so sudden. Today, no one is scoffing, and lithium is being viewed as our new super-mineral that will catapult us firmly into the next century. Now Tesla has started buying up Nevada and building its battery gigafactory, with competing gigafactories following suit and competing electric vehicle (EV) manufacturers all throwing billions at this fast-moving market that no one has been able to keep up with. Not only has the EV taken its first major leap into the mainstream—most notably indicated by Tesla’s phenomenal advance sales of its affordable Model 3—but it’s gone beyond the mainstream. Electric vehicles will be the rule rather than the exception; and lithium the number one […]
