Jeffrey Brown Makes a Fool of Himself

Oil Drum writer Jeffrey Brown is infamous for his Export Land Model. For those unfamiliar, it works like this:

1. Growth in oil exporting countries (particularly exacerbated by high oil prices) will increase their oil consumption.



2. Oil exporting nations' higher consumption leaves less oil for oil importers.



3. Eventually, this supposedly will create tight supplies; we're screwed.

Scary stuff, except...

For the past few years, major importers' appetites have been dropping a lot faster than major exporters can gain it - thus gutting the basis of Jeffrey's argument.

This has been particularly well laid out in several recent posts on Peak Oil Debunked (here, here). JD has also noted that OECD demand, which has been in decline for four years now, has gorged out - by a wide margin - any gain in exporters' appetite.

The second post, in fact, so ired Jeffery, he himself barged into the comments' section to defend his position:

In any case, the "POD People" (Peak Oil Debunked People) have repeatedly criticized me for "cherry picking" examples of net export declines. The crux of my argument is that net exports tend to decline at a rate faster than production declines. Once an oil exporting country starts showing lower production, if they don't systematically and continually cut consumption, the most likely scenario is that they will show an accelerating net export decline rate.

For the fourth time, can the POD People show me some examples of an oil exporting
countries systematically cutting their consumption in order to maintain constant
net oil exports?

JD countered with this basic counter-comment: "learn the crux of my argument first."

The crux of my argument is that net exports tend to decline at a rate faster than production declines.

That's a valid point, and I accept it. However, you have consistently reacted with complete denial to my point, i.e. if shrinkage in importer consumption is much larger than growth in exporter consumption, then the effect you mentioned is canceled out, and available exports do not decline at a rate faster than production declines. Please try to wrap your mind around it: reduction in importer consumption increases the pool of available net exports.

Of course this didn't stop Jefferey Brown, a cross-eyed mutt, from going back for seconds on his own vomit:

I freely concede that the scope of the decline in demand (falling below the supply of exported oil) surprised me, but for what it's worth, the EIA is estimating the total worldwide decline in demand at only about 1.5 mbpd this year. I suspect that we will transition from a combination of voluntary + involuntary reductions in net oil exports this year to mostly involuntary reductions in net oil exports next year and in fllowing years, subject of course to the supply/demand balance (Note: Jeffrey then goes on a long rant, listing a slew of exporters' production/consumption statistics).

A decline of only 1.5 mbpd? Folks, I've shown this image so many times, it's burned into people's pupils:

As you can see, a 1.5 mbpd decline is in perfect parameters of the current multi-year trend.

Now, for the Ghawar Guzzler smart cookie of the week... congrugulations, Gavin, for driving the final stake in Brown's heart:

The data you have cited shows 8 countries taking a combined total of 2.3 Mb/d off the market in 8 years

Since in 2007 the OECD have reduced their consumption by 4 Mb/d (source is the usual EIA).

This means that there is an extra 1.7 Mb/d on the world export markets.There is no reason to believe that the sudden reversal in demand growth is temporary, even if there is a stunning worldwide economic recovery.

Jeffrey Brown made this prediction in 2005: "As I said last year, I expect that by the end of 2006 we will be in the teeth of a ferocious net oil export crisis." Good work, JD; and Jeffrey Brown, your infamous prediction shall now be enshrined into the Peakers' Hall of Shame.

- Brewskie

Matthew Simmons's Idiotic "Plan B"

Money doesn’t sleep and crack pipes smoke all night: Matthew Simmons is a big rig engine, plowing his baby batter of a greedy mind through the cold of a frigid landscape, cracking ice like an ice road trucker. His redlining mind barrels through in top gear, fuming metaphoric smoke from sulfuric ashes smoldered on his ravenous chops. He’s got a big plan for peak oil and he wants your dime - up to 1 quadrillion of them, to be exact.

Matt Simmons is jet-setting a preposterous plan of epic proportions; he’s garnering support to blow $50-$100 trillion. Not on renewable research, not on oil exploration, not on conversation or a Manhattan Project-like effort to adjust to peak oil; no he wants to rebuild the oil industry's infrastructure, globally, piece-for-piece. Did I hear a feint whisper of “Check, please?” before the china crashed?

This is the gospel according to corrosion.com:

The Oil & Gas Journal has reported in its recent edition that the US oil and gas industry will need to invest US$50-100 trillion to rebuild its ageing infrastructure within the next 7 years and stave off a serious drop in oil and gas production. That’s according to Matt Simmons, chairman of Simmons & Co.International, who spoke recently at the Offshore Technology Conference in Houston, Texas.In a worst-case scenario, Simmons said, oil and gas output could fall by 10-20% by 2013 if industry does not replace its rusting, corroded assets. Spare capacity has also run out because formerly cheap prices for oil and gas precluded upgrading and construction of new facilities.

And from a presentation:

Rebuilding any significantpart of the infrastructure will absorb most of high quality iron ore and other metals.

Before we even tackle the rationality of clawing through such presbyopic expenditures, let's first observe the problems at hand. First, we're going to need lots of steel; and since America no longer carries the world's preeminent steel industry (we're third, but the industry is a shell), it means we'll have to buy produced steel elsewhere (hello trade deficit; oh brother China, can you spare a pauper a dime?). Also, such exorbitant expenditures will entice industry to cheapskate, inducing government to foot the bill, sucking money out of our pockets and enduring future generations stratospheric debt; vital engineers will be excoriated across sectors; and with this much money, planning, construction and engineering being concentrated into oil - an effort Simmons states "we might find that winning World War II was an easier task than what we have ahead of us" - means those faltering pipes and crumbling roads are going to be put off for a while...

Drive at your own risk: we have an oil industry to rebuild!

Now consider the time and cost required to build some of the following...

Oil Refinery...

Time to construct: depends... 4, 6, 7 sometimes even 10 years.

Cost: billions a piece

Number in US alone: 132.

Offshore drilling rig

Time to construct: years, depending on size and depth qualification

Rental fee: six-figures a day, going up to $500,000-$600,000.

Oil pipeline

Miles of oil pipeline in US alone: 55,000 of crude oil trunk lines (8-24 inches in diameter), 30,000 to 40,000 of small gathering lines (2-6 inches in diameter).

Mad Matt's guesstimate of replacing global pipeline network: $15 trillion.

Now mind you, even if the world got this rolling next year, it would take decades to complete (something Simmons admits). Simmons is also notorious for claiming oil peaked in 2005 (not according to the EIA, dipshit), and that oil is headed for a crash landing of 60 mbpd by 2015. This means he abides by the 5%, 6.5% annual depletion-rate flavors favored by many doomers (he stated months back that the world's oil fields are declining at annual depletion-rates of 20%, and that only significant investment can bring that down to single digits).

Still, we're going to pretend Simmons is a real Roosevelt, we'll assume we can get this done in 20 years. So, taking last year's total liquids production of 86.17 mbpd, considering Simmons's rhetoric that oil is in decline, and applying a 5% annual depletion-rate to this, we find that... after 20 years, total global production is under 30 mbpd!

It's not half-empty empty, girl. We have a shiny new oil industry for the next fifty years!

So, under Matt Simmons, we managed to squander tens of trillions of ollars, excoriated engineers from practically every vital sector, neglected renewable energy and infrastructure projects, and wasted an asinine amount of steel - all to build a brand new, spanking oil industry that will last us for the next fifty years; even though America, with a current refinery capacity of 17.455 mbpd, wouldn't even need anywhere near that amount under Simmons's apocalyptic future!

In all seriousness... is the oil industry's infrastructure aging? Yes. Is this a concern? Sure; but to the extent Simmons claims? Not even close.

According to the IEA:

Repair of the oil-production facilities built in the 1970s is part of the $6 trillion that needs to be spent by 2030 to meet global oil and gas needs.

Now some critics say the IEA is too stodgy, too out of touch to be reliable. Maybe. But considering Simmons's record of the past few years (I know you debunker aces already have this stuff down, but the mentally-stunted Billy Madisons of the peak oil community are a little behind their special ed. peers, and they need a few "tough love" donkey kicks to their rosey heads to - let's say... - speed them up):

$120-$190 barrel of oil was suppose to hit in 2005.

OPEC currently has no spare capacity.

He stated months back that "the boom of summer 2008 that sent oil and gas prices skyrocketing was the only truly great situation the industry ever had." (the seventies didn't count(?) - oh, and he oddly enough stated the 2008 industry boom wasn't likely to return anytime soon)

Back in 2003, predicted looming gas shortages by 2005; failed to predict shale gas's impact, or the current gas glut; still believes we're going to gas Purgatory.

Throws a conniption about Ghawar's 28% water cut (didn't anyone tell him oil fields typically don't peter out until they cross 50%?).

An oil price crunch is going to hit in a few months (link).

Was featured in the documentary "the Power of Community: How Cuba Survived Peak Oil." (this of course was beautifully debunked by JD)

Even Robert Rapier - a peak oiler, an Oil Drum writer, a fan of Matthew Simmons and somebody I do respect - questioned Simmons's technical expertise in this piece:

I would say that most technical people are familiar with fuzzy logic, so I figured that Simmons was just not a technical guy.

[...]

So, the point is that I am learning to take Simmons with a grain of salt when he is discussing technical subjects. He may be an ace investment banker - and he has certainly made a lot of money - but he has given me no reason to put stock in predictions like this from him: (Rapier goes on to discuss several subjects)

So anywho, what exactly does Mr. Simmons like to say?

“Data always beats theories. 'Look at data three times and then come to a conclusion,' versus 'coming to a conclusion and searching for some data.' The former will win every time.”

Indeed, Mr. Simmons. Twighight in the desert, my ass.

- Brewskie

Mr. Simmons's Mental Capacity Goes Up in Smoke

This ultimately will be a somewhat quick debunker post on the man (a trademark, "heart attack brick burger-like meat stack" is in the pipeline for him=)). I was reading a vaguely noticeable article on "why gas won't go to $4 a gallon this summer (as if anybody couldn't see that)," when this bit was eyeballed (link):

Houston consultant Matthew Simmons sees higher prices ahead as well. OPEC's supply capacity is strained, he said, and the recession has halted refinery expansions, pipeline improvements and offshore-drilling projects. "There's no extra crude in OPEC's pocket," he said. "We have no cushion."

There you have it, folks: "we're screwed;" all coming from the mouth of the man who driveled last winter "we don't have any evidences of a glut," or who's messianic certainty of natural gas Armageddon prevented him from forecasting shale gas's significance, or the gas glut we have now.

Of course for normal people - those who don't flake out their brains from "phalanxing" insidious chemicals from layers of makeup plastered onto one's face (like Wacko Jacko) - who have been paying attention to the news, they have gained clarity of a situation a 1st grader could comprehend: you're wrong, old fart.

Here's the real money shot:

And we fist-pounders demandingly ask: "Where's the beef?"

I hate to run rehashed material into the ground - yah gotta run idiots' heads into roughshod soil like wheel barrels to perk any activity in their frontal lobes! - but Saudi Arabia is or will be adding spare capacity(here, here... poke here), plus has exhibited avarice avity for its vaunted offshore potential; Iran's not shabby with "Great Lakes" oil discoveries (same can't be said for political freedom), then or now; and Iraq, if it can hold its shit together, has a Kobe Bryant-like oil future, with plenty more oil to be found.

Mr. Simmons is a colossal businessman who started his company from scratch; yet he banked an ego the size of his fortune on oil and gas Armageddon. This man has gotten practically nothing right this decade with his dooms day scenario forecast; yet his "fleet" of peak oil Lassie clones slobber their rough collie smiles to every phonon he emits. "Oh no, OPEC has no cushion. We're soo fucked!!"

Mr. Simmons never-the-less persists into his wintry charge of peak oil doom like ravenous Napoleon charged pig-head first into Russia. With such callous disregard to facts, it's no wonder Mr. Simmons played an influencing part with another indefatigable turd:

- Brewskie

The King's Latest Presentation

I was scoping out the Oil Drum and found a link to Matthew Simmons's latest slide-show presentation, Two Energy Oxymorons: 1. Energy Independence 2. Energy Security. I didn't have much time to check it out, but here's a few things I found while skimming through it:

• Oil defiantly peaked in 2005 (some things never change; I think his reputation peaked in 2005).

• Shale gas won't save us; gas production still going down.

• UN dead wrong: world population will soar past 2050 expectations (Freddy Hutter pointed this out earlier).

• We're screwed! Oil production is going to fall off of a cliff, so is gas, the world's population is going to soar past anything meager oil production is going to sustain. Therefore... it's completely imperative to divert mountainous supplies of cash and resources to rebuild the oil industry's infrastructure! (Yeseriee, the King of Peak's twisted and contradictory logic is becoming eerily more Wacko Jacko.)

That's just a few tid bits. I'll try to scope through it more when I get the time.

- Brewskie

Drum Goonies Stooged on Shale Gas

(Another long one, girls. Grab a nightcap - it will be worth it:))

The lunar space goats of the Oil Drum fired this ballistic warhead into orbit back in 2006:

The scud missile erratically pierced through the lower-stratosphere, trailed by this sooty sky-writing about N America's natural gas production: “Doesn't this graph just chill you?”

This scary infection - perhaps - largely started from one source: the two-headed peak swine of Matthew Simmons and Mike Ruppert, who, in a conversation back in 2003, crooped about an impending natural gas shortage for the US, predicting a “natural gas crisis in two years,” warning that America’s natural gas production was about to “fall off a cliff.”

This peak gas influenza quickly metastasized into the fanatic, screaming lungs of practically every high peak priest, including:

Richard Heinberg,

James Kunstler,

LATOC,

Mobjectivist,

Dieoff.org

You get the picture...

Now personally, when I first heard this - way before shale gas become prevalent - I though this was the biggest cargo ship full of horse shit rotting up the port: “We’ll just buy gas from somewhere else,” says your average common sense genius; and it turns out America HAD embarked on the construction of LNG import terminals (and had a number in place), plus America was already well suited to handle vast amounts of imported natural gas.

But then came 2008 - word of shale gas started leakin’. Where was the Oil Drum on this? They had this to say:

But until some solid, repeatable well data emerges, the Haynesville will remain more diamond in the rough than diamond ring.

[...]

So there you have a brief explanation of how the new technology is slowing, though it won’t stop, the declining gas reserve in the United States

This was posted April 10, 2008 - right when America was experiencing a near-9% increase in natural gas production, the biggest increase since the late-1950s! While America was tootin’ dimethyl sulfide, the peak herd was swattin’ their fly encrusted asses in the doomer feedlot, percolating their Oreo pupils on doomer feed pumped with $100+ oil PGH. Tasty!

Finally, during September of last year, when the main stream media was catching a whiff, the Drum ‘fessed up:

Navigant Consulting Inc (NCI) recently prepared a report called North American Natural Gas Supply Assessment on behalf of a natural gas organization called the American Clean Skies Foundation. In this report, NCI estimates the amounts shale gas and tight gas production can be increased in the next decade. These estimates suggest that US natural gas production can be ramped up by nearly 50% by 2020. How reasonable are these estimates?

[...]

My analysis indicates that NCI is correct in some respects. There is indeed a great deal of unconventional natural gas resources in the United States, and recent improvements in technology point to the possibility of significantly greater production.

[...]

EIA has recently reported a big increase in US natural gas production (8.8%, comparing the first five months of 2008 with the first five months of 2007). Some have suggested that the EIA numbers must be wrong. It seems to me
that what we may be seeing is the effect of a recent technological
breakthrough.

No, Drum geeks, this wasn't a technological breakthrough we witnessed - it was a psychological breakthrough(!): you demonstrated to the world that you, like your fellow peak diaper-changing neanderthals, DO NOT demonstrate a clear-headed understanding of technology! Now we have a massive, gaseous gas glut - something I gave a heads up months ago.

Of course the diehard peak Rambos always have a standard fallback to everything in every forum: “But shale gas is expensive; it’s EROEI is too low to make sense for America’s long-term energy future… the wells have a short shelf-life. Blah, blah, blah…”

While it’s true shale gas will remain more costly than conventional gas production, I’ve been arguing for some time that as the industry comes to better understand shale gas formations plus effective production techniques, the production costs will decline, production will go up, and it will become more efficient. I’ve argued this before on the Oil Drum; naturally, my comments were deleted (they do that?), so call my a liar. But while the peakers are bitching, people out in the field are working hard:

"There will be many Barnetts," according to Robert Aquilera, one of the world's most foremost experts on tight gas engineering. What else does Robert say on shale gas's price prospect? Here's an excerpt from his interview with Energy Tribune (click the "many Barnetts" link):

ET: Speaking of prices, what is a sustainable price for natural gas? I ask because I’ve heard some producers insist that shale gas wouldn’t be profitable when prices are under $8. Now, I’m hearing $5. What’s your take on the relationship between the relatively high cost of drilling for tight gas and the market price which has been so volatile lately?

RA: My take is that $5 to $6 will work in most cases and will make most shale plays competitive.

In other shale gas related news...

Petrohawk's record-setting shale gas wells

Shale gas expected to meet half of N America's needs by 2020.

Plenty of foreign interest in shale gas, including China, Europe (here, here, here), Canada (here, here).

Despite scale-backs in US gas drilling, Chesapeake Energy is ADDING rigs to drill the Haynesville Shale, Barnett drilling is holding steady.

Haynesville poised to become the world's largest gas field by 2020.

Haynesville profitable at $5 per mcf, $4 per mcf.

And so on…

Remember - shale gas production is in its infancy. The Drum's wise peak blowhards - who, along with the other peak priests, foretold an impending gas shortage in the US years in advance - discounted shale gas right when the dimethyl sulfide was leaking up right under their noses!! I've runned this point into the ground, but it's this - along with the peak oil community's many blunders - is why the Drum cannot be taken seriously.

Anywho, for a short recap of the past few years, here’s a graph. Guess who turned out right? (I would have a better graph, but Blogger didn't like my Adobe pick for some reason. I'll get a better one up when I can.)



- Brewskie

The Good Nazis Need Your Support

The Oil Drum has launched its fund drive; it needs your zealotry, your unquestioning patriotism, your punch drunk love of Jim Jones' Kool-aid, and most of all - your Schatzanweisung des Deutschen Reichs.

The Drum would love your support more than ever in these tough times; they need your support so they can stifle dissenters, knock off the scarlet letters with the dishonorable "Drum boot."

Remember - if King Hubbert couldn't nail global peak, the Wikipedia-sourcing stooges won't either.

- Brewskie

"Klusterfuck" Kunstler Backpedals on High-Speed Rail

(Note to AndrewRyan: This is not the piece on James Kunstler I was referring to; I had another one in mind. It'll be up this week.)

Old man Kunstler woke up yesterday to howl at the world about the appendix-bursting pain that's stabbing his heart: he took a swipe at Obama's proposed high-speed rail system! This is what he had to say:

One very plain and straightforward example at hand is the announcement last week of a plan to build a high speed rail network. To be blunt about it, this is perfectly f*****g stupid. It will require a whole new track network, because high speed trains can't run on the old rights of way with their less forgiving curve ratios and grades. We would be so much better off simply fixing up and reactivating the normal-speed track system that is sitting out there rusting in the rain -- and save our more grandiose visions for a later time.

Nevermind rebuilding a passenger-rail system has long been a center-piece to Kunstler's 19th century utopia; nevermind that, last year, he bombastically praised a loyal reader's comment on building a high-speed rail network...

A reader from Ohio reminds us of a very important point: "$700 billion could completely rebuild the US passenger system! All the way to complete electrification and to the same standards the French enjoy with their TGVs."Its enough money to bring service to every town of 5000 and up."

Oh Mr. Clusterfuck, your problem is you're a miserable old man who's faced disappointment throughout your life: aside from the '90s, when you wrote several decent books criticizing suburban living, you we're a so-so novelist in the '80s, you banked your credibility with Y2K, and you practically banked the farm betting on oil's peak. You've had nothing but a "lost decade;" you've attempted, fatuously, to prop up this "Frankenstein peak" as if you we're a Fed worker trying - in rhapsodic fashion - to plug the holes in AIG. If you haven't found happiness throughout your life, it's doubtful you'll find it in your utopian 19th century lifestyle.

See you for the Memorial Day weekend blowout, James (more on this later).

- Brewskie

The Oil Drum Shoots Blanks Again

The mentally challenged peak oil community has been a little obdurate at grasping basic facts. This is what happens when, as a subspecies of homo sapiens, one refuses to evolve his/her bumble bee attention span like the rest of the race. However, a few of the brighter bulbs are starting to dimly flicker to a basic concept: oil did not peak in 2005. Their new hypothesis? 2008 is the new 2005. This has been recently proposed by Dr. Clifford Wirth (who I burned last week), and another Drum dead beat of the Peak Royal Guard, Ace, who - along with his compadre, Gale "the Actuary" - comprise an ugly two-headed mutt I neutered several weeks ago.

Let's get to the rematch. Ace had an earlier proposition that Saudi Arabia peaked in 2005. Never mind that Saudi hit record production last summer of 9.7 mbpd. Ace didn't notice that when he was burning books; he also doesn't mention his porous Saudi production numbers that would flunk a kid in special ed. In his recent post, he also mentioned Saudi Arabia as "having peaked," but with "a sustainable surplus of 1 mbpd." Uh... no, Ace. Since Saudi Arabia produced 9.7 mbpd last summer, since it has reduced production to just under 8 mbpd, and since the oil kingdom still maintains low production costs ($2-3 per barrel), this is indicative that Saudi has more than 1 mbpd of surplus production; plus they're adding to their surplus (here, here and here)!

With Ace trying to keep cool with the latest peak oil trend, by proclaiming that 2008 is the year peak landed, he recently fired his battle shot to shake the peak world. Here's some rambling from his paranoid thesis:

World oil production peaked in 2008 at 81.73 million barrels/day (mbd) shown in the chart below. This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2008 but at 73.79 mbd. However, if oil sands are also excluded then crude oil and lease condensate production peaked in 2005 at 72.75 mbd.

The US Energy Information Administration (EIA) and the International Energy agency (IEA) should make official statements about declining world oil production to renew the focus on oil conservation and alternative energy sources.

What toilet paper is your MBA made out of, Ace - Afghan Afghani? The IEA has news for you: Record production for 2008. There's a big difference in production, too. Notice the first graph below:



And the second, which excludes biofuels and includes EIA production info.:

Notice the big difference in production stats. between my graphs and Ace's; notice, too, where our sources of information come from - I got mine from the EIA and IEA. If you look in the left-hand corner of his graphs, you'll see he got his info. from... Wikipedia...??

Now just to be fair, I recently posted a link about electric freight trains from Wikipedia last week when I roasted Dr. Wirth - but this was a safe bet. Anybody who's been to Europe or other developed parts of the world knows electric freight trains exist - something Dr. Wirth's Ph.D. didn't tell him; but to rely on Wikipedia for scientific information, particularly on matters of oil production and peak oil, is a ludicrous and stupid bet at best, and a humilating one at worst. No respectable journalist refers to Wikipedia anymore; they did in 2004, but Wikipedia's reputation has rotted since.

Anyways, Ace, it's not fair using the recent declines in production as proof of global decline. That's been the result of repeated cuts by OPEC (scroll down for info.) in effort to stave off cheap oil; and as I stated in my assault on Dr. Clifford, (a) the world was in the midst of an oil glut last summer and (b), the glut could have been much bigger and thus more harmful on OPEC and Russia's fiances.

Your 0-for-2 now, Ace. You and your failed statistics are nothing more than rotted cabbage in the peak oil land fill. You're a footnote in a long history of failed peak oil and its prophecies, a cult that dates much of the oil industry's history, a cult that - like Dubya - refuses to learn from one thing - personal mistakes. One of your high peak priests, Ken Deffeyes, recently celebrated his ninth failed peak oil prediction (via Peak Oil Debunked). "The King of Peak," Mathew Simmons, bluntly stated at the beginning of last year's oil flop, there's "no roof on oil prices at this point." Ooopppss.

Your referral to Wikipedia is bleeding red rosacea to you and your peak oil community. It's this and your bottomless pit of failed predictions that are proof nobody can take you seriously. Oil will inevitably peak someday - nobody, with at least a fair double-digit I.Q., will dispute this; but when the day inevitably comes, the BBC and other outlets of respectable journalism will turn to others for referral. They'll turn to OPEC, Exxon Mobil, the IEA and EIA, CERA and others with access to the industry. Nobody, but lowly peak bloggers, will to turn to the Oil Drum. You'll have your celebrations in your peak oil "victory gardens," but no one will come. Stay there.

Hand over your blanks before you shoot yourself in the ass again, Ace.

- Brewskie