In yesterday’s 7 pm news ABC TV business presenter Alan Kohler got carried away with the news that the US drilling rig count increased by 2 rigs in the last week:
Fig 1: US drilling rig count 23/9/2016
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother
This was too good news to be missed and prompted Alan to pre-empt the results of the coming OPEC meeting in Algeria:
“It does not matter what they agree on in Algeria the US will just swamp the market with oil anyway”
Weeks earlier, on 23/8/2016 Alan opined that OPEC was “irrelevant”.
Alan is well known for his lively technical analysis and interpretation of money markets, usually combined with humour and irony. And yesterday’s presentation was no exception:
Fig 2: Alan Kohler presenting his latest $US graph
But on oil statistics it was neither irony nor humour. It was plain wrong, And that for several years now. Obviously, it has escaped Alan’s attention that US shale oil production has peaked in 2015.
You don’t need a Master degree to type following search words on the internet: “US shale oil production” and get in the 2nd line:
How much shale (tight) oil is produced in the United States?
https://www.eia.gov/tools/faqs/faq.cfm?id=847&t=6
You then click on Shale in the United States and get this graph:
Fig 3: US tight oil production graph from the US Energy Information Administration
And let’s see whether (global) oil markets are swamped with shale oil. The US crude oil export ban has been lifted, so US shale oil’s success should show up in export statistics:
Fig 4: US crude oil exports, mostly to Canada
http://www.eia.gov/todayinenergy/detail.cfm?id=27532
Yes, crude exports have increased, but only by 300 kb/d to the rest of the world (i.e. global markets). That’s a drop in the ocean. Let’s see how popular US crude oil is.
Fig 5: US crude oil exports by destination country
The quantities are minute (ie. blending component in refinery intakes). US shale oil is a very light oil with a gravity of 40 or above
Fig 6: US crude oil by gravity. The higher the API, the lighter the oil
http://www.eia.gov/todayinenergy/detail.cfm?id=16591
US shale oil will hardly compete with most of the other oils on the global market. The only irony here is that the US shale oil industry has indeed swamped something: it’s their own tank farms in Texas, where that stuff clogs up inventories. The world interprets this as a general glut. More on this in a post to come soon.
Fig 7: Crude oil by type for various suppliers
http://www.eia.gov/todayinenergy/detail.cfm?id=7110
Conclusion:
All this has more than academic importance. The public is systematically lulled into believing that peak oil is no longer a problem because of US shale oil. And that’s why governments get away with building and planning new tollways and airports.
Fig 8: Sydney’s planned M4 extension at Concord, part of a gigantic road tunnel program
Related posts:
30/4/2016
Australian Public Broadcaster ABC unable to look at oil statistics
http://crudeoilpeak.info/australian-public-broadcaster-abc-unable-to-look-at-oil-statistics
7/3/2012
No number crunching in Alan Kohler’s opinion piece on a premature peak oil death
http://crudeoilpeak.info/no-number-crunching-in-alan-kohler-opinion-piece-on-premature-peak-oil-death
5/4/2012
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Addendum
The outcome of the 170th (Extraordinary) Meeting of the OPEC conference on 28/9/2016 was:
“The Conference opted for an OPEC-14 production target ranging between 32.5 and 33.0 mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward.”
http://www.opec.org/opec_web/en/press_room/3706.htm
I sent the above post to Alan but to no avail. In the 7 pm news on 29/9/2016 he commented on the OPEC decision to cut production by 700 kb/d:
“…which isn’t much considering that they have agreed on anything. The market behaved as if it was a very big deal which it will be if it holds and someone doesn’t need cash in the next month or two or Non-OPEC members like Russia and the US don’t decide to make up for the cut with extra production themselves which they probably will”
Let’s have a look at what the International Energy Agency said in its September Oil Market Report (dated 13/9/2016) on the US and Russia:
.
Oops, that isn’t enough, around 200 kb/d from the US and 100 kb/d from Russia. Alan had 2 weeks time to acquaint himself with this report. So again Alan got his numbers wrong.
