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Remember peak oil?

johnhemming
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Re: Remember peak oil?

#302466

Postby johnhemming » April 22nd, 2020, 12:06 pm

I don't know what people use as biojet fuel, but you can get things like rapeseed oil which can power heat engines.

johnhemming
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Re: Remember peak oil?

#302573

Postby johnhemming » April 23rd, 2020, 3:41 am

You would probably have to process the original source biofuel quite a bit (thereby losing energy efficiency) to get to the right sort of chemical source for jet fuel.

spasmodicus
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Re: Remember peak oil?

#302685

Postby spasmodicus » April 23rd, 2020, 1:18 pm

I don't know what people use as biojet fuel, but you can get things like rapeseed oil which can power heat engines.

yeah, in theory you could use almost anything combustible to make jet fuel. But once folks are allowed out for their hols, airlines are going to go for the cheapest fuel possible, which at -$20/barrel or even +$30, is probably oil based?
cf Ryanair whingeing about having to leave centre seats empty, because it reduces max. load factor to 66%, cough cough.
S

88V8
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Re: Remember peak oil?

#302788

Postby 88V8 » April 23rd, 2020, 11:37 pm

spasmodicus wrote:cf Ryanair whingeing about having to leave centre seats empty, because it reduces max. load factor to 66%, cough cough.S


If there is ongoing concern, who in their right mind is going to fly in an enclosed box with the aircon circulating all the germs. A sort of disease exchange. Airlines will have a lot more to worry about than centre seats.

V8

BobGe
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Re: Remember peak oil?

#302795

Postby BobGe » April 24th, 2020, 3:26 am

Planes do come with oxygen masks though, which Ryanair could charge for, so it's not all bad.

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Re: Remember peak oil?

#302799

Postby scrumpyjack » April 24th, 2020, 6:11 am

I understand that the air filters on planes are fine enough to catch the virus so you shouldn't get it from recirculation of air. Cruise ship filters are not that effective.

StepOne
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Re: Remember peak oil?

#302930

Postby StepOne » April 24th, 2020, 1:23 pm

ReallyVeryFoolish wrote:Indeed, right now, there is no feasible substitute for jet fuel.


There is the option not to fly at all. And given that everyone now has a laptop and knows how to work teams, and that social distancing may become the norm for many years (i.e. no gathering in meeting rooms) I can see air travel never getting back to where it was. Same for commuting by car.

dspp
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Re: Remember peak oil?

#303116

Postby dspp » April 25th, 2020, 10:26 am

ReallyVeryFoolish wrote:
ReallyVeryFoolish wrote:From where I am sitting, the further reduction in expenditure by the oil majors makes me even more confident we will see > $70 or 80 oil and higher in the medium term. End of life fields with high marginal cost are more likely to be closed down now as opposed to having money spent extracting remaining reserves. Add that to the fact that there's already no significant large scale new capacity under development presently anyway. It's even more certain that once the market returns to normality, oil prices will recover significantly.

This is the first article in the media that reflects my views on the medium term outlook for oil production. If anything, I would say the article likely under estimates the situation. Oil consumption in the modern economy isn't going to reduce as quickly as many people seem to expect.
https://www.google.com/url?rct=j&sa=t&u ... IE7F1hk2Xg


I too think that an upcycle in oil price is fairly likely to follow this downcycle, indeed that is why I am over-exposed to oil & gas to the extent that I am. However it is always worth being cautious and - from an environmental perspective at least - hopeful. The transition away from oil could occur faster than people think. So here are some snippets that give pause for thought:

1) In 2019 three quarters of global 'capacity add' in generation was renewables. (https://www.irena.org/newsroom/pressrel ... ty-in-2019) That is an amazing rate of progress. I have previously looked into, and posted here on TLF, regarding average renewables capacity factors vs average conventional capacity factors, and they are not so different than each other. Yes individual technologies are dissimilar, but the aggregate is fairly similar. This means that very soon you will not be able to give away new conventional capacity, it will become exposed to all the dis-economics of diminishing scale.

2. I hear folks say that oil is skewed towards the transport sector and is unsubstitutable at scale in the short term. Well, to an extent that is so, but as any TSLA investor will tell you, the times they are a changing (and I am overexposed to TSLA as well, which has done considerably better than some of my oil exposure). From where I sit - which is currently in the international electricity sector - everyone worldwide within the grid planning system is expecting rapid EV adoption. And they are expecting less grid disruption and/or reinforcement than you might expect. They are expecting overall grid utilisation to go up (so cost per 'unit' to go down), but peak grid use to not be as much of an increase as was feared. The reason is nodal batteries, not so much at house level as at substation and HV node level, maybe some at generator infeed level.

3. That in turn means that EV adoption gets a double boost. Firstly it turns out the grid is not an expensive barrier, and secondly it means that we need roughly twice as many batteries as are in the EVs themselves, which in turn improves battery manufacturing economics (more scale is good).

4. And the new generation capacity that will come onstream will not be conventional oil & gas. It will be renewables. See point 1. That in turn could lead to quite a rapid collapse in conventional demand. I happen to think that the IRENA scenario below is overoptimistic but it is within the range of possible outcomes. (note, it is from a freely available IRENA publication, see https://www.irena.org/-/media/Files/IRE ... k_2020.pdf , so we can reproduce it here). That in turn suggests that the next upcycle in oil price could well be the last opportunity to bail out (er, sectoral switch if you want posh words) at a profit. But of course everyone will be thinking like that. Not everyone can be a lucky punk !

Image

regards, dspp

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Re: Remember peak oil?

#303252

Postby 88V8 » April 25th, 2020, 6:44 pm

dspp wrote: I am overexposed to TSLA which has done considerably better than some of my oil exposure...the next upcycle in oil price could well be the last opportunity to bail out (er, sectoral switch if you want posh words) at a profit.


That's all very interesting.
Do you think Tesla will continue to prosper, or will the mainstream car manufacturers steal their clothes? I have no position.

As regards oil substitutes, I recall a post on TMF where someone pointed out the multitudinous downstream uses of oil derivatives, so I smile when green folk predict the end of oil extraction. Be careful what you wish for n'all that.

But as regards renewables, where to invest? Or for me, approaching the big 70, does it matter? The oil minnows can continue tiddling around with the minor fields, and I cannot help feeling that Shell, Exxon, BP, Aramco, must be well aware of the trends and will themselves seek to ride the wave of EVs and renewables. Does one therefore need to jump ship at all?

V8

dspp
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Re: Remember peak oil?

#303310

Postby dspp » April 26th, 2020, 8:49 am

88V8 wrote:
dspp wrote: I am overexposed to TSLA which has done considerably better than some of my oil exposure...the next upcycle in oil price could well be the last opportunity to bail out (er, sectoral switch if you want posh words) at a profit.


That's all very interesting.
Do you think Tesla will continue to prosper, or will the mainstream car manufacturers steal their clothes? I have no position.

As regards oil substitutes, I recall a post on TMF where someone pointed out the multitudinous downstream uses of oil derivatives, so I smile when green folk predict the end of oil extraction. Be careful what you wish for n'all that.

But as regards renewables, where to invest? Or for me, approaching the big 70, does it matter? The oil minnows can continue tiddling around with the minor fields, and I cannot help feeling that Shell, Exxon, BP, Aramco, must be well aware of the trends and will themselves seek to ride the wave of EVs and renewables. Does one therefore need to jump ship at all?

V8


Re 1, TSLA : for many years I thought the legacy auto industry would swamp them. Indeed Musk said the same thing. Now I tend towards the view that TSLA is as likely as any to make it through the transition as any other.

Re 2, oil products : I am not in agreement with that poster, as they've not done their homework imho. The volume of oil & gas going into chemicals, lubricants is a relatively small %, and many can be substituted. Not all. It is not a good lifeline to depend on if you are an oil producer.

Re 3, renewables : I have very little idea and have said so many times. This for me is the big conundrum.
[edit: 09:33 - To add, apart from my own personal investment in PV on my house; and my work for the last 18-20 years which has tended to be on the decarbonisation side of the equation; the only stock I have seen in those years that met my criteria as a renewables investment was TSLA. That is why I went into TSLA when I did as per viewtopic.php?f=76&t=5037 at AFAIR about $220-$250 range. Whether it represents a fair risk today at $700+ is another thing. ]

regards, dspp

dspp
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Re: Remember peak oil?

#304075

Postby dspp » April 29th, 2020, 11:26 am

US energy production exceeds consumption
plenty of interesting info
https://www.eia.gov/todayinenergy/detail.php?id=43515

- dspp

88V8
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Re: Remember peak oil?

#304257

Postby 88V8 » April 29th, 2020, 8:14 pm

dspp wrote:US energy production in 2019 exceeds consumption.

No wonder the Saudis got in a tizwoz.
Not that it has done them much good, nor will even in the medium term. Do they really imagine US oil production capacity is going to evaporate?

V8

dspp
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Re: Remember peak oil?

#304296

Postby dspp » April 29th, 2020, 10:17 pm

88V8 wrote:
dspp wrote:US energy production in 2019 exceeds consumption.

No wonder the Saudis got in a tizwoz.
Not that it has done them much good, nor will even in the medium term. Do they really imagine US oil production capacity is going to evaporate?

V8


Actually, when you think about what it takes to enable it:
- near zero interest rates
- heavy capex at risk in drill & frac spreads
- heavy investment at risk in drill & frac crews
- all of which tend to evaporate/deteriorate if idled
- minimum basin-sized clustering
Then yes, it is unlikely to turn around and reinstate too quickly. Burnt investors do have memories.

It is a rough game.

regards, dspp

FabianBjornseth
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Re: Remember peak oil?

#304358

Postby FabianBjornseth » April 30th, 2020, 8:23 am

dspp wrote:Then yes, it is unlikely to turn around and reinstate too quickly. Burnt investors do have memories.

regards, dspp


http://www.wtrg.com/rotaryrigs.html

The US rig count steadily increase from ~400 July 2016 to ~1050 in November 2018. This was still just ~60% of average number of active rigs from 2007-2014. Despite this lower number of active rigs, US oil production surged in the period, due to significant operational efficiency gains and an influx of private equity. Could the same happen again? I believe the status of the industry at this time will lead to a different outcome:

  • The US rig count was already dropping since November 2018, as operators failed to meet their production forecasts, and the investors were now and demanding value and returns. COVID-19 has only accelerated what was already a fundamental problem. https://www.wsj.com/articles/frackings-secret-problemoil-wells-arent-producing-as-much-as-forecast-11546450162
  • Many of the efficiency gains since 2014 were "easy-wins" that squeezed suppliers margins. Further efficiency gains are less obvious.
  • It is likely that a lot of the best acreage has already been drilled
  • Due to the disappointing output from the acreage drilled in the last boom, investors may not be as aggressive, and sanction incrementally smaller projects than before

spasmodicus
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Re: Remember peak oil?

#304439

Postby spasmodicus » April 30th, 2020, 11:30 am

dspp wrote:Actually, when you think about what it takes to enable it:
- near zero interest rates
- heavy capex at risk in drill & frac spreads
- heavy investment at risk in drill & frac crews
- all of which tend to evaporate/deteriorate if idled
- minimum basin-sized clustering
Then yes, it is unlikely to turn around and reinstate too quickly. Burnt investors do have memories.

It is a rough game


but quite short memories, by all accounts. In 2016 WTI went below $30/bbl, at which most shale gas/oil production is uneconomic. However shale production,i.e. the rate of losing money, actually increased in the USA. Some companies/investors persist even when the odds against financial success must be insurmountable. Nearer to home, witness the antics of our own (actually mostly Aussie owned, but they count as our own don't they) plucky little Cuadrilla, a fine example of not knowing when to throw in the towel!

regards,
S

bruncher
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Re: Remember peak oil?

#435673

Postby bruncher » August 18th, 2021, 1:55 pm

bungeejumper wrote:It's dangerous territory unless you know exactly what you're doing. The majority of ordinary punters are jumping into ETCs such as Wisdomtree's CRUD that they think will allow them to simply ride the rising tide when prices rise again. But that's a disaster in waiting, because most of them have no idea about how contango works. Or the rolled-forward exposure.

BJ


I admit I was one of those who thought they could win by buying ETC's when the price was low and waiting for the rising tide. I am under water holding NGAS even after big recent rises in the actual market price. Could I still win or should I pull out? My situation has improved a great deal in recent months, but I need the ETC to rise further to break even. Just wondering whether the fund will even survive if contango burns cash? Is it like a pyramid scheme that needs a continuous inflow of new money?

bruncher
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Re: Remember peak oil?

#439409

Postby bruncher » September 3rd, 2021, 10:26 am

bruncher wrote:
bungeejumper wrote:It's dangerous territory unless you know exactly what you're doing. The majority of ordinary punters are jumping into ETCs such as Wisdomtree's CRUD that they think will allow them to simply ride the rising tide when prices rise again. But that's a disaster in waiting, because most of them have no idea about how contango works. Or the rolled-forward exposure.

BJ


I admit I was one of those who thought they could win by buying ETC's when the price was low and waiting for the rising tide. I am under water holding NGAS even after big recent rises in the actual market price. Could I still win or should I pull out? My situation has improved a great deal in recent months, but I need the ETC to rise further to break even. Just wondering whether the fund will even survive if contango burns cash? Is it like a pyramid scheme that needs a continuous inflow of new money?


Damn! Sold too soon. Should have held my nerve instead of being scared by things I don't understand.

TUK020
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Re: Remember peak oil?

#448471

Postby TUK020 » October 7th, 2021, 10:08 am

This thread is an interesting example of mean reversion

bruncher
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Re: Remember peak oil?

#448480

Postby bruncher » October 7th, 2021, 10:26 am

I've made money on this same NGAS ETC previously, so ignorance not necessarily an impediment to making money.


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