The End of the Line for Oil


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ORIGINAL POST

POSTED BY Ed (3 mths ago)
Big oil companies are no longer trying to replace all their production through conventional exploration, the energy consulting company said in a report published Tuesday.

More http://www.bloomberg.com/news/articles/2016-09-20/oil-majors-must-count-on-m-a-to-replenish-reserves-woodmac-says

COMMENTS

Ed (3 mths ago)
If you ever find yourself at a cocktail party with a bunch of oil executives, one phrase is a guaranteed mood-killer: "reserve replacement."

Not merely awkward to say, it is the industry's bogeyman. Because in a business chiefly concerned with getting stuff out of the ground, you need to replace that stuff pretty consistently unless you want to, well, eventually run out of stuff.

Last year, the stuff-gathering did not go so well. Not replacing your reserves can be due to several things, such as striking out on a big exploration prospect or simply dialing back investment in finding new fields.

Oil Party Faux Pas

"So How's The Old Reserve Replacement Going?"

It can also just be about those fickle little things called prices.

One of the things that makes proved reserves proved is a reasonable certainty they can be produced economically. A barrel of oil that costs more to get out of the ground than anyone is likely to pay for it isn't, from any rational viewpoint, going to be produced. So, depending on the vagaries of the commodity markets, it can disappear from the books, even if it physically still lurks there beneath the ground.

A good example of how this works is what happened last year with Exxon Mobil, which suffered a serious reversal in its reserve replacement ratio:


Exxon's reserve replacement ratio crashed below 100 percent in 2015:

https://www.bloomberg.com/gadfly/articles/2016-09-30/big-oil-reserve-replacement-price-gains-won-t-help-much


The thing is....

Prices cannot spike without destroying growth...

According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf


Hmmmmm.....

Ed (3 mths ago)
Why energy prices are ultimately headed lower

We have been hearing a great deal about IMF concerns recently, after the release of its October 2016 World Economic Outlook and its Annual Meeting October 7-9. The concerns mentioned include the following:

Too much growth in debt, with China particularly mentioned as a problem

World economic growth seems to have slowed on a long-term basis

Central bank intervention required to produce artificially low interest rates, to produce even this low growth

Global international trade is no longer growing rapidly

Economic stagnation could lead to protectionist calls

These issues are very much related to issues that I have been writing about:

It takes energy to make goods and services.

It takes an increasing amount of energy consumption to create a growing amount of goods and services–in other words, growing GDP.

This energy must be inexpensive, if it is to operate in the historical way: the economy produces good productivity growth; this productivity growth translates to wage growth; and debt levels can stay within reasonable bounds as growth occurs.

We can’t keep producing cheap energy because what “runs out” is cheap-to-extract energy. We extract this cheap-to-extract energy first, forcing us to move on to expensive-to-extract energy.

Eventually, we run into the problem of energy prices falling below the cost of production because of affordability issues. The wages of non-elite workers don’t keep up with the rising cost of extraction.

Governments can try to cover up the problem with more debt at ever-lower interest rates, but eventually this doesn’t work either.

Instead of producing higher commodity prices, the system tends to produce asset bubbles.

Eventually, the system must collapse due to growing inefficiencies of the system. The result is likely to look much like a “Minsky Moment,” with a collapse in asset prices.

The collapse in assets prices will lead to debt defaults, bank failures, and a lack of new loans. With fewer new loans, there will be a further decrease in demand. As a result, energy and other commodity prices can be expected to fall to new lows.

Let me explain a few of these issues:


(you may want to be sitting before you read the rest... perhaps pop a Xanax...)

https://ourfiniteworld.com/2016/10/11/why-energy-prices-are-ultimately-headed-lower-what-the-imf-missed/comment-page-1/#comment-102654


https://gailtheactuary.files.wordpress.com/2015/04/world-gdp-compared-to-energy-consumption.png?w=640&h=391

https://gailtheactuary.files.wordpress.com/2015/08/world-energy-consumption-and-gdp-growth-in-2010-to-2014a.png

https://gailtheactuary.files.wordpress.com/2015/09/world-gdp-growth-divided-between-energy-and-efficiency1.png

Ed (3 mths ago)
https://damnthematrix.files.wordpress.com/2016/09/ec609-discoveries.png


A rather alarming chart…. I was concerned when I initially looked at it….

Fortunately we have enough shale oil to last another 100 years… and by then we will no longer need oil because we will have EVs in every garage and solar panels and wind mills providing 100% of our energy …

And within a few decades there will always be the option of moving to the colonies on Mars or any of the other planets that Elon Musk is readying for us.

The future is so bright…. I need to wear … welding goggles?

http://images11.palcdn.com/hlr-system/WebPhotos/01/014/0140/0140939.jpg

Ed (3 mths ago)
LONDON—In June, oil giant BP PLC announced what it deemed an “important” new discovery in Egypt.

It turned out to be a modest natural-gas find that didn’t even rank in the top 50 discoveries since 2012. The fact that BP and its partner Eni SpA hailed it as a major success is a sign of the times for the oil industry.

For years, big oil and gas companies poured ballooning sums into seeking mammoth reserves in difficult locations. But their recent record was spotty, and a dearth of major finds was followed by the oil-price slump that began in 2014. It prompted companies to cut costs and shift away from expensive, high-risk exploration.

Some in the industry say the decline in exploration spending will eventually contribute to an oil drought—and spiking crude prices. Saudi Arabia’s energy minister Khalid al-Falih told an oil conference in London this month that the underinvestment caused by weak oil prices over the past two years will result in “a period of shortage of supply.”

Today’s frugal period comes after oil companies boosted exploration spending in the 2000s amid high prices and rising Asian demand.

Drilling tested fresh ocean depths and under Arctic ice in a search for new barrels, as output from easy-to-reach fields declined.

But as spending increased, success didn’t. Leaving aside unconventional resources, annual volumes of oil and gas discovered have declined successively since 2010, according to data from Wood Mackenzie.

Big companies responded with big cuts. BP, Eni and their peers cut exploration spending by 35% in 2015 compared with 2013, Wood Mackenzie’s data show. Many projects now focus on lower-risk, lower-reward prospects as companies hope for incremental gains near existing infrastructure that they can bring online quickly and cheaply.

http://www.wsj.com/articles/oil-companies-shift-exploration-tactics-curb-spending-1477474206


https://si.wsj.net/public/resources/images/OJ-AQ625_EXPLOR_9U_20161025175106.jpg

Ed (3 mths ago)
Granny is spending $10 per day but earning only $1.

Granny is obtaining the difference by withdrawing $9 per day from her bank savings.

How much money does Granny have in the bank and how long can this continue before her bank account balance is $0?

Ed (3 mths ago)
Next Step in “Irreversible Decline”? Exxon Books 38% Lower Earnings, Blames Refining Margins

ExxonMobil reported earnings of US$2.65 billion for the third quarter of the year, or US$0.63 per share, largely in line with analyst expectations. The positive result reaffirmed the company’s reputation as one of the most stable Big Oil players.

In its financial report, the company noted that the annual drop in earnings from US$4.2 billion for the third quarter of 2015 was caused by lower refining margins and chronically depressed oil and gas prices, despite the pickup in crude over the last few months.

Even so, Exxon’s downstream business fared much better than its upstream operations. While earnings from exploration and production stood at US$620 million, chemicals and downstream operations contributed US$2.4 billion combined.

A recent report from the Institute for Energy Economics and Financial Analysis, however, warned that Exxon is suffering from fundamental weaknesses in its financials, which could spell an “irreversible decline” for the world’s top public E&P.

The report’s author, IEEFA’s director of finance, Tom Sanzillo, notes that Exxon has seen a 45-percent drop in its revenues over the past five years, accompanied by cuts on capex, declines in cash balances at the end of each year, and shrinking cash flows.

http://wolfstreet.com/2016/10/28/exxon-38-percent-lower-earnings-in-q3-blames-refining-margins-irreversible-decline/

Ed (3 mths ago)
Will Oil Majors Ever Recover?

The oil majors began reporting their third quarter earnings in recent days, and the figures do not look good. The three-month period ending in September saw oil prices sink to the low $40s per barrel and rebound to $50, but the losses continued to pile up for many of the largest oil companies.

Statoil started the earnings season on Thursday, reporting a loss much worse than analysts had expected. The quasi-state-owned Norwegian firm reported a loss of $432 million in the third quarter, lower than the $307 million loss it posted a year earlier. “The financial results were affected by low oil and gas prices, extensive planned maintenance and expensed exploration wells from previous periods,” Statoil’s CEO Eldar Saetre said in a statement.

The poor results were due to lower oil prices and lower refining margins, but Statoil put on a brave face, arguing to shareholders that it is bringing down costs. It announced another cut to its capex guidance for 2016, lowering it from $12 billion to $11 billion.

Italian oil company Eni reported a 484 million euro loss, compared to a 127 million euro loss a year earlier. Eni blamed lower oil and natural gas prices, along with some unexpected shutdowns. Refining margins also fell, hurting its downstream unit.

ConocoPhillips reported a $1 billion loss for the quarter, or about 84 cents per share, and revenue declined by 13 percent to $6.52 billion. Still, the company raised its production estimate for the year slightly, and its loss was not quite as bad as analysts expected.

ExxonMobil released numbers on Friday, and it earned $2.65 billion for the quarter, down 38 percent from a year earlier. Chevron also reported a $1.3 billion profit, a decline of about 37 percent from the third quarter in 2015.

There are some common themes throughout these earnings reports. First, obviously, earnings continue to suffer. Not only are oil prices still low, albeit up slightly from the lows earlier this year, but the oil majors are struggling to grow production. Severe cutbacks in spending, along with large asset sales over the past two years, are making it difficult to stop production from falling.

Exxon saw output decline 3 percent over the past 12 months; Chevron’s was down 1 percent; a few others were flat or slightly up.

A second trend that emerged was declining earnings from refining, which makes sense because refining margins across the globe have plunged this year. Global refining margins were down 42 percent in the third quarter from a year earlier, according to BP. As refiners around the world took advantage of huge margins in 2015, they processed ever more volumes of gasoline and diesel, which ultimately led to narrowing margins this year. That took away the security blanket for so many oil majors.


In the first nine months of this year, Exxon’s refining unit, for example, saw earnings fall 25 percent from the same period in 2015. Chevron’s downstream earnings fell by more than half. Downstream units are still more profitable for the oil majors than their upstream divisions, but they are not providing the buffer that they did last year.

Third, debt levels continue to rise. Exxon saw its total debt balloon by nearly 35 percent to $46.2 billion by the end of September. Chevron’s debt jumped by 27 percent to $45 billion. Debt for ConocoPhillips rose by 15 percent to $28.7 billion. These are worrying figures, and to the extent that some of the other majors managed to avoid rising debt or even whittled away at their indebtedness, it was because they sold off assets, providing one-time cash injections that could reduce long-term production.

Meanwhile, they are all stubbornly holding onto their dividend payout levels, a generous offering to shareholders when they are struggling to get out of negative territory. With high dividends and inadequate cash to cover those payouts and fund capex, debt is rising (see previous paragraph).

One final note.

This could all be cyclical, but ExxonMobil offered a worrying note to shareholders.


The oil major, in an acknowledgment of the investigations it is under by the New York Attorney General and the U.S. Securities and Exchange Commission, warned investors that it might have to write down some oil assets because future climate policy might make those reserves impossible to develop.

Far from a cyclical problem, that disclosure is an early sign of a much more existential threat just over the horizon.

http://oilprice.com/Energy/Energy-General/Will-Oil-Majors-Ever-Recover.html


'Impossible to develop' = the price of extraction is too high --- there is no way the price of oil can rise to allow for a profit to be made... (high oil prices destroy growth)

Therefore much of the oil that is in the ground --- will remain in the ground....

Ed (3 mths ago)
“The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.”

Saudi oil minister Sheik Ahmed Zaki Yamani (2005)

Ed (3 mths ago)
END OF THE U.S. MAJOR OIL INDUSTRY ERA: Big Trouble At ExxonMobil

The era of the mighty U.S. major oil industry is coming to an end as the country’s largest petroleum company is in big trouble. While ExxonMobil has been the most profitable U.S. oil company in the past, it suffered its worst year on record.

For example, just four years ago, ExxonMobil enjoyed a $45 billion net income profit in 2012. Now compare that to a total $5 billion net income gain for the first three-quarters of 2016. If Exxon continues to report disappointing results for the remainder of the year, its net income will have declined a stunning 85% since 2012.

Actually, the situation at Exxon is much worse if we dig a little deeper.

Profitability Is Much Less When We Factor in Capital Expenditures

To understand the real profitability of a company we have to look at its cash flow, or what is known as free cash flow. Free cash flow is calculated by deducting capital expenditures (CAPEX) from the company’s cash from operations. ExxonMobil’s free cash flow declined from $24.4 billion in 2011 to $1 billion for the first nine months of 2016:

https://srsroccoreport.com/wp-content/uploads/2016/11/ExxonMobil-Free-Cash-Flow-2011-2016.png


So, here we can see that Exxon’s free cash flow of $1 billion (2016 YTD) is down 95% from $24.4 billion in 2011. The reason for the rapidly falling free cash flow is due to skyrocketing capital expenditures and falling oil prices. But, this is only part of the picture.

If we include dividend payouts, Exxon’s financial situation drops down another notch. While free cash flow does not include dividend payouts, the money Exxon pays its shareholders must come from its available cash. By including dividend payouts, the company was $8.3 billion in the hole in 2015:

https://srsroccoreport.com/wp-content/uploads/2016/11/ExxonMobil-Free-Cash-Flow-Minus-Dividends.png



Now, even though Exxon stated a $45 billion net income for 2012, its free cash flow minus dividends was only $11.5 billion. Moreover, the company didn’t make any money in 2013 or 2014 after dividends were paid to their shareholders. Thus, deducting dividends from the equation provides a more realistic picture, especially since Exxon has been forking out serious sums of money to its shareholders.

That being said, there seems to be something seriously wrong going on at Exxon when we look at the long-term chart below:

https://srsroccoreport.com/wp-content/uploads/2016/11/ExxonMobil-Free-Cash-Flow-vs-Oil-Price.png


Let me start off by saying, this chart is an extension of the chart above it. Even though the title doesn’t include dividend payouts, the legend in the chart displays it. The white line represents the average annual oil price. There are several important factors shown in this chart.

As the price of oil increased from $20 in 2002 to $97 in 2008, Exxon’s free cash flow minus dividends surged to $32 billion from $3.4 billion. Thus, the higher oil price led to larger free cash flow profits. Well, that was the good news.

The bad news is, Exxon’s surplus cash declined significantly when the oil price was over $100 from 2011 to 2013. Even though the oil price in 2011 and 2012 was higher than it was in 2008, the company’s free cash flow including dividends was less than half. Furthermore, Exxon made no surplus cash in 2013 when the oil price was above $100.

While Exxon enjoyed surplus cash over $20 billion from 2004 to 2007 when the price of oil was between $38 and $72, how is it that the company made no surplus cash in 2013 when the oil price was north of $100?? We will get into that in a minute.

Even though Exxon suffered negative free cash flow (including dividend payouts) in 1998 (-$2.5 billion) and 1999 (-$1.9 billion), the oil price was at a low of $13 and $18 respectively. Compare that to a cash deficit of $8.3 billion in 2015 at an average oil price of $52…. triple of what is was during the 1998 and 1999.

The reason for the huge decline in ExxonMobil’s surplus cash, even at much higher oil prices, was due to two factors; 1) higher capital expenditures and, 2) higher dividend payouts.

The Massive Increase Of Capital Expenditures Is Causing Havoc At ExxonMobil

Very few investors realize the devastating impact of rising capital expenditures on Exxon’s financial bottom line. This chart shows annual capital expenditures versus the company’s oil (total liquid) production:

https://srsroccoreport.com/wp-content/uploads/2016/11/ExxonMobil-Oil-Production-vs-Captial-Expenditures.png

More https://srsroccoreport.com/end-of-the-u-s-major-oil-industry-era-big-trouble-at-exxonmobil/

Ed (3 mths ago)
https://www.youtube.com/watch?v=dLCsMRr7hAg


https://gailtheactuary.files.wordpress.com/2014/02/kopits-50-majors-capex.png


http://energypolicy.columbia.edu/events-calendar/global-oil-market-forecasting-main-approaches-key-drivers

Ed (57 days ago)
Permian Giant Oil Field Would Lose $500 Billion At Today’s Prices

Did you hear about the largest U.S. oil and gas field that’s in the Permian basin of west Texas?

That’s the one that’s not a field because it hasn’t been discovered yet. That’s the one whose 20 billion barrels are an estimate by the U.S. Geological Survey. That’s the one whose 20 billion barrels would lose $500 billion at today’s oil prices.

Wait a minute. What about the headlines?

Bloomberg: A $900 Billion Oil Treasure Lies Beneath West Texas Desert

USA Today: USGS: Largest oil deposit ever found in U.S. discovered in Texas
Deutsche Welle: Largest US oil and gas discovery made – USGS

Read the source–the U.S. Geological Survey. The USGS did an assessment of the undiscovered, technically recoverable resources of the Wolfcamp shale in the Permian basin.

“Undiscovered” means what it says–it has not been discovered. It’s an estimate, an educated guess. “Technically recoverable resources” means the oil that could be produced if cost didn’t matter.

Where Did $900 Billion Come From?

Where did the $900 billion value come from? Multiply 20 billion barrels times $45 per barrel and you get $900 billion. In other words, if the oil magically leaped out of the ground without the cost of drilling and completing wells; if there were no operating costs to produce it; if there were no taxes and no royalties.

Sweet. Jeb Clampett shootin’ at some food.

In the real world, an average Wolfcamp well costs $7 million to drill and complete (Table 1 from my June 2016 post on the Permian basin plays). Average operating costs are about $12 per barrel. Severance taxes are almost 5% and the average net revenue per barrel after royalties is only 75%.

http://www.artberman.com/wp-content/uploads/PERMIAN-ECONOMIC-ASSUMPTION-1-1024x290.jpg



The obvious question that reporters apparently failed to ask is, What is all of this going to cost?


According to the USGS’ input data, it would take 196,253 wells to produce the 20 billion barrels if it exists. At $7 million per well, that would cost almost $1.4 trillion in drilling and completion costs alone.

It would cost more than $1.4 trillion to generate $900 billion in revenue resulting in a net loss of $500 billion at $45 oil prices excluding all operating expenses, taxes and royalties–and no discounting.


That’s a discovery that no one can afford to make.

More http://www.artberman.com/permian-giant-oil-field-would-lose-500-billion-at-todays-prices/

Ed (40 days ago)
British Oil Industry On The Verge Of “Collapse”


The United Kingdom’s oil industry is taking a beating from low oil prices, so much so that it is “close to collapse.”

That comes from the head of the Association of UK Independent Oil and Gas Exploration Companies, otherwise known as Brindex. Robin Allan, the chairman of Brindex, says that the number of new oil projects that are profitable at $60 per barrel is close to zero.

“It's almost impossible to make money at these oil prices,” Allan told the BBC in an interview. “It's a huge crisis.”

The United Kingdom has been a significant oil producer in the past, driven mostly by offshore oil platforms in the North Sea. However, North Sea output has been in decline since the late 1990’s, with the industry unable to log substantial new discoveries to offset declining production from aging fields. Production has fallen by 40 percent in just the last four years. U.K. oil production, now below 1 million barrels per day, is less than half of what it was in 1998.


With the best days for British oil fields behind them, costs have climbed rapidly. A strong currency, high taxes, and falling output have led to surging costs to produce each given barrel of oil. By some estimates, it is five times more costly to produce oil in the U.K. today compared to 2002. As a result, the health of the British oil industry has deteriorated rather rapidly.

But the latest crisis has been sparked by low oil prices, which have fallen by half since June 2014. That has oil companies slashing both spending and employees across the country. The U.K. oil and gas industry employs an estimated 450,000 people, but those numbers are starting to dwindle quickly.


According to the BBC, ConocoPhillips is cutting about 14 percent of its 1,650 workers, and several other firms are either freezing wages or laying off workers. But the numbers are surely worse than is being reported because oil companies often use contractors, whose layoffs wouldn’t be officially announced.


Read More http://oilprice.com/Energy/Crude-Oil/British-Oil-Industry-On-The-Verge-Of-Collapse.html

http://cdn.oilprice.com/images/tinymce/Evan1/ada1027.png



The thing is...

High-priced oil ends growth....

According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices.

http://www.iea.org/textbase/npsum/high_oil04sum.pdf

Ed (36 days ago)
The countdown has started as the demise of the great U.S. shale gas industry has begun. This will have a disastrous impact on the U.S. economy as shale gas production declines in a big way. Unfortunately, very few Americans understand how sickly the domestic shale gas industry truly is, because they have been brainwashed to believe the United States is heading towards energy independence.

For the U.S. to become energy independent, it would have to add at least another five million barrels per day of oil production. At the peak in February 2015, the U.S. shale oil industry produced a little more than five million barrels of oil per day. However, the real problem is not the doubling of U.S. shale oil production, rather it’s being able to make a profit in the process.

The U.S. shale oil and gas industry hasn’t made any real money since 2009. This is especially true for one of the largest natural gas producers in the United States. Chesapeake Energy, which is the second largest natural gas producer in the country, hasn’t made a lousy nickel for at least the past ten years:

https://srsroccoreport.com/wp-content/uploads/2016/12/Chesapeake-Energy-Free-Cash-Flow-Table.png

More https://srsroccoreport.com/u-s-shale-gas-industry-countdown-to-disaster/

Ed (14 days ago)
HSBC Report: People are almost completely ignoring a looming crisis for oil

Headquarted in London, UK, HSBC is the world’s sixth largest bank, holding assets of $2.67 trillion. So when they produce a research report for their clients, we should listen.



Among the report’s most shocking findings is that “81% of the world’s total liquids production is already in decline.”




Included within the report is a helpful, ten-point summary of the key arguments the bank makes, and what is going on right now. We have summarised the arguments below:

Oil’s oversupply problem, which has caused most of the trouble in the markets in recent years will end by 2017, and the market will return to balance.

Spare capacity will have shrunk substantially by then “to just 1% of global supply/demand.” This HSBC argues, will make the market more susceptible to disruptions like those seen in Nigeria and Canada in 2016.

“Oil demand is still growing by ~1mbd every year, and no central scenarios that we recently assessed see oil demand peaking before 2040.”

81% of the production of liquid oil is already in decline.

HSBC sees between 3 and 4.5 million barrels per day of supply disappearing once peak oil production is reached. “In our view a sensible range for average decline rate on post-peak production is 5-7%, equivalent to around 3-4.5mbd of lost production every year.”

Based on a simple calculation, HSBC estimates that by 2040, the world will need to find around 40 million barrels of oil per day to keep up with growing demand from emerging economies. That is equivalent to over 4 times the current crude oil output of Saudi Arabia.


“Small oilfields typically decline twice as fast as large fields, and the global supply mix relies increasingly on small fields: the typical new oilfield size has fallen from 500-1,000mb 40 years ago to only 75mb this decade.” — This will exacerbate the problem of declining oil fields, and the lack of supply.


The amount of new oil discoveries being made is pretty small. HSBC notes that in 2015 the discovery rate for new wells was just 5%, a record low. The discoveries made are also fairly small in size.

There is potential for growth in US shale oil, but it currently represents less than 5% of global supply, meaning that it will not be able, single-handedly at least, to address the tumbling global supply HSBC expects.

“Step-change improvements in production and drilling efficiency in response to the downturn have masked underlying decline rates at many companies, but the degree to which they can continue to do so is becoming much more limited.” Essentially HSBC argues that companies aren’t improving their efficiency at a quick enough rate, meaning that supply declines will hit them even harder.

http://static.businessinsider.com/image/57cfe337dd0895ef558b484b-1200/image.jpg

More http://www.businessinsider.com.au/the-future-of-oil-supply-and-demand-2016-9?r=UK&IR=T

Ed (14 days ago)
Full report:

https://drive.google.com/file/d/0B9wSgViWVAfzUEgzMlBfR3UxNDg/view

Interview: https://www.research.hsbc.com/R/20/DCNKWlb

Ed (14 days ago)
2008: It is now widely recognized that Mexico’s Cantarell, the second most productive oil field in the world, is in terminal decline. Adrian Lajous, former CEO of the state-owned oil company, Petróleos Mexicanos (Pemex) has bluntly described the situation: “Cantarell has peaked and has started its decline.”

Pemex now estimates a 14% annual production decrease at Cantarell. David Shields, author of the book Pemex: The Oil Reform, and arguably the leading expert on Mexico’s oil production, has warned: “This is bad news for Mexico. The field is declining faster than even the government’s pessimistic scenarios.” Figure 1, depicts the U.S. Energy Information Administration’s (EIA) 2008 projection of decreases in Mexican oil production in general, and the decline of Cantarell in particular, through 2020.

It should be noted that the EIA forecast is likely optimistic, as there are real questions as to how much production Mexico can glean from other fields to offset Cantarell.

This issue aside, however, the decline of Cantarell will clearly impact Mexico’s overall production levels since the field accounts for over half of the nation’s total output. Indeed, the EIA projects Mexico will become a net oil importer by 2017 – a shocking reversal for a nation that currently exports about 50% of its oil.


As important as these consequences are, however, they pale in significance compared to the impact reduced oil production will have on the people of Mexico – a nation which has literally changed its socioeconomic profile with billions in revenues from oil exports. Record revenues pay for schools, roads, hospitals, and other important societal infrastructure.

Oil revenues constitute nearly 40% of the Federal government’s budget. After a decade of steady progress in poverty reduction, a severe production decrease will put public spending in jeopardy. In 2006, despite nearly identical sales of $100 billion, Pemex paid $54 billion in taxes compared to only about $36 billion by PDVSA, Venezuela’s state-controlled oil company. In short, revenue from oil exports is the foundation of Mexico’s leap forward.


But, the specter of Mexico’s emerging public spending crisis looms on the horizon. Reality is quickly setting in. Second quarter profits dropped 56% this year over the same period in 2007. This decline in revenues has forced Mexican President Felipe Calderón to call for “an urgent reduction in public spending to reduce the enormous dependence on oil revenue.” It is no exaggeration to state that the government’s ability or inability to adapt to lower oil revenues will affect virtually every aspect of life in Mexico.

In order to shed light on this issue, the present analysis focuses on how declining oil revenues will impact five core facets of Mexican society: 1) Social Progress 2) Economic Growth 3) Inequality 4) Political Stability 5) Migration.

More http://www.resilience.org/stories/2008-08-27/peak-oil-and-mexico-socioeconomic-impacts-cantarell%E2%80%99s-decline/




2017: Looting and riots erupt in Mexico as gas prices spike 20 percent in one weekend as the government stops regulating oil prices

Read more: http://www.dailymail.co.uk/news/article-4089408/Mexican-president-defends-gas-price-hike-protests-spread.html#ixzz4V2x2GbwW


http://i.dailymail.co.uk/i/pix/2017/01/05/06/1zrjJ454oY48cb872b68d47f4aa5-4089408-Residents_pilfer_gasoline_and_diesel_from_a_gas_station_followin-a-34_1483597111680.jpg

http://i.dailymail.co.uk/i/pix/2017/01/05/06/3BDBA16A00000578-4089408-image-a-40_1483598227778.jpg

http://i.dailymail.co.uk/i/pix/2017/01/05/06/1zrjJ454oY48cb872b68d47f5991-4089408-Police_forcibly_remove_demonstrators_who_blocked_a_main_road_for-a-36_1483597128333.jpg

Ed (4 days ago)
China's Oil Collapse

- China’s crude production seen dropping as much as 7% this year
- Output declining at aging fields amid capital spending cuts


China’s output slumped in 2016 as state-owned firms shut wells at mature fields that had become too costly to operate after the crash. Crude production fell 6.9 percent in the first 11 months of 2016 to about 4 million barrels a day, the first decline since 2009 and the biggest in data going back to 1990.

The International Energy Agency estimates output fell 335,000 barrels a day last year as the country’s biggest producers cut spending, and will slide a further 240,000 barrels a day this year. Production shrank to a seven-year low in October “with no uptick in activity expected from the major companies,” the Paris-based group said last month.

Supply from the Daqing field, one of China’s biggest and oldest, slipped about 3 percent last year to 732,200 barrels a day, according to data from China National Petroleum Corp.

Output at China Petroleum & Chemical Corp.’s Shengli field, which contributed 65 percent of the company’s domestic crude production last year, will shrink almost 2 percent, the subsidiary that operates it said this month.

There’s “little hope” the country’s aging oilfields can reverse the declines even as prices rebound.


“China’s largest oil fields are aging rapidly,” said Gordon Kwan, Nomura’s Hong Kong-based head of Asia-Pacific oil and gas research, who sees the country’s output falling 5 percent even as prices rise. “Advanced technology can only mitigate the decline rate, but can’t reverse the structural trend.”


https://www.bloomberg.com/news/articles/2017-01-17/china-s-inescapable-oil-slide-is-a-record-breaking-gift-to-opec


https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iUTbQDVtGFzI/v1/800x-1.png

McAlpine (4 days ago)
So with all this negative posting going on , the last few months have been a boom for investors in oil producers on the stock market with 30 - 80% returns. How do you explain that? $52 a barrel and going up , though admittedly not as quick as the last few months ....

Ed (4 days ago)
If anyone anticipated oil would lift off lows in the 30 buck range... buying futures or some other instrument... they made money of course....

But big picture... oil producers are still losing money with oil at these prices...


Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

Here are the break-even oil prices for 13 of the world's biggest producers
http://www.businessinsider.com.au/break-even-oil-prices-for-all-the-major-producers-in-the-world-2015-7?r=US&IR=T


And oil cannot rise to the break even price --- at least not for very long --- without causing the global economy to crater


According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

Ed (3 days ago)
Macroeconomic Impacts of High Oil Prices

U.S. demand for crude oil arises from demand for the products that are made from it—especially gasoline, diesel fuel, heating oil, and jet fuel; and changes in crude oil prices are passed on to consumers in the prices of the final petroleum products. Increases in crude oil prices affect the U.S. economy in five ways:

When the prices of petroleum products increase, consumers use more of their income to pay for oil-derived products, and their spending on other goods and services declines. The extra amounts spent on those products go to foreign and domestic oil producers and, if wholesale margins increase, to refiners. Domestic producers may pay higher dividends and/or spend more on oil discovery, production, and distribution. Foreign producers may spend some or all of their extra revenues on U.S. goods and services, but the types of goods and services they buy will be different from those that domestic consumers would buy. How quickly and how much domestic and foreign oil producers spend on U.S. goods and services and financial and real assets will be critical in determining the effects of higher oil prices on the aggregate economy [18].


Oil is also a vital input for the production of a wide range of goods and services, because it is used for transportation in businesses of all types. Higher oil prices thus increase the cost of inputs; and if the cost increases cannot be passed on to consumers, economic inputs such as labor and capital stock may be reallocated. Higher oil prices can cause worker layoffs and the idling of plants, reducing economic output in the short term.


Because the United States is a net importer of oil, higher oil prices affect the purchasing power of U.S. national income through their impact on the international terms of trade. The increased price of imported oil forces U.S. businesses to devote more of their production to exports, as opposed to satisfying domestic demand for goods and services, even if there is no change in the quantity of foreign oil consumed.


Changes in oil prices can also cause economic losses when macroeconomic frictions prevent rapid changes in nominal prices for final goods (due to the costs of changing “menu” prices) or for key inputs, such as wages. Because there is resistance on the part of workers to real declines in wages, oil price increases typically lead to upward pressure on nominal wage levels. Moreover, nominal price “stickiness” is asymmetric, in that firms, unions, and other organizations are much more reluctant to lower nominal prices and the wages they receive than they are to raise them. When a nominal increase in oil prices threatens purchasing power, the adjustment process is slowed, with multiplier effects throughout the economy [19].


Finally, higher oil prices cause, to varying degrees, increases in other energy prices. Depending on the ability to substitute other energy sources for petroleum, the price increases can be large and can cause macroeconomic effects similar to the effects of oil price increases.


http://www.eia.gov/oiaf/aeo/otheranalysis/aeo_2006analysispapers/efhop.html

Ed (3 days ago)
Has Petroleum Production Peaked, Ending the Era of Easy Oil? (2012)

A new analysis concludes that easily extracted oil peaked in 2005, suggesting that dirtier fossil fuels will be burned and energy prices will rise

Despite major oil finds off Brazil's coast, new fields in North Dakota and ongoing increases in the conversion of tar sands to oil in Canada, fresh supplies of petroleum are only just enough to offset the production decline from older fields. At best, the world is now living off an oil plateau—roughly 75 million barrels of oil produced each and every day—since at least 2005, according to a new comment published in Nature on January 26. (Scientific American is part of Nature Publishing Group.) That is a year earlier than estimated by the International Energy Agency—an energy cartel for oil consuming nations.


To support our modern lifestyles—from cars to plastics—the world has used more than one trillion barrels of oil to date. Another trillion lie underground, waiting to be tapped. But given the locations of the remaining oil, getting the next trillion is likely to cost a lot more than the previous trillion. The "supply of cheap oil has plateaued," argues chemist David King, director of the Smith School of Enterprise and the Environment at the University of Oxford and former chief scientific adviser to the U.K. government. "The global economy is severely knocked by oil prices of $100 per barrel or more, creating economic downturn and preventing economic recovery."


Nor do King and his co-author, oceanographer James Murray of the University of Washington in Seattle, hold out much hope for future discoveries. "The geologists know where the source rocks are and where the trap structures are," Murray notes. "If there was a prospect for a new giant oil field, I think it would have been found."


King and Murray based their conclusion on an analysis of oil data from the U.S. Energy Information Administration. Looking at use and production trends, the two note that since 2005 production has remained essentially unchanged whereas prices (a surrogate for demand) have fluctuated wildly. This suggests to the authors that there is no longer any spare capacity to respond to increases in demand, whether it results from political unrest that cuts supply, as in the case of Libya's political upheaval last year, or economic boom times in growing countries like China.



"We are not running out of oil, but we are running out of oil that can be produced easily and cheaply," King and Murray wrote.

https://www.scientificamerican.com/article/has-peak-oil-already-happened/


Expensive to produce oil is a huge drag on growth --- hence the massive stimulus we have seen might be interpreted as an effort to offset the huge drag on growth of expensive oil...

Ed (3 days ago)
Oil Isn't Running Out, But The Age Of Cheap Oil Is Definitely Over

Remember the summer of 2008, when oil was approaching $150 per barrel and topping the headlines? The oil story quickly faded to the background when the financial crisis hit full-steam that September; we had bigger things to worry about in terms of the potential collapse of the worldwide financial system. Meanwhile, the deepening recession greatly reduced demand for oil. The price per barrel fell precipitously.


[CIBC chief economist suggests 147 oil triggered the crisis... http://www.theglobeandmail.com/opinion/first-there-was-expensive-oil/article4355127/]


But while the world is awash in an excess supply of oil at the moment, I am convinced that the supply/demand balance of oil over the longer term is a critical issue that bears watching.


Oil is so important because it is, at the moment, the primary source of transportation fuel, and transport costs affect the entire economy. Low oil prices cut the cost of doing business and help reduce geographic barriers, while high oil prices act as a “tax” on the entire system and force us to act more locally.

I recently sat down with a group of Morningstar’s energy analysts to discuss the idea of “peak oil.” In this article, I will define the issue and share the group’s insights.

Peak Oil Defined
At its core, peak oil is the idea that we will reach a point at which the rate of oil production cannot be increased because of geologic limits such as the size of the planet’s resource base and the impact of natural decline rates. There are other limits to the rate of production, including above-ground factors such as investment rates and geopolitics, that further constrain production levels. To use an analogy, when thinking about the maximum amount of milkshake one can drink in a certain amount of time, the size of the straw and the ability to suck matters just as much as the amount of liquid in the cup.

The idea behind peak oil is credited to a geoscientist named M. King Hubbert, who worked for Shell back in the 1950s. In 1956 he published a paper that detailed a statistical method he developed suggesting that the rate of fossil-fuel production tends to follow a bell-shaped curve. The idea behind this is that after fossil-fuel reserves are discovered, production begins to increase exponentially until a peak production rate is reached; after that it begins to decline as depletion overcomes new discoveries.

When you look at the history of discoveries, it’s pretty clear that we’ve already found most of the obvious oil fields. In terms of oil reserves, discoveries peaked in the 1960s, and the rate of discovery dropped below our annual consumption in the late 1980s. Today, we’re using more oil each year than we find.

2009 was a banner year for oil discoveries, with a lot of headlines being generated by finds in Brazil and the deep waters of the Gulf of Mexico. In fact, we saw discoveries on the order of 10 billion barrels of reserves, the highest rate since 2000 when the giant Kashagan field in Kazakhstan was discovered. However, the world is consuming around 83 million barrels a day, which equates to 31 billion barrels a year. So even in this banner year, we are barely replacing one third of the oil we consume.

Are We Running Out of Oil?
In a word, no. Yet we have essentially found all of the cheap oil. Since Colonel Drake first drilled for oil in Pennsylvania in 1859, the world has used about a trillion barrels of oil. Estimates vary widely, but there are at least another trillion barrels of conventional crude oil reserves and perhaps two or three times that much if you consider unconventional (and higher-cost) sources, such as oil sands and oil shale. We’re not going to run out of oil overnight, but it’s fair to say that the first trillion barrels we consumed were the cheapest, easiest-to-access reserves.

When you look back at the East Texas oil boom early last century, oil wells were being drilled a few hundred feet deep. In the deserts of Saudi Arabia and Iraq, giant oil fields are so close to the surface that you could practically stick a straw in the ground and strike oil. These big, easy finds were relatively inexpensive to develop.

But check out where we’re looking now: The latest Gulf of Mexico discovery, Tiber, is a well drilled to a depth of 35,000 feet and lies beneath 4,000 feet of water. Think about that; the well is a mile deeper than Mount Everest is tall. It will likely take 7–10 years before this discovery produces anything. While this is a significant discovery, it certainly isn’t cheap oil.

We have established that cheap oil might be a thing of the past, and it is clear that we are using more oil than we find each year. Yet how does this fit into the notion that oil production is peaking? The key thing to consider is that an oil well’s rate of production declines over time.

As oil is pumped from a reservoir, the pressure in the well begins to drop and the rate of flow decreases. This process is called a decline rate. One can drill new wells in a field to balance the impact of declines, but as an oil field is developed and drained from multiple wells, it reaches a point at which the whole field goes into decline. We saw this play out with Alaska’s Prudhoe Bay, in the North Sea, and in the Cantarell field in Mexico. Now we can aggregate oil fields and look at production curves for countries in the same way, and we see that 40 of the 54 oil-producing nations are past their peak oil production. In the United States, oil production peaked in 1970 around 9.5 mb/d, but today our production is about 5 mb/d.

Let’s put oil-field declines in context. World oil production is roughly 83 million barrels per day. Various estimates place the underlying global decline rate somewhere between 4% and 8% per year. That means that each year we have to add about five million barrels of new production to keep production flat. Step five years out, and we have to replace 25 mb/d of production, or about three times Saudi Arabia’s current production. That’s a lot of new wells that need to be started just to offset declines.

Plus, this does not account for any growth in oil consumption. Absent global recessions, underlying oil demand is increasing by about 1% per year. This means that five years out we’d need another 5 million barrels of oil per day just to keep the current equilibrium. Frankly, we’re not certain that we’ll be able to reach that level of production.

Have We Reached Peak Oil?
It is hard to tell, and we do not know. No one will know for certain except by looking in the rear-view mirror. A couple of our analysts attended a conference in Denver put on by the Association for the Study of Peak Oil and Gas a few weeks back, and the precise timing of peak oil is of considerable debate. In our minds, the exact timing is less meaningful than the fact that oil production will begin to decline at some point within the next five to 10 years.

One enlightening analysis at the conference was presented by Rembrandt Koppelaar based on tracking announced oil megaprojects and layering anticipated production gains on top of existing world production. His analysis provides a best-case outlook that shows we can bring about 25 mb/d of new production online by 2016, assuming announced projects are completed on time and result in expected new production. His analysis suggests that we will get to roughly 90 mb/d in 2014. Incidentally, this is roughly the level of production an increasing number of oil executives are discussing as a production peak.

The Demand Side
We’ve talked a lot about supply issues, but demand is just as critical. Over the past five years we’ve seen China and other emerging economies bidding barrels away from industrialized countries. In fact, demand from the developed world (defined as the OECD countries) is down by about 4% since 2000, while China’s demand is up 60% and India’s is up 40%. On a net basis, world demand is up about 8%. In a very real way, the OECD countries have become one of the larger “suppliers” of oil to the market by reducing consumption.

Looking forward, we see this trend continuing, especially if fuel-efficiency measures as well as hybrid and electric vehicles gain traction here. Gasoline consumption in the United States accounts for about 12% of total world demand for oil, and any sizable reduction in gasoline use will free up barrels for the rest of the world. Our efforts to boost efficiency and reduce consumption will certainly affect the supply/demand balance. As Benjamin Franklin might have said, a barrel saved is a barrel earned.

China: The Wild Card
On the other side of the coin, most of the demand story is China. Formerly an exporter, China became a net importer of oil in 2000. It produces about 4 mb/d but now consumes roughly 8 mb/d. China has been responsible for 4 mb/d of new demand since 2000, about half of incremental demand over that period.

One item worth looking at is the rapid growth in China’s car ownership. In March, car sales in China overtook those in the U.S. for the first time, and sales are averaging 1.1 million new units a month. This is roughly twice the level of 2005 car sales. A big driver here was massive government subsidies that make “cash for clunkers” look downright stingy. But the core story of increased affluence, increased urbanization, and the availability of consumer financing seems to give real legs to Chinese auto demand. Just think, here in the United States we have a little less than one car per person in the country, but China’s ratio is a little over one in 10. It makes sense that both ratios will get closer to one another in the coming years.

Another component here is the fact that China subsidizes fuel prices, so Chinese drivers, who pay even less per gallon than we do in the States, are not very exposed to price increases. If oil prices spike, the price of gasoline goes up in the U.S., and there’s a demand response (witness 2008). But this impact is muted in China. As long as China can maintain a measure of economic stability, auto demand there is likely to continue its upward trek.

Of course, the big question mark is whether China can maintain its scalding-hot economic growth in the face of much slower growth in the U.S., given that China is still export-driven. If China runs out of steam and its GDP drops to, say, 3%–5% annual growth instead of the nearly 9% so far this year, quite a bit of oil demand would come off. China is the wild card.

What Happens to Oil Prices?

Whether or not prices keep escalating to ration tight supply remains the $64 billion question. We do think oil prices are likely to increase as oil supply begins to tighten again, but oil prices are tricky. To some extent, they reflect the state of the dollar. But, perhaps more importantly, high oil prices act as a tax on economies. When oil purchases begin to account for a material level of GDP, say, 4%–6% like we saw in 2008, economies cannot really bear that tax, and demand responds strongly.

We don’t think that we’re likely to see oil shooting past $200 a barrel. Instead, we tend to think that high prices will cure high prices and lead to reduced demand. Some analyses we’ve seen suggest that $100 oil is enough to trigger another recession in the U.S. So high prices are likely to throw countries back into recession and reduce demand that way, which will result in a lower oil price.



This article originally appeared in the November issue of Morningstar StockInvestor. http://msi.morningstar.com/




'Some analyses we’ve seen suggest that $100 oil is enough to trigger another recession'

According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

Let's do the numbers.... we are at 50 bucks now.... whatever growth we have would evaporate if the trillions of stimulus were pulled back ... so already the economy is taking a big hit ... without a doubt the economy would unravel if the stimulus was pulled off....

Add 50 bucks to the price of oil and that would result in a hit to GDP of 5 x 0.4 = 2%


'A sustained price per barrel of $100' would not result in a recession --- it would result in collapse.

But if oil stays below $100.... oil majors will eventually go out of business.


Rock >>> Hard Place

McAlpine (3 days ago)
If the last 100 years is anything to go by , the Oil Majors will survive and adapt and manipulate. Look at Banks , financial crisis and all the curency and crypto currency threats. They all adapt to the times we live in (and often get the public to pay for its survival).
How does any of this affect the public or the investor is another story. Right now , its seems investing in Oil Producers (and I dont necessarily mean the majors) can bring back decent returns. Enough to get a battery driven Tesla at least and reduce all our over involvement in oil.

Ed (3 days ago)
Unfortunately we live in a finite world.... resources are not unlimited. And we have burned through most of the cheap sources of the key resource that powers the global economy - oil.

Break-even is over $100 --- the global economy cannot operate with oil at that price. Oil majors are losing billions every quarter.

Not sure how they can adapt to or manipulate that.




Here is my take on 'renewable energy' --- the PR people toss that out there to give people hope that there is life after oil.

Most people would understand that oil is finite.... and if renewable energy were not put forward as an answer .... there would be --- to put it mildly .... a fair bit of anxiety as we see Oil Majors scraping the bottom of old wells (fracking).... drilling miles beneath the oceans.... steaming oil out of tar sands....


Here is the reality:

Replacement of oil by alternative sources

While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source.

The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.

Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:

4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years


The world consumes approximately 3 CMO annually from all sources. The table [10] shows the small contribution from alternative energies in 2006.

http://en.wikipedia.org/wiki/Cubic_mile_of_oil

Ed (3 days ago)
Then we have this:

Renewable energy 'simply won't work': Top Google engineers

Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.


Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren't guys who fiddle about with websites or data analytics or "technology" of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.

Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.

All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.


In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).


http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/

http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/

Ed (16 hrs ago)
Council on Foreign Relations: Saudi Arabia’s Break-Even on Oil is Approaching $120 per barrel

http://www.cfr.org/oil/fiscal-breakeven-oil-prices-uses-abuses-opportunities-improvement/p37275?cid=ex-cgs-oil_breakeven_discussion-levi_use-113015
http://i.cfr.org/content/Breakeven_figure_Saudi_Arabia.jpg


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