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EIA Confirms: Oil Production Peaked
Submitted by Nick Cunningham via OilPrice.com,
U.S. oil production has peaked…at least for now.
That is the conclusion from a new government report that concludes that U.S. oil production is on the decline. After questions surrounding the resilience of U.S. shale and when low oil prices would finally cut into production, the EIA says the month of April was the turning point.
In its Short-Term Energy Outlook released on July 7, the EIA acknowledged that U.S. oil production peaked in April, hitting 9.7 million barrels per day (mb/d), the highest level since 1971. In May, production fell by 50,000 barrels per day, and EIA says that it will continue to decline through the early part of next year. Still, the declines won’t be huge, according to the agency’s forecast – production will average 9.5 mb/d in 2015 and 9.3 mb/d in 2016.
The EIA figures move a little closer to what some critics have been saying for some time. Data from states like North Dakota and Texas had pointed to slowing production for months while EIA posted weekly gains in production figures for the nation as a whole. Along with several consecutive weeks of inventory drawdowns, EIA figures started to look a little suspect. The latest report is sort of an acknowledgement that those figures were a little optimistic.
Nevertheless, as the EIA affirms peak production in the second quarter of 2015, the fall in output over the next few quarters should bring supply and demand back into balance, or at least close to it. Supply exceeded demand by more than 2.5 mb/d in the second quarter of this year, but that gap will narrow to 1.6 mb/d in the third quarter and just 500,000 barrels per day in 2016.
On the natural gas side of things, production dipped a bit in recent months, owing to declines in the Marcellus Shale. Still the EIA is bullish on natural gas, predicting production gains of 4.3 billion cubic feet per day in 2015 (a 5.7 increase over the year before) and 1.6 Bcf/d jump in 2016. Last year, natural gas inventories were drawn down way below the five-year running average as cold weather caused consumers to burn through large volumes. Still, production kept climbing throughout 2014, building back depleted storage.
The refill in storage levels over the past year has been impressive. At 662 Bcf, natural gas storage levels are now 35 percent higher than they were at this point in 2014 and just a tad above the five-year average. The EIA predicts that storage levels will continue to climb, which could put further downward pressure on prices, having already fallen by nearly half from just November 2014. Towards the end of the year, natural gas storage levels could fill to above-average levels, which will reduce any chance of prices rising beyond where they are now (~$2.80/MMBtu).
That could keep electricity prices from rising too much, certainly a welcome development for consumers. But it will also be awful news for coal producers, which are seeing their market shrink. Coal’s share of the electricity market (a pie that is not really growing), is expected to fall by a massive 3 percent this year, plummeting from 38.7 percent to just 35.6 percent. In fact, in April natural gas captured more of the market (31.5 percent) than coal did (30.3 percent). Coal once generated half of the country’s electricity, but natural gas and renewable energy are eating away at that dominant position.
Lower coal generation (due to shuttered coal-fired power plants) means lower coal consumption. That in turn means coal mining companies are going to have a bad year. Across the country, U.S. coal production is expected to fall by 75 million tons this year. That will lead to further mine closures.
Forecasting the future is impossible, and there is no doubt that the EIA projections will somehow get it wrong. For oil, in particular, estimates about prices are almost useless, as geopolitical events (Greece, China, Iran) overwhelm what appear to be simple supply and demand figures. Still, the projections at least offer a baseline against which we can compare different policies and geopolitical scenarios.
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"That in turn means coal mining companies are going to have a bad year."
I think they've been having a bad year for the last 6 running. And they fucking VOTED FOR OBAMA. The guy who said "Ima put you outta bidness" right to their faces and they still voted for him. TWICE!
Stupid doesn't even begin to cover it.
Scott me up beamy
https://www.youtube.com/watch?v=_VFCQNdgDHE
Massive $100 oil derivative contracts.
We have to get the price up.....thank you....and goodnight.
Coal companies absolutely DID NOT vote for Obama ....
Yep, they didn't pay their protection money to the Capo.
This was news in the 1960s. Now, it's just confirmation of the triumph of science over hope.
Jeez, lay off it Tyler(s). Peak oil is BS. Regardless, quoting EIA hurts your case. I have to follow those numbskulls and can tell you they are purely reactive--real good at changing the forecast to reflect immediate past history. How do quote this gov't agency while dogging all the others that offer statistics??
Did you even read the article, or are you just reacting to the headline?
Always fitting...
Gold, Oil, Dollar = ?
https://aadivaahan.wordpress.com/2011/02/14/oil-crisis-in-a-thousand-words/
Have to throw in natural gas too.
Problem remains funding US Banks as "Greek Contagion" spreads to USA.
We have too much "energy product" not too little.
These prices are going nowhere but down.
you have not been paying attention.
the law of supply and demand has been cancelled by TPTB ...
We now have perfect price control effected by the PPT.
Gold and Silver price must fall, no matter how much demand soars.
Oil price must rise steadily, despite slackening demand,
East is West, yes in no, war is peace, stop is go.
oh good grief.....headlines headlines headlines....more like oil production levels off.
forecasting the future impossible: no shit sherlock
gasoline shortage in calif. with record oil production
peak gasoline?
Somebody want oil prices to increase??? Duh
Gosh.....maybe.
US is still importing about 7.5 million barrels a day - same as China.
And, yes, gasoline is 6 cents a gallon in Venezuela today.
I know, it's a paradise! You should move there. Bring toilet paper and milk.
Peak or not. It doesn't matter. What does matter is that the energy return of the oil that's left is decreasing, and that eventually, no matter how much momentary flucuation occurs, prices will gradually increase over time. It just takes more energy and money to extract what's left. Period. End of story.
We won't even run out of oil. Just useful, affordable oil. In the end, we'll still have trillions of barrels worth of inaccessiable crud in the hydrocarbon horizon, which might as well be on Jupiter for all the good it will do anyone.
We still don't have electric trains, planes, ships or automobiles in any but trivial amounts. Without a significant breakthrough in cost-effective, energy dense batteries, they never will.
Peak demand may have hit, but at 33 billion barrels a year there's still no scenario where we are running the world on oil by 2100. Natural gas, which we have in quantities similar to oil (energetically), might get us close to 2100. Coal might actually push us a few years over. But by around the turn of the next century, it's electricity or nothing, pretty much.
Pray for batteries, ubiquitous solar and nuclear. Those are pretty much our only viable alternatives if we want to keep a globe spanning industrail civilization at the current scale.
Solar, schmolar. It is uneconomic and likely to be so for loooong time. How do you know? Simple, you can walk around in it and not die. The density is just not there.
This is why gasoline and coal are so economic--they are compact. It's a miracle that a gallon quantity of something (AND liquid AND stable at ambient temp) can push my SUV 20 miles down the road.
As to demise of gasoline, please consider that most all of the improvements in engine efficiency since, say 1980s to present--due to computers and material science,--were taken as horsepower. New CAFE standards cause more or less doubling of mpg, will, ironically extend viability of gasoline.
Also, our air tests cleaner today than it did in 1970, and that's with almost 5 times as many vehicles on the road.
Oil production has peaked due to high supply, not lack of oil. That means we temporarily have more oil "in the bank" (ground).
That means more stable prices going forward. Fill 'er up and drive.
And remember that 30% of all oil use is non-fuel in nature.
The way this shitshow is progressing me thinks by 2100 this planet will be nothing but a radioactive wasteland.
it peaked in the 70s
The German Army did a study on this. They suggest we all plant a garden. http://www.permaculturenews.org/files/Peak%20Oil_Study%20EN.pdf
PEAK OIL !
People have been saying peak oil for decades, and they keep producing more.
So in the sixties for every dollar of GDP growth there was what 2 to 3 dollars debt what would those figures be now.
Print to infinity bitchez.
As one would expect with falling prices...damn these people are genuises...
How interesting that such "news" would be publicized right as an Iran Nuclear Deal may be imminent. If such a deal is imminent and sanctions are lifted re. Iran and its oil exports, that could release a considerable supply of more oil onto the open market. I hope that happens and the price of oil declines... for the sake of consumers who need manageable energy costs.
Funny our response to the oil shortages of the 70s was to accelerate immigration from Mexico have we reached "peak invasion" yet?
Airbus: NO
Excellent graph, omit oil or "fuel imports" use of US energy has cratered, use of imported energy has spiked-all as a direct result of federal policies to promote "energy independence".
Kill coal our most abundant and most economical source of energy and buy oil from terrorist states with US citizenship.
Nice plan.
The USSR's national action plan for America is coming to fruition nicely, too bad it's 25 years too late.