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Jeffrey J. Brown: Hurricanes & US Oil Production

user profile picture Adam Taggart Sep 05, 2017
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Hurricane Harvey took offline over 50% of Texas' refining capacity and shut down large percentage of the wells in the major Eagle Ford shale play.

This week, Hurricane Irma threatens to deliver a similar massive punch to the oil patch in the Gulf.

To discuss the ramifications from these storms on the oil markets, geoscientist and oil explorer Jeffrey Brown returns to the podcast. He calculates that Harvey alone will have long-lasting effects such as lingering supply shortages, but his greater focus is attuned to the growing validation of his Export Land Model, which calculates the rate at which oil-producing nations cease to become net exporters as their domestic consumption increases. Since it's formulation in 2005, more and more countries have switched from being net-exporters to net-importers, and the data in aggregates is strongly suggestive of a flat-lining in world oil production — the consequences of which are immense:

But if you look at the available data — basically we have to rely on some US data and some OPEC data — it strongly suggests is that actual global crude oil production virtually stopped increasing in 2005.

I think it was 69 million barrels a day is what I estimated in 2005, we might have had 70, 71 million barrels a day in 2016 — which is a very slight increase over 2005. So, in other words, if you look at the trillions of dollars spent on global upstream capex post-2005, all we’ve been able to do is basically keep crude oi production from collapsing. What has increased is global natural gas production and associated liquids, condensate and natural gas.

So my thesis is the increase in condensate natural gas liquids is obscuring flat-lining actual global crude oil production. Add to this tremendous shortfalls in discoveries and the fall-off in capex, and to me that’s just a very strong probability of actual ongoing material decline in real global crude oil production.

Click the play button below to listen to Chris' interview with Jeffrey J. Brown (49m:09s).

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