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Wednesday, April 4, 2012

Reposting a Link to Citi's Coming "Industrial Revolution"

I posted a link to Citi's talking paper on their analysis of the US energy industry through 2020 a few days ago. Subsequently I posted a rebuttal by Oilprice.com.

Here's another synopsis of the CITI analysis:
Oil and gas production in the United States and North America is going to skyrocket in the next 8 years due to strides in natural resource extraction, write Citi analysts in a report published yesterday. In fact, they went so far as to call North America "the new Middle East," at least in terms of oil production.
 
This—as well as a trend towards declining U.S. energy consumption—will completely transform both the domestic economy and the threats the U.S. will face in the future.

Indeed, Citi economists expect total liquids production to as much as double for the continent in the next decade, and predict that the U.S. could overtake both Russia and Saudi Arabia in oil production by 2020.
For a graphic look at the sudden drop in gasoline retail sales, click here. Retail sales of gasoline have literally dropped off a cliff -- this is a very stunning graph.

The trend for less gasoline consumption began back with the recession of 2008, but the more recent drop is something not seen since the beginning of that graph, starting back in 1984. It is very, very striking. And I don't think the drop off in gasoline retail sales is due to GM's Chevy Volt.

It's interesting to correlate this drop-off with the relative vitality of the US economy. [The operative word is "relative."]

If a Harvard MBA student had only one graph to look at, and it was the gasoline retail sales graph, it would be interesting to read the likely explanation(s) and what it means going forward. Gasoline retail sales are back where they were in 1984, and yet ....

So, I guess I got to rambling, and actually combined two different topics. Sorry. But I figure most people don't/won't have time to look at the Citi paper, but they might have time to look at a graph.

By the way, when you look at the graph, it might shed a little light on why two, maybe three, refineries are closing in the northeast. 

2 comments:

  1. The Citi paper cites Continental Resources as estimating Bakken oil in place at > 90 billion bbls and recoverable at 36 billion boe. If the citation is accurate and its context (Bakken and Three Forks for the entire basin) is the same as the 24 billion bbl recoverable estimate, this is a new, higher estimate. The OOIP expression of greater than 90 billion bbls is interesting as it is lower than almost all such estimates and surprisingly, implies 40% recovery.

    Hess684

    ReplyDelete
    Replies
    1. Someone told me EURs were based on primary production. Perhaps, the Citi recoverable estimates are based on primary, secondary, and tertiary recovery.

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