Oil guy here. Refining, not production or finance, but I'm not blind.
A couple of years ago, I was on an interview team for bringing in new hires. Usually, I would favor younger people who could stick around a while and become useful. On that day, though, I actually found myself using family situation as a tiebreaker, favoring people with families, people a little closer to retirement. I don't expect to retire from my plant, let alone people hiring on now, so I figured we might as well give the job to those who could benefit from it the most while the gettin's still good. My coworkers used to call me Chicken Little when it came to that kind of attitude, but now they all see the writing on the wall and have joined in.
The major oil companies are no longer oil companies. They're "energy" companies, and oil isn't their best investment. Exxon, Shell, BP... they're all running away from oil fast. Even unsubsidized, the current lowest cost per installed kW of energy is terrestrial wind. Second is utility scale solar. Then offshore wind. Then natural gas.
I've seen my company's (well, "my company" at least for the next few months, as my understanding is that my refinery was just sold as part of a purge of downstream oil assets) future prospectus, and the plan is to ditch oil, with LNG (liquified natural gas, used a lot in Asian power plants) as the 50 year bridge fuel to going hydrocarbon free. They're investing heavily in wind.
There was a time when the EROEI (energy returned on energy invested) for oil extraction was a triple-digit number. Nowadays, many wells are single-digit. It's just not as profitable as extraction becomes more difficult.
On top of that, demand in the first world is dropping as vehicles become more efficient, and just about every meaningful market in the world has pledged to electrify their vehicle fleet to some degree (China being the most serious and most aggressive with the timeline) within the next decade or two. It's going to create some weird pricing structures for finished products. As it is, gasoline and diesel seem like a loss-leader for kerosene (jet fuel). Awfully hard to get a half-million pounds off the ground with anything less energy dense than a hydrocarbon fuel, and current batteries are certainly that: far less energy dense. I could see a situation where, just as electric cars are really taking off, the cost of gas drops back down to a buck per gallon. Refining isn't magic: you can't just make kerosene. There's going to be some amount of longer and shorter chain hydrocarbons that we'll have to find something to do with, and supply and demand could make said "waste" hydrocarbons awfully cheap. Or the cost to fly just gets prohibitively expensive.
Our refinery still makes money, so it's not going anywhere just yet. Others don't, like the Convent refinery in Louisiana that didn't sell and so was simply closed, leaving 700 jobless. Still, I give our plant maybe 10 years at most. We're already one refinery heavy in the region, from a supply/demand standpoint, which is depressing finished product pricing and therefore profit. Corners will be cut to maintain profitability, and that's dangerous.
I like learning things. Good poast. I will generate an in-depth look at bug execution one day.
I second that. Fantastic, informative post. I now have a new term to throw around at parties when I'm pretending to be worldly and smart: energy density.
And I'm telling you right now, I'm stealing your actual statement when this comes up:
Party Goer: "Look Creep, your friends on the Finance Board may like oil, but we've? got to stop releasing carbon emissions into the atmosphere, because global warming. Every mode of transportation needs to be battery."
Creep: "Listen asshole, it's awfully hard to get a half-million pounds off the ground with anything less energy dense than a hydrocarbon fuel, and current batteries are certainly that: far less energy dense. So fuck off until you have a better idea."
That's what I'm going to do. In real life.
That party goer wouldn't necessarily be wrong. I make an awfully comfortable living because of oil, but it needs to go for all of the obvious reasons. There are just problems that are unsolved at this time that would prevent us from moving on completely. If we were smart as a nation, we'd be investing heavily in solving those problems while interest rates are basically zero, creating jobs, scaffolding a more efficient economy, and preventing China from eating our lunch a little down the road when doing these things are no longer an option (they're already so far ahead, and we're just sitting there and taking it) all in one fell swoop in the process. Improving the electrical grid to handle mass vehicle charging, urban development to allow for said ubiquitous charging, and, as has been pointed out, developing a way to get a half million pounds off the ground with a battery would be right at the top of the list if I were king.
Light vehicle electrification is coming. I'm as gearhead as they get, but there are two plug-ins in my driveway because I don't hate money. Helps that they're superior to their gas counterparts from a driving standpoint in just about every way as well. Range while towing is a problem, but that's a relatively small use case and also solvable. And batteries are constantly improving.
It's going to be interesting to see where it all goes, but make no mistake: oil is definitely on the decline. Not brought about by Greenpeace and hippies but by market capitalists and the profit motives of the oil industry itself. There is still money to be made by scraping the bottom of the figurative barrel, but there are just better investments out there for companies with the means that the majors possess.
But with oil it is always give it a year or two...all the banks are saying oil is going even higher this year, but the same analysts are also saying nobody will fund oil guys. Which is true right now if you talk to the banks, but if WTI goes over $60 and maybe even $55 you will see a flood of money go into the oil patch because interest rates are nothing.
I think this piece is key. Operators have gotten really efficient which allows US onshore to keep going. I think that will be played out in the next 5ish years at which point we will see $80+ again.
Also I would not recommend to a friend to start a career in oil now. Even with the chinevitable booms, overall the industry will continue to slim. The O&G workforce is saturated today and there will be very few careers in oil for kids born today.
That's what I got from the article. In some ways I think it will be a sad decline in that industry helps define culture, and O&G is its own culture and contributes to American culture. It's been an influencer.
I agree. Like don't get me wrong, global warming is real and we do need to reduce hydrocarbon consumption, but that doesn't change the fact that the loss of culture will be a bit of a loss of Americana and it sure was fun to live it for a while.
There was a time when the EROEI (energy returned on energy invested) for oil extraction was a triple-digit number. Nowadays, many wells are single-digit. It's just not as profitable as extraction becomes more difficult.
I used to work E&P at a major. I can very much attest to this. I think most people would be shocked at how much discovered oil we never attempt to produce.
I don't work in O&G but follow it for fun and one of the reasons why XOM did not do well in 2020 is because they have been all in on oil (and bought XTO for far too much 11 years ago). They work on algae and carbon capture but most of it was lip-service.
CVX has been farther along, more disciplined capital wise and farther ahead on LNG (Gorgon plant in Australia especially). I hope they build a ton of solar on that massive amount of acreage they own in Australia.
TOT bought a majority stake in Sun Power in 2011. Sun Power (via their Maxeon spin-off) makes arguably the best panels in the industry.
I have solar on my roof and have been driving a gas-electric car since 2013 though still don't see batteries creating the same kind of culture and music like this:
I don't work in O&G but follow it for fun and one of the reasons why XOM did not do well in 2020 is because they have been all in on oil (and bought XTO for far too much 11 years ago). They work on algae and carbon capture but most of it was lip-service.
CVX has been farther along, more disciplined capital wise and farther ahead on LNG (Gorgon plant in Australia especially). I hope they build a ton of solar on that massive amount of acreage they own in Australia.
TOT bought a majority stake in Sun Power in 2011. Sun Power (via their Maxeon spin-off) makes arguably the best panels in the industry.
I have solar on my roof and have been driving a gas-electric car since 2013 though still don't see batteries creating the same kind of culture and music like this:
I've seen a lot of solar on roofs go up in the last few years. Even up here in the PNW, people are investing in it. From my understanding, the break-even point is several years, so it's a long-term commitment. Same with cars. I haven't been inspired enough to go battery on my car; but at some point the price per gallon may make me do it.
I really know nothing about this. I have a cousin who lives outside chicago and flies around and does like ....I don't even know land surveying? He hires a crew and has to hang out in these middle of nowhere places for several months. Makes fantastic money.
Just brings his dudes a pack of beer at the end of the day and collects cash.
I don't work in O&G but follow it for fun and one of the reasons why XOM did not do well in 2020 is because they have been all in on oil (and bought XTO for far too much 11 years ago). They work on algae and carbon capture but most of it was lip-service.
CVX has been farther along, more disciplined capital wise and farther ahead on LNG (Gorgon plant in Australia especially). I hope they build a ton of solar on that massive amount of acreage they own in Australia.
TOT bought a majority stake in Sun Power in 2011. Sun Power (via their Maxeon spin-off) makes arguably the best panels in the industry.
I have solar on my roof and have been driving a gas-electric car since 2013 though still don't see batteries creating the same kind of culture and music like this:
I've seen a lot of solar on roofs go up in the last few years. Even up here in the PNW, people are investing in it. From my understanding, the break-even point is several years, so it's a long-term commitment. Same with cars. I haven't been inspired enough to go battery on my car; but at some point the price per gallon may make me do it.
The last year of subsidy for kilowatts produced from the gubmint was 2020 (I had 6 years). With the Federal tax credits harvested already, I am in the money and capturing my own power is a hedge against SCL raising rates materially faster than inflation. Also if the power goes out, Porn Hub is still just a few clicks away with a battery pack in my garage.
I don't work in O&G but follow it for fun and one of the reasons why XOM did not do well in 2020 is because they have been all in on oil (and bought XTO for far too much 11 years ago). They work on algae and carbon capture but most of it was lip-service.
CVX has been farther along, more disciplined capital wise and farther ahead on LNG (Gorgon plant in Australia especially). I hope they build a ton of solar on that massive amount of acreage they own in Australia.
TOT bought a majority stake in Sun Power in 2011. Sun Power (via their Maxeon spin-off) makes arguably the best panels in the industry.
I have solar on my roof and have been driving a gas-electric car since 2013 though still don't see batteries creating the same kind of culture and music like this:
I've seen a lot of solar on roofs go up in the last few years. Even up here in the PNW, people are investing in it. From my understanding, the break-even point is several years, so it's a long-term commitment. Same with cars. I haven't been inspired enough to go battery on my car; but at some point the price per gallon may make me do it.
The last year of subsidy for kilowatts produced from the gubmint was 2020 (I had 6 years). With the Federal tax credits harvested already, I am in the money and capturing my own power is a hedge against SCL raising rates materially faster than inflation. Also if the power goes out, Porn Hub is still just a few clicks away with a battery pack in my garage.
For a house around 4,000 sq. feet, what's the general buy-in for a roof system?
Including install around 40K here in SW Washington. Payback is 15-20 years assuming no rebates b/c of combo low rates and fewer hours of sun avail compared to other areas of the country.
Including install around 40K here in SW Washington. Payback is 15-20 years assuming no rebates b/c of combo low rates and fewer hours of sun avail compared to other areas of the country.
Seems like an investment worth pondering assuming it's your 'till I die' house. How much translates to the re-sale? Is it like a kitchen or bathroom remodel?
Including install around 40K here in SW Washington. Payback is 15-20 years assuming no rebates b/c of combo low rates and fewer hours of sun avail compared to other areas of the country.
Seems like an investment worth pondering assuming it's your 'till I die' house. How much translates to the re-sale? Is it like a kitchen or bathroom remodel?
With the subsidies gone, it's not worth it in most of Washington. By the time you break even, the panels are at EOL. It costs about $3.00 per installed Watt, so a 10 kW system runs 30K. Now do the math: In the average day, according to a map I just looked at, you're going to get about 35 kWh out of a 10 kW system in western Washington. Here, that's $3.50 savings per day. In Wenatchee, where my in-laws live, that's less than a dollar. So somewhere between 8,500 and 30,000 days to break even, depending on where you live. Again, the panels don't last forever, so something to consider.
Comments
Light vehicle electrification is coming. I'm as gearhead as they get, but there are two plug-ins in my driveway because I don't hate money. Helps that they're superior to their gas counterparts from a driving standpoint in just about every way as well. Range while towing is a problem, but that's a relatively small use case and also solvable. And batteries are constantly improving.
It's going to be interesting to see where it all goes, but make no mistake: oil is definitely on the decline. Not brought about by Greenpeace and hippies but by market capitalists and the profit motives of the oil industry itself. There is still money to be made by scraping the bottom of the figurative barrel, but there are just better investments out there for companies with the means that the majors possess.
CVX has been farther along, more disciplined capital wise and farther ahead on LNG (Gorgon plant in Australia especially). I hope they build a ton of solar on that massive amount of acreage they own in Australia.
TOT bought a majority stake in Sun Power in 2011. Sun Power (via their Maxeon spin-off) makes arguably the best panels in the industry.
I have solar on my roof and have been driving a gas-electric car since 2013 though still don't see batteries creating the same kind of culture and music like this:
https://youtube.com/watch?v=MpZV1iJ99g4
Just brings his dudes a pack of beer at the end of the day and collects cash.
https://www.cfact.org/2021/01/16/california-secretly-struggles-with-renewables/