LENR and the Oil Price Fall

  • Dear All,
    I tried to have a text about the link between the fall of the Oil Price and LENR published somewhere ("non-LENR media") without success. So I decided to make it public on this blog, without changes:
    _______________________________________________________________________


    Why is Saudi Arabia not decreasing its oil production and stop the oil price fall?


    If you follow me, I will describe you a scenario that could seem almost science fiction, but it is not, and that explains why Saudi Arabia is not cutting production and is letting the oil price fall. The Saudi strategy is probably the first strong sign that the world has already entered the “transition” that in the next decades will change the energy sector and beyond. You’ll decide if it makes sense or not.


    Here is what’s happening now in the oil world.


    All the possible reasons that could be behind the oil price drop have been thoroughly explained by uncountable articles on journals and newspapers in these last few months. For the House of Saud however all those sensible reasons are just a useful self-weaving blanket that helps them hide the real reason for the move, which is part of an undisclosed long term strategy. The strategy is the response to something extraordinary and disruptive.


    In the second half of 2014 the royal family of Saudi Arabia, a country that has 740 billions US dollars reserves, has managed to verify that an energy source that will eventually misplace all others sources has already entered the engineering stage and will probably be openly commercial in 2015.


    The energy source is Cold Fusion, the too-good-to-be-true nuclear fusion clean energy that Fleischmann and Pons unveiled in 1989 and that in the following years was completely discredited. Now Cold Fusion is back. In the meantime it has acquired a series of new fresh names, the most common of which is probably “Low Energy Nuclear Reactions” (LENR).


    Ridiculous? Ludicrous? Well, try to google it and verify yourself. If you do it properly it will take some time. Check how much Bill Gates is planning to invest in this field. Check also the already delivered 1 [MW] thermal plant that the US based company Industrial Heat is testing right now. And the plans for China producing the plants of Industrial Heat.


    A convincing and recent article to start with may be this (but there are many similar ones):


    http://www.huffingtonpost.com/…ear-reacti_b_6189772.html


    With this short text I am not trying to convince you about the existence and importance of Cold Fusion, I am just suggesting you to look at it, possibly with a honest and informed expert physicist or engineer for technical support.


    Back to the strategy of Saudi Arabia.


    The consequences of the the engineering of Cold Fusion will be vast and for a large part unforeseeable. What is but foreseeable is that in, let us say, 40 years, crude oil will be used only for producing materials and for a residual number of small means of transport still using internal combustion engines. Thus the amount of oil that humanity will consume is much less than expected so far.


    I will now go through a few simple estimations, for which I will use round numbers because what I am trying to convey is the message and not the details.


    The world consumption of oil in the late 2014 has been about 92.4 million bbl/day, which corresponds roughly to 34 BILLION bbl per year. Let us imagine that in the next 40 years the average oil demand without any disruption from LENR, would be 15% more than the current value: about 39 billion bbl/y.


    The proven oil reserves of Saudi Arabia are 270 billion bbl (the real reserves are clearly more than that). This means that Saudi Arabia, which has a now a world shear of oil production of 12%, could keep selling its reserves for about 60 years. And the number grows probably to 80 years or more with the real reserves.


    However, as the House of Saud knows, the adoption of LENR will progressively and inevitably substitute all conventional energy sources. It is impossible to precisely estimate the time that the complete replacement will need, but, based on other previous major changes in energy sources, and given that the cost drop and the advantages offered by Cold Fusion over all other sources are dramatic, it make sense to estimate a replacement time of about 40 years, starting, may be, as early as in 2016.


    Then for Saudi Arabia it makes no sense to keep with a strategy that is optimal for a double amount of time and a constant oil demand. Saudi Arabia must change strategy otherwise it will remain with a lot of oil unsold at the end of the energy transition, despite being one of the countries with the lowest oil production cost. So the best strategy is to rapidly increase the production share as much as possible and keep it as long as possible. Thanks to the low oil production costs for Saudi Arabia and other Middle East Countries it is easy to put many of the competitors out of business by just letting the prices fall.


    The oil production cost for Middle East Countries is around 30 $/bbl. Saudi Arabia, with a break-even price of 110 $/bbl, roughly equal to the Brent price in the last 4 years, was getting all it needed, until this summer. The gain was then about 110 - 30 = 80 $/bbl.


    Let us assume Saudi Arabia wants to maintain the oil revenues as today. If it will manage to rise the production share to three times the present value, that means to 36%, the oil price that will allow Saudi Arabia to keep the revenues unchanged is about 57 $/bbl. In fact the margin per barrel with such a low price would drop to 27 $/bbl, that, multiplied by 3 gives 81 $/bbl, pretty much the present gain.


    During the 40 years transition the world oil consumption will decrease with a curve that is difficult to precisely guess. However for the estimation of the total oil consumption during this period, the curve can be simplified to a straight line going from the present consumption to zero in 40 years. This means that the oil that will be consumed during the whole transition will be more or less equal to the initial yearly demand multiplied by the transition time and divided by two (the triangle area is half the base times the height). It is a very rough estimation, but it suffices for explaining the scenario.


    So with a world oil production share of 36%, the present world demand +15% and a constant price of 57 $/bbl, Saudi Arabia would manage to finish its proven reserves of oil in 39 years, very near to the estimated transition time. The plan makes sense.


    The remaining 67% of the oil production will come from the “simplest” onshore and offshore rigs around the world that have the lowest production costs.


    Saudi Arabia is a monarchy and the royal family can decide whatever it wants without needing to explain much to the public. Right now Saudi Arabia is performing a large price fall test that will allow the House of Saud to evaluate how quickly it will be possible to increase its oil share. In fact triplicating the share in a few years would be an unprecedented very large effort that would generate important and probably fierce reactions from countries and markets. It would therefore need very careful planning. The present price shock will provide important data.


    After this shock Saudi Arabia and other informed countries will start increasing production and the price will probably stabilize, may be just below 60 $/bbl.


    If this scenario is correct, in the second half of 2014 “the transition” towards virtually unlimited energy has already begun. High-end oil, renewables, nuclear fission, hot fusion research and a few other industrial sectors will soon have big troubles. But the transition will offer unimaginable opportunities.


    Let’s prepare for the transition.


    Andrea Calaon

  • Hello Andrea,
    this is my first posting here, thank you for this great forum on LENR. I'm watching the unfolding of LENR now since about 3 years and I am very much hoping that 2015 will let us see the breakthrough of LENR by availability of the first commercial device. LENR might really be a "game changer" for the "old" powers.
    In regard to your posting: similar thoughts have been expressed in a Swedish blog named "Sifferkoll" already right after the publication of the "Lugano report" on October 8th and after the oil price started to decline, please have a look at the following links, the first one already from October 10th!
    http://www.sifferkoll.se/sifferkoll/?p=401; http://www.sifferkoll.se/sifferkoll/?p=443; http://www.sifferkoll.se/sifferkoll/?p=488; http://www.sifferkoll.se/sifferkoll/?p=527; http://www.sifferkoll.se/sifferkoll/?p=555
    Especially the following link is a read, from my opinion; it primarily focuses on the water boiling replication of the E-Cat by Alexander G. Parkhomov, but over all its evaluation goes far beyond that:
    http://www.sifferkoll.se/sifferkoll/?p=542
    It is a proven fact that "big oil" has begun to sell oil fields massively around 2011 (some guys are still wondering why, maybe we now know better?), when the first public test of the E-Cat has been presented and that "big oil" is massively "short" on oil since summer 2014.
    Citation: "Shell has been on a massive divestment strategy on its oil field assets, from Africa to the Far East since September 2011, though as it was already tracking the Black Swan and has a department specifically tasked with watching this particular Black Swan develop, it knew before the others, it just speeded up its divestment of oil fields as the Black Swan became more visible.
    They accelerated the sales of their oil fields as a certain report from the town of Lugano in Switzerland started doing the rounds in the scientific circles in June July of 2014.
    Other Fossil Fuel companies on a divestment strategy since September 2011 include BP who sold their stakes in fields in the North Sea, Russia, the Arctic and the Gulf to name but a few, and not even batting an eyelid about being refused license to buy future assets in the Gulf."
    So, from that point of view, LENR is publicly working already! This is very much beneficial from a consumer's and European point of view. :)


    Best regards
    Werner

  • For me the relation with LENr is still a question but it would be rational.
    I am not just convinced that rationality lead the world. there is an unlimited resource of delusion, groupthink, and stupîdity to fuel the oil markets until my daughter of 5 can laugh at experts saying that they are incompetent. Cognitive revolution like admitting Nature and science were wrong only happen because the naive eye of a kid of 5 is more powerful than the one of experts, when technology is mature


    this is why I fear that LENR will only impact the markets when it is making big money for the dad of a kid of 5.


    PS: i forget to confirm that your article was very nice, and propose a credible possibility... I hope it is real, and this would be rational.

  • Dear Werner,
    Thank you very much for your long and interesting comment.
    The comment by Ian Walker (last link on Sifferkoll) that you suggested is VERY interesting and thoroughly documented. I had had a look at the first comments on Sifferkoll, but not the last.


    To me it looks the price fall started between the end of July and August, before the publication. May be when the report document started going around ... or when some employee of the company where the 1 [MW] E-Cat plant was starting operations leaked that it actually worked, and the problems were only engineering problems. I guess with the patrimony of the House of Saud it is not a problem to find a way to have reliable info on time.
    Oil companies will have the money to invest in the new technology and are prepared.
    The biggest troubles will hit Renewables, High-End Oil and Gas (the complete production chain), Conventional Nuclear and Hot Fusion Research.
    As far as I know almost no one knows about LENR outside the big Oil Companies, which instead seem somehow prepared.


    Alain,
    I think that sooner or later (probably not before the last quarter of 2015) some Oil and Gas CEO will declare something official and the wind will rapidly change. And this may even happen before "the public opinion" has somehow "digested" what LENR is.
    Large investment in oil an gas have long pay backs and as soon as everyone knows that eventually oil will be abandoned ... any large investment in the oil and gas will be verified against the foreseeable transition immediately to prevent losses. High end oil and gas will halt.
    Energy is the most important driver on the planet today. After a few years from the start, building "Hot-Cat type" Power Plants will become for large tech companies just a matter of setting up the production chain. I guess it will rapidly become easy to manufacture them anywhere. And there will be a phase when the world will practically work "in parallel" on the transition. The central part of the substitution curve could be very steep. Oil will stay longer for small transport, but as soon as the technology will be certified for small transport in less than 10 years the transition will be complete.


    Towards the end of the transition the new drive for humanity will become the supply of rear elements/materials. The extraction of materials from the oceans will become one of the largest industries, may be similar to the oil and gas today.


    Regards


    Andrea

  • Hi Andrea,
    I only heard about LENR when I was researching the seemingly unexplained diving price of oil. Absolutely fascinating. Given geo-political situations, LENR, amongst other new energy sources, is now a must-have. If you listen to the commodity market pundits, you could go crazy. But if you think with an open mind, the last-days-of-oil theory just makes sense. It's just an inevitability. So exciting to watch this in 2015. Not so nice to see job losses and economic havoc in Russia and Venzuela, but I suspect the Russians are suitably buffered...
    Patricia
    @aliceinorbit

  • it is right that if an "authority" accept LENR, whether it is oil baron or academic lord, it will launch immediate cognitive transition.
    I'm very pessimistic on the capacity of academic to lead the change.
    For oil baron I'm pessimistic, but less, as they are losers. groupthink is led by loss.


    I don't know if serious companies like Airbus, who are not losers, will convince.
    There is a long list of serious organizations who supported LENR reality and who were ignored.
    Take NASA, Us Navy Spawar and NRL, Toyota and Mitsubishi.


    maybe the key is support from the top managers.
    To trigger the panic one have to send someone of high caliber, like a group CEO, CTO, CSO.


    Just sending a lab head of a skunkwork team will not trigger the revolution.


    if you see a CTO/CEO/CSO at the group level in a big multinational level, supporting LENR, maybe it is time to sell futures of Brent below 40$


    who will be the first?

  • I sense that the technology will come on-stream slowly with multiple players, over the next, say 5 years. In short, everyone wants to get paid. And look out, Jeb Bush is making a play for the White House, I wonder if he's divested enough from oil? That should be an interesting space to watch.

  • five years is a realistic horizon for things to change (not for total conversion, 20year, but for mind conversions)... this is the speed of real world innovation... 5 years by 5 years lab science get industrial technology... industrial technology get popular... popular technology get dominant...


    we forgot in 2011 when Rossi was making demo that it was so slow.
    It took 2 years for the 2 independent tests
    it took 1 year for LENR Cities to launch the kickoff... more than 2 years from our first talk on LENR.


    I laugh when I hear "Rossi did nothing and promised all"... he achieved much already... demo, tests, investor, partners... one year by one year... not one week by one week.


    and it will take few more years even for Rossi.

  • Ali Naimi is saying it quite clear in its interview of December 21st:
    http://oilpro.com/post/9223/me…di-oil-minister-ali-naimi


    "There are many things in the energy market – not the oil market– that will determine prices in the future. A lot of effort is being exerted worldwide, whether in research, or boosting efficiency, or using non-fossil fuels. All these might witness a breakthrough one day. Any strategy must be done in a way that allows it to be changed continuously. Now, we do not know where prices are going. Are they going to go up, are they going to go down. But one thing is for sure. Current prices do not support all producers."


    So Saudi Arabia is expecting a breakthrough in the energy produced by non-fossil fuels; so huge that it would need a flexible strategy in the oil sector. And only Saudi Arabia and a few others can be the actors of that strategy.
    Either he was joking or he is telling the truth.


    Alain, Patricia, you are right, the adoption will require time. But the impact, and not a small one is already here. The substitution of the energy sources will take a long time, tens of years. However the suddenly finite horizon for oil and gas will quickly change all the long term plans. And in this re-planning there will be troubles.


    Let us hope the people who will decide will use wisdom and will ease the transition with care.

  • thanks Today, I have one thing to say, and this is SERIOUS.
    :(


    Cut their budget


    Spread the fact that their sponsor is poor.
    Kill their budget.
    Spread the terror on their oil market.


    All the rest is for kids.


    Please be courageous, spread the terror on oil markets.

  • Alain,
    how did you find http://shamanicnews.wordpress.com/?
    The article about LERN and the Price of Oil is not bad, only too optimistic about the transition time and about the diffusion of the knowledge that the Oil Industry will fall.
    But the rest of the shamanic news are cr...


    Vive la Civilisation des Lumières et de la Science pacifique.
    A bas toutes les idéologies, notamment ceux intolérants, et les fausses promesses des religions.

    Regards

  • In the past year, the price of crude oil has dropped from a high of $101.33 to a low of $44.20. I believe that this price reduction has been engineered by the Saudis and that this price reduction is a capitulation. The Saudis know that LENR-based power systems will be implemented soon so they are trying to keep their product competitive.


    The current (lower) crude oil prices will allow LENR to be implemented in a way that does NOT cause chaos in financial and commodity markets. The Saudis appear to be acting in a sensible and responsible way.

  • Dear Sanders,
    The price of oil is made by a complex system that can not be controlled by a single entity and responds slowly to any major supply change, while demand is VERY rigid. The Saudi are simply keeping pumping instead of reducing. Russia keeps pumping for many reasons, many Countries recently restarted production, the world consumption does not grow, planners have a lot of reserves, ... And the price drops.
    The decision of Saudi Arabia is not due to an price threat from a competing energy source, at least not now. Instead they need to expand their production share in the next few years. And for doing that they will not stop pumping. They have the lowest production cost. The price will go where the market will push it. Since the 80s the price of oil has not been determined by the market, but by a controlled supply. The "market price" is not known right now. It will appear in the next years. With a low price Saudi Arabia will be able, may be in 3-4 years to offer Asia and Europe the lowest price. And the share of Saudi Arabia will rise, also thanks to the disappearance of other producers. This new scenario will allow the Saudi to react to the unfolding of Cold Fusion, as Ali Naimi explained, with the necessary flexibility. Saudi want to sell most of their oil before the end of the transition. So thanks to the large share, during the transition they will be able to make the price in order to sell the maximum possible quantity of oil.
    The behaviour of the Saudi has nothing to do with easing a soft transition. I wish it had!
    LENR will cause disruption even with low oil prices.
    The most important part will be played by governments and international entities in deciding policies that will avoid problems during the transitions.

  • A few days ago, on the 6th of march 2015, Arab News, which is “Saudi Arabia's first English-language newspaper”, owned by the House of Saud, issued an Editorial(!) where Cold Fusion is named explicitly. But first let us step back.


    As already mentioned in this thread, on the 21st of December 2014, Ali Naimi, oil minister of Saudi Arabia, said that the strategy of his Kingdom had changed because Saudi Arabia thinks that “one day” there can be a breakthrough “in research, or boosting efficiency, or using non-fossil fuels”. So that Saudi Arabia must be prepared for a time that will require flexibility in the price of oil.


    The keywords used were 3: research, efficiency and non-fossil fuels.


    Well, the recent Editorial on Arab News is entitled “Saudi businesses must not neglect R&D”. It speaks about new revolutionary batteries based on graphene and describes, among all possible breakthrough that could influence the world of energy, just one single thing: Cold Fusion.


    It really seems Saudi Arabia (i.e. the House of Saud) is trying to progressively convey the fact that Cold Fusion has already entered the engineering phase, and that the strategy of the Kingdom had to adapt to this simple fact.


    Additionally Ali Naimi declared in Berlin a few days ago: “Some speak of OPEC’s ‘war on shale,’ others claim ‘OPEC is dead.’ Theories abound. They are all wrong”. May be he is not lying.