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Page added on November 11, 2014
US Government Oil Forecasts “Wildly Optimistic”
We would do well to pause, and ponder both the data and implications presented in the Post Carbon Institute’s latest report, released a few days before Halloween, “Drilling Deeper: A Reality Check On U.S. Government Forecasts for a Lasting Tight Oil & Shale Gas Boom”.
The PCI’s new report exposes current oil industry & Energy Department oil production forecasts as wildly exaggerated. Further, it makes a compelling case that production of “U.S. shale gas and tight oil reserves will peak and drop off swiftly, long before officially predicted by the U.S. Energy Information Administration.”
The report was written by PCI Fellow and geoscientist David Hughes, who previously predicted the vast downgrade of available oil resources in California’s Monterey Shale.
According to PCI Executive Director Asher Miller, “based on our analysis, the reality is far different from what the industry is telling the Energy Department, and the Energy Department is, in turn, telling the public and the Congress.”
Looking at the actual well production data, the Hughes report concludes that:
Although shale gas production will rise in the short term, until the 2020 timeframe, the DOE’s assumption that growth will continue to levels more than 100 percent higher than today by 2040 is not supported by the data. An analysis of seven major shale gas plays comprising 88 percent of DOE’s forecast production through 2040 suggests production rates will be about one-third of the DOE’s forecast in 2040 for these plays, and that production from these plays will peak as early as 2016.
In a press release accompanying the report, PCI’s Miller suggested a possible source for the Department of Energy’s apparently faulty and overly optimistic data – the oil and gas industry itself, and its insatiable need for more well-drilling investment and love of rising stock prices. Wrote Miller:
Last summer Adam Sieminski, administrator of the U.S. Energy Information Administration, the Energy Department’s statistical arm, said in a briefing, ‘We want to be able to tell, in a sense, the industry story. This is a huge success story in many ways for the companies and the nation, and having that kind of lag in such a rapidly moving area just simply isn’t allowing that full story to be told.’
Miller concluded:
As a citizen I’m not sure I want the government to be telling the oil industry’s story. The industry seems to be doing a great job of that all by itself. Instead, I would expect the EIA to act as an independent source of unbiased information upon which we as a nation can depend in formulating our energy policy.
The Energy Information Agency has revealed a tendency toward industry-friendly, outlandish optimism before.
On May 20 of this year the L.A. Times reported that the EIA had drastically reduced the amount of recoverable oil contained in California’s Monterey Shale, from “13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California,” according to the Times to just 600 million barrels recoverable by existing technology – a whopping reduction of 96%. It was as if 13 billion barrels of oil had simply vanished.
The EIA’s embarrassing admission followed by five months a previous report by the PCI’s David Hughes, “Drilling California: A Reality Check on the Monterey Shale”. Drilling California provided “the first publicly available empirical analysis of actual oil production data from the Monterey Formation,” and raised serious doubts about the quality and reliability of the data the EIA was presenting to the public.
The EIA’s exaggerated estimates of recoverable oil in the Monterey Shale were widely repeated in mainstream media outlets, and were used to inform academic studies which projected millions of new jobs and billions of dollars of tax revenue would flow into California as a result of developing those energy resources. Author Hughes stated at the time of the EIA’s mea culpa that “left out of all the hoopla was the fact that the EIA’s estimate was little more than a back-of-the-envelope calculation.”
Alarming Implications
Writing at Common Dreams about the Drilling Deeper report and its implications, PCI’s Asher Miller noted that “the so-called ‘shale revolution’ has more in common with the California Gold Rush and the Dot-Com Bubble than a new golden age of energy abundance.” He concludes,
The implications of this are profound. If the “shale revolution” is nothing more than a temporary respite from the inevitable decline in US oil and gas production, then why are we rushing to rewrite our domestic and foreign policy as if we’re going to be “Saudi America” for the rest of the century?
He noted that faulty forecasts are influencing investments in renewable energy, foreign policy, and action on climate change.
The Post Carbon Institute suggests citizens “Arm yourselves with the facts to counter this information.”
12 Comments on "US Government Oil Forecasts “Wildly Optimistic”"
coffeeguyzz on Tue, 11th Nov 2014 9:47 pm
I’m upping my offer to $500 to be verifiably donated to the charity of choice to any reader who can refer me to the EIA’s official report downgrading the Monterey’s TRR. NOTE: I am not interested in employees/associates telling the press ABOUT this phantom report … I want to see the real deal.
Addendum, last night’s announcement of two record-breaking production flows from the Bakken (over 7,100boepd and over 7,800boepd) came from wells frac’d with world-record setting 94 and 102 stages. What this means is that every shale field in the country will be using this revolutionary coiled tubing conveyed system and produce far, FAR more hydrocarbons than Mr. Hughes had predicted.
Plantagenet on Tue, 11th Nov 2014 10:53 pm
coffeeguyzz
Do a google search on “EIA Monterey downgrade” You’ll get 18,000 hits documenting the EIA downgrade of the Monterey shale.
Or paste the following pinkie into your search engine
Now, as to your pledge. Please donate $500 to Greenpeace. THANKS!
Plantagenet on Tue, 11th Nov 2014 10:55 pm
The site excised the link in my post above Nonetheless you can do the google search yourself as I’ve indicated. Then please make the donation you pledged to make.
THANKS!
Poordogabone on Wed, 12th Nov 2014 1:56 am
Coffee, the fact that technology can extract more oil faster is not news. The consequence of that however points to higher depletion rates, does not eliminate the “red queen” effect, quite the opposite and if anything will bring the peak of shale oil closer while “glutting” the market in the meantime .
Let me know if I’m missing something as I am no expert.
Steve O on Wed, 12th Nov 2014 6:34 am
The government cooks all the numbers -oil forecasts, unemployment, inflation, GDP, you name it. They have to, it’s the only way they can keep the funny money flowing on Wall Street and keep themselves in their worthless jobs.
Davy on Wed, 12th Nov 2014 6:57 am
Steve many of us here are on ZH daily and have gone to shadowstats. The manipulation, corruption, and disregards for laws is pervasive. There are a whole array of reasons from greed to accepted practices. The TPTB are looking for anything to increase inflation and the velocity of money to keep the dreaded deflation monster at bay. They are turning a blind eye in desperation. The psychopaths on Wall Street, the lobbyist, and the politicians are all in it and making money. The games and the rackets are sophisticated and deep state. No use fighting a system rotten to the core.
coffeeguyzz on Wed, 12th Nov 2014 7:12 am
Plant, you actually strongly re-affirmed my point … the articles brought up by google relate to people (EIA head Sieminski in the first Blomberg story) REFERRING to the soon-to-be-released EIA report. THAT report has, as of this moment,not been produced.
In a semi-spoiler alert vein, I had contacted the EIA inquiring about this report and the reply was that NO report had been made. This – incredibly, as your 18,000 hits demonstrate – DESPITE the widespread mis-perception that it is fact.
Plant, it is NOT!
As an aside, I do not wish to appear like a complete asshole and will, in fact, make a charitable donation to a youth-related organization shortly. However, Plant, if you can directly link me to this phantom EIA report, I’ll pinch my nose and contribute – verifiably – to Greenpeace also. (there is no report, bro).
coffeeguyzz on Wed, 12th Nov 2014 7:28 am
Poordogabone, the main effect – of the many – related to this highly-improved frac’ing process is not that it will remove hydrocarbons faster, it will now make economical the development of a vastly expanded area of heretofore marginal fields.
Eg., on the fringes of the Bakken, wells that might produce 100kbbl over 30 years may now be able to produce significantly more in a fraction of the time. These areas would then not be considered so marginal and re-categorized as recoverable and thence developed.
This process would repeat over all US shale plays and – in fact – have an influence on the the potential of shale fields worldwide.
agramante on Wed, 12th Nov 2014 7:48 am
Still too slow and too small a field to offset declines elsewhere, coffee. Here’s one explicit reference to the Monterey downgrade, in their own report. Refer to page 16, and note the 13 billion barrel difference:
http://www.eia.gov/pressroom/presentations/sieminski_06162014.pdf
I’ll second Plantagenet’s naming of Greenpeace as the charity of choice. Thanks for donating.
trelawney on Wed, 12th Nov 2014 7:50 am
Coffeeguyzz
Will this quote from http://www.eia.gov/forecasts/aeo/assumptions/pdf/oilgas.pdf satisfy you? “This year EIA’s estimate for total proved and unproved U.S. technically recoverable oil resources increased 5.4 billion barrels to 238 billion barrels, even with a reduction of the Monterey/Santos shale play estimate of unproved technically recoverable tight oil
resources from 13.7 billion barrels to 0.6 billion barrels.”
coffeeguyzz on Wed, 12th Nov 2014 11:18 am
Just inadvertantly erased my response to you guys. Time constrained at the moment.
No welching from me, ever.
Thanks for your input/time, but by omission, does not that confirm no report has been issued?
Official communications referencing the data may or may not be construed as validation of same … I’ll not go lawyer on you guys, but, still, no official report then?
Makati1 on Thu, 13th Nov 2014 2:41 am
That anyone today believes ANY “report” from ANY source only proves their naivete or gullibility. Everyone has a spin that equates who is signing their paychecks or what they are trying to put across. Only by reading about the same event/situation from many sources can you begin to get a grasp of the reality.
“This way to the Egress, folks” was the way the carnival barker dumped the yokels out of the sideshow tent under the false impression that they were going to see a real, rare, ‘Egress’ after the two headed man and the tattooed fat lady. Or so I have been told.
Never went to a real tented circus. Just indoor ones at the farm show building in Harrisburg, or at the Hershey Arena. That was when the local schools took all of the kids to see the circus every year. Ah, the good old days…