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Page added on November 13, 2014
U.S. Shale Boom Masks Threats to World Oil Supply
The U.S. shale boom masks threats to global oil supply including Middle East turmoil, conflict in Ukraine and the difficulty of unconventional oil production beyond North America, the International Energy Agency said.
“The global energy system is in danger of falling short of the hopes and expectations placed upon it,” the IEA said today in its annual World Energy Outlook. “The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers.”
Global oil consumption will rise to 104 million barrels a day in 2040 from 90 million barrels a day in 2013, driven by demand for transport fuel and petrochemicals in developing countries, the report said. To meet that growth and replace exhausted fields will require about $900 billion a year in investment by the 2030s as oil companies develop fields from Canada’s oil sands to the deep waters off Brazil, the IEA said.
Benchmark oil prices in New York have dropped more than 20 percent this year as crude production in the U.S. reached the highest in 40 years, driven by shale fields in North Dakota and Texas. That’s threatening investment in the global industry as companies try to insulate profits from the price fall. While the near-term picture is secure, the development of capital-intensive areas outside North America is at risk, the IEA said.
Oil futures fell as much as 1.1 percent to $77.10 a barrel in New York today.
Energy Trends
The Paris-based IEA advises industrialized nations on energy policy and produces the World Energy Outlook each year, making long-term forecasts on global energy trends. This year’s report, for example, included a section highlighting the rising cost of decommissioning the world’s nuclear aging reactors, expected to total more than $100 billion by 2040.
In the Canadian oil sands, among the most expensive oil deposits in the world to exploit, an investment slowdown is already evident and the IEA estimates about a quarter of projects are at risk as prices fall. Norway’s Statoil ASA and France’s Total SA have delayed projects in the region this year.
Likewise, the complexity and capital intensity of developing Brazil’s deepwater fields could also contribute to a shortfall in investment.
Uncertain Geology
Replicating the U.S. shale oil boom outside of North America will also be a challenge, the report said. A lack of existing oil and gas infrastructure, environmental opposition to fracking, and uncertain geology are among the reasons unconventional drilling hasn’t spread.
Oil companies from Royal Dutch Shell Plc to ConocoPhillips said last month that they would cut capital spending to maintain profitability in the face of lower oil prices.
Threats to new investment stand alongside political risks to oil and gas production. Sanctions that restrict Russia’s access to technologies and capital markets have raised concerns about security of supply from the world’s largest energy exporter, the IEA said.
With Asian countries set to import two out of every three barrels of crude traded internationally by 2040, over-reliance on the Middle East for production growth is a concern, the IEA said. China is set to overtake the U.S. as the world’s biggest oil consumer within two decades, according to the report.
Turbulent Time
Iraq is the biggest risk to the security of oil supply, the report said, contributing to the most turbulent time in the Middle East since the 1970s. While renewed conflict in the north of the country has not yet affected production, it discourages the large-scale capital commitment needed for the next phase of the country’s oil development, the IEA said.
In Iran, there are also few signs of a resolution with the international community necessary for increased output.
While projected output increases in Brazil and Canada, a rise in consumption will raise reliance on the Middle East, raising questions about whether the necessary investment will be made in time to avert a period of tighter markets and higher prices.
The IEA sees total production of crude staying at around 68 million barrels per day until the early 2030s before dropping to 66 million barrels by the end of the period, leaving the task of meeting rising demand entirely to unconventional production and natural gas liquids.
Meanwhile, investment in cleaner forms of energy is being held back by the $550 billion a year that fossil fuels receive in subsidies, the IEA said. Renewables subsidies are about a quarter of that amount.
50 Comments on "U.S. Shale Boom Masks Threats to World Oil Supply"
Speculawyer on Thu, 13th Nov 2014 12:37 pm
Prices dropping more today. It is very amazing. People are now calling for $50/barrel. That is possible . . . markets do over-react. But that will involve lots of losses, reduced investment, and an eventual return to higher prices. I doubt it gets that low it is possible.
Well, I hope the public uses this reprieve from higher gas prices wisely. But sadly, I suspect a lot of people will foolishly buy gas guzzlers that they will seriously regret in later years. :-/
Plantagenet on Thu, 13th Nov 2014 12:40 pm
Yup. SUV sales are already going up, and sales of hybrids and EVs are going down.
GM’s EV-1 was cancelled during the oil price crash of 1999. Lets just this current oil price crash doesn’t take the EV industry down with it this time as well.
Northwest Resident on Thu, 13th Nov 2014 12:50 pm
“SUV sales are already going up”
There will be no mercy and no reprieve for the completely ignorant and foolish.
Davy on Thu, 13th Nov 2014 12:52 pm
Too bad joe consumer is tapped out. The sub prime auto loan market is slowing also. I don’t see many autos sold this time around becuase of low prices.
marmico on Thu, 13th Nov 2014 1:26 pm
The sub prime auto loan market is slowing also
Another wowser from Davy-boy without evidence. U.S. consumers spent equally on new vehicles and gasoline in 2013. Wowser! The red line in da chart is turning down big time.
How many air bags were in your first auto purchase? Say it ain’t so. Fatalities per capita have been cut in half since Rocky graduated in geology from Texas Tech 40 effing years ago. Safer personal transport and twice the mileage. Ain’t the oil age great. 🙂
Feemer on Thu, 13th Nov 2014 1:33 pm
I’ve been able to abstain from getting a car for a few years by biking and using public transit to get to work, but i expect to have to buy one in the next few years :(. I will definitely be getting a fuel efficient one, probably the volkswagon clean diesel.
Northwest Resident on Thu, 13th Nov 2014 1:47 pm
“Ain’t the oil age great.”
That will make a great epitaph. I can imagine those words chiseled into a giant tombstone that is sitting in the middle of a former frack site, toxic pools of poisonous water emitting smoke into the burning hot morning air of a world dramatically altered by climate change, skeletons of critters large and small scattered around, rusted vehicles and oil rigs laying on the ground, all against the backdrop of a completely denuded hillside and a blood-orange sun rising over a landscape that used to contain life and provide sustenance.
Yeah, the age of oil is great, a real wild ride, just like a big hit on the crack pipe, consequences be damned.
marmico on Thu, 13th Nov 2014 1:54 pm
Go play with your sativa heirloom seeds. You are a nutter.
Davy on Thu, 13th Nov 2014 2:12 pm
Marm, wowser is a great word to add to my word salad menus, thanks buddy.
Northwest Resident on Thu, 13th Nov 2014 2:20 pm
I have no idea what a nutter is. Probably one of those juvenile terms that complete ignoramuses use to insult people they don’t agree with. Am I close?
Davy on Thu, 13th Nov 2014 2:54 pm
NR, you know the routine when corns get scared they have to insult and ridicule. I have a feeling Marm is getting worried.
adamc18 on Thu, 13th Nov 2014 2:58 pm
‘Nutter’ is a word used in Britain, similar in meaning to ‘crackpot’, ‘loony’ or, in Ireland ‘eejit’. But maybe ‘Northwest resident’ doesn’t live in Lancashire ?
westexas on Thu, 13th Nov 2014 3:05 pm
Following is the Saudi response to the 2008 to 2009 oil price decline. We will see what happens this time.
Quarterly Saudi Production* and Brent Crude Oil Prices for 2008 to 2009
2008:
1Q: 10.7 mbpd & $97
2Q: 10.8 mbpd & $122
3Q: 11.1 mbpd & $115
4Q: 10.5 mbpd & $55
2009:
1Q: 9.5 mbpd & $44
2Q: 9.7 mbpd & $59
3Q: 10.1 mbpd & $68
4Q: 9.9 mbpd & $75
*Total petroleum liquids + other liquids (EIA)
marmico on Thu, 13th Nov 2014 3:08 pm
wowser is a great word
No problem, Davy-boy. I imagine (in my sativa stoner NWR cloud of smoke nuttiness) that your 7 year old will get thrice the mileage per barrel that you got at the same age. Will the fatality rate be thrice lower?
When I wear my consumer cap, I hope rockman and his Walter Mitty billionaire boyfriend go bankrupt. Others and their billionaire boyfriends will pick up the pieces and carry on.
Northwest Resident on Thu, 13th Nov 2014 3:13 pm
Davy — When the marmico trolldog insults you, rockman, shortonoil and me all on the same day, then I know I’m in good company.
And your point is right on spot. Just like an alcoholic who gets pressured into dealing with his denial issues will spit and cuss and accuse and go ballistic — anything to keep from dealing with his stinking issues — so too does the marmico trolldog start barking and biting when the inconvenient facts start closing in around him.
marmico is cursed, actually. He would have been far happier living out his life completely oblivious to peak oil and all the associated consequences — until TSHTF of course. But as it is, somehow he became “aware”, and so has to spend feverish days and nights barking and biting and howling at the moon to keep those uncomfortable facts from penetrating his protective bubble. marmico is pathetic if you ask me, but no more so than a whole lot of other deniers of reality that we’re surrounded with.
“nutter” — such a trite, silly name to call someone just because you disagree with them. I can see myself sitting in a meeting with all the business users and analysts I frequently meet with. One of them proposes a solution that I disagree with, and I respond by calling that person a “nutter”. They’d all look at me like I was an imbecile, a fool, a rude crude uncouth dude — a marmico!
shortonoil on Thu, 13th Nov 2014 3:20 pm
We will know when the IEA has become forthcoming when they finally admit that there is a limit to what economies can afford to pay for oil, and, also, that the limit is going down. We hit the maximum affordable price in 2012, and that drove an explosion in the shale industry. We will never see the price that high again. Non conventional will not be filling in for the decline in conventional. The price will never again be high enough to allow it.
http://www.thehillsgroup.org/
marmico on Thu, 13th Nov 2014 3:23 pm
Give it a rest Brown.
PS–It’s now about 560 days since I had my “Oh My God” moment, when I looked at the HL plots for Saudi Arabia, Russia and Norway, combined with the reasonable expectation of rapidly increasing consumption (at least in Phase One of the net export decline) in exporting countries, as oil prices skyrocket.*
How many days is it now?
*
ghung on Thu, 13th Nov 2014 3:36 pm
Sure marm; “How many days is it now?”
Maybe you should be asking; “How many trillion$ is it that the central banks have pumped into keeping your party going now?” I guess you oilies think the oil patch operates in its own little bubble…. OH, wait! It’s a BIG bubble, isn’t it?
oilystuff on Thu, 13th Nov 2014 3:38 pm
Wait, this guy marmico is in the oil business?
Northwest Resident on Thu, 13th Nov 2014 3:41 pm
marmico is in the SNAKE OIL business… 🙂
Davy on Thu, 13th Nov 2014 4:12 pm
Now guys, if we didn’t have are corny mascots what would this site be but a bunch of doomers and peekers with the odd propaganda bitches. Marm can’t help it he just gets nervous when his cornbelt tugged.
Oily, I took Marm for a finance type maybe an analyst.
Marm, if you are out there what do you do to keep food on the table and wine in the cellar?
Davy on Thu, 13th Nov 2014 4:16 pm
OH, marm, you gave me a “wowser” for saying this:
“The sub prime auto loan market is slowing also”
Read this marm:
http://www.washingtonpost.com/news/business/wp/2014/08/19/moodys-says-lenders-are-backing-off-subprime-auto-loans/
MSN Fanboy on Thu, 13th Nov 2014 4:53 pm
Marmico you made the mistake of going against conventional peaker thought.
No matter where one stands in history there are always doomers either religious or otherwise.
They keep being proven wrong with their predictions… its next year… its next year etc… ad infinitum.
The sorry thing with peak oil (whatever that is) is that its a reasonable belief… that just makes the doomers foam at the mouth, jump up and down and proclaim their infinite wisdom to us simpletons who thought things like modern medicine and industrial agriculture were good things.
I call I doomer rage lol
Soon they will be saying ebola will kill us all…
wait that already happened.
Northwest Resident on Thu, 13th Nov 2014 5:13 pm
MSN — As is frequently the case, you’ve got it all wrong, again.
marmico made several mistakes today, the same mistakes he makes repeatedly.
1) Denying reality (see Davy’s link to the subprime auto loans article above and prior to that, marmico’s assertion that Davy did a “wowser” without any evidence)
2) Name calling, rude obnoxious confrontational behavior — see just about any post by marmico
3) Nonsensical blah-blah-blah — see his post above at 3:23 pm
Going against “conventional peaker thought” is not what marmico does on this forum. He cruises through, tosses a few insults and irrelevant stats of dubious origin out the window, guns the motor and disappears down the road without ever engaging in a civil and serious debate about “conventional peaker thought”.
Why am I not surprised that you’re empathizing with marmico?
Davy on Thu, 13th Nov 2014 5:18 pm
MSN, I remember when you first came on this site you were a genuine corn of the 1st order. Now look at yourself. You have been for the most part converted. Corns either leave this site quickly or convert on this site (NOo and Marm exceptions).
The evidence we doomers and peakers present are scientific and logical. It is the corns that are on the defensive. You can see it throughout academia and the media. I remember when PO was fringe. I remember when collapse talk was for cults. This has all changed with the overwhelming evidence that we have problems that are appearing to be predicaments.
When the crisis breaks then we will be the new gods because we will have answers. The old gods mainly the economists and techno’s will be discredited. Doomers and peakers are working through plan b and life boat ideas as we speak. These ideas will be in demand not false ideas of prosperity. Prosperity is over and with it the false advertising and fake roads to happiness. Life is going to get real and small soon.
ghung on Thu, 13th Nov 2014 5:23 pm
MSN Fanboy, you paint with a broad brush; a little dangerous for those with narrow focus. Some of us don’t cherry-pick our data or focus on short-term indicators to arrive at our conclusions. I’ve always expected that shear inertia and lack of viable alternatives would keep us and our markets bouncing around for a decade or two. It’s the overall trend that matters. Confirmation bias won’t change that.
Makati1 on Thu, 13th Nov 2014 6:49 pm
Too many ‘oily’ articles this time, to comment. ALL of them are some degree of fiction and are only a snapshot of today, not tomorrow and especially not 10-20+ years in the future. ALL represent the author’s views spun according to who signs his/her paycheck. Are they just propaganda or maybe make-work for the non-producers of real things of value? The ‘Intermediaries”?
PO has to post something and oil is the theme, but so much interacts with oil that most any topic is relevant. I enjoy this site for it’s variety of relevant topics and it’s wide cross-section of countries and views represented in the comments. Thanks PO!
BTW: “Po” is “Sir” in Filipino.
Nony on Thu, 13th Nov 2014 6:51 pm
$74 WTI. Rock will come along soon to point out that’s more than double $30. But it’s still way down from 100.
The Republicans saying drill, baby, drill in 2008 had it right. Let’s open up ANWAR, GOM, VACAPES, KXL, etc. now and really let this thing rock.
Makati1 on Thu, 13th Nov 2014 7:02 pm
Had to add that I think there are only 3 possibilities in our future:
1. A slow, painful winding down of BAU with every trick in the book being tried until the world levels out somewhere around the 3rd world economy.
2. A sudden crash that resets to a totally different trading system that eliminates most globalization to the point where we are all living a 1700s life style.
3. Total war, leading to nukes being exchanged among the dozen or so countries and most life extinct by 2100.
Time frame? I would say #2/#3 before 2020. All corners of the world are heating up and fast approaching combustion temperatures. It’s only a matter of time.
shortonoil on Thu, 13th Nov 2014 7:16 pm
Interesting article over on Zero hedge. Deutsche Bank is saying a price decline to $60 is going to have some serious implications for the entire High Yield market, not just shale.
http://www.zerohedge.com/news/2014-11-13/if-wti-drops-60-deutsche-expects-one-third-high-yield-energy-space-default
They speak as if they believe it is going to happen. It is going to happen! It may take another year to get there, but that’s where we are going.
MSN Fanboy on Thu, 13th Nov 2014 7:53 pm
And the sad fact is I agree with Davy, NR and Ghung.
I will accept the truth, even if it irks me.
marmico on Thu, 13th Nov 2014 8:03 pm
marmico made several mistakes today
Go puff some weed, clueless one.
http://blogs.wsj.com/economics/2014/09/24/why-fears-of-a-subprime-auto-bubble-are-overblown-for-now/
Northwest Resident on Thu, 13th Nov 2014 8:34 pm
marm — Thanks for demonstrating my points regarding you. Good job!
JuanP on Thu, 13th Nov 2014 9:10 pm
“A doomer is one who believes that problems of ecological overshoot, such as over population, climate change, pollution and especially peak oil, will cause the collapse of industrial civilization, and, a significant human population die-off. Many doomers are also survivalists.”
I am a doomer.
http://en.wikipedia.org/wiki/Doomer
shallowsand on Thu, 13th Nov 2014 11:05 pm
What is the point of the insults? Anonymously online, no less. What’s the angle?
rockman on Thu, 13th Nov 2014 11:17 pm
“To meet that growth and replace exhausted fields will require about $900 billion a year in investment by the 2030s as …” Amazing logic: all we have to do is spend about $18 TRILLION developing reserves which, for the most part we haven’t found yet, and we’ll meet their consumption projection.
Shallow – Easy answer: insults are much easier to toss out if you don’t have the facts to support your position.
shallowsand on Thu, 13th Nov 2014 11:54 pm
I can’t even tell if marm has a position from what I’ve read under this news item.
What points has marm made in the past?
Apneaman on Fri, 14th Nov 2014 2:30 am
Equating apocalyptic religious predictions with today’s scientific doomerisim is disingenuous and also a form of denial. No doomer is claiming that we are being punished with climate change and the rest of it because some guy fucked another guy or because we did not sacrifice enough goats to the sky father. It’s about the laws of physics, biology and unintended consequences. Yes there has been bad behavior and great irresponsibility, but it is nothing new; been that way our whole history. Our technological evolution has outpaced natural evolution. We got too powerful too fast. Most people don’t like that, because it means we are not exceptional, not in control and it also means we could all go away. Even highly intelligent peak oilers and collapseatarians, like the wizard Greer, can’t handle it. That’s why he keeps using the apocalyptic religious comparison. He has made made many predictions and post collapse plans and all with great certainty. Extinction makes all plans null and void. I do not know if we will go extinct soon, but I think it is arrogant to say it can’t happen to us (or in my time) when we know it is the fate of all living things.
Harquebus on Fri, 14th Nov 2014 3:26 am
I have just spent an hour trying to convince my neighbors, over a couple of beers, just how serious our situation is.
After defeating their “not going to happen arguments”, one asked “Don’t you have anything good to say?”.
“No”, I replied, “It’s all bad”.
“Then I don’t want to know.” was the response.
The music was turned up, another beer was opened and they are now watching the cricket.
We are doomed.
Davy on Fri, 14th Nov 2014 6:05 am
Juan, thanks for the doom deff. I didn’t realize it is a wiki recognized concept. I thought it was word internet word salad thrown around on sites like ours.
Shallow/NR/Rock, while I admit Marm is cocky and rude he does have a bit of humor with it. The guy is smart so let’s enjoy our challenges. I have said this before the Native Americans based part of their tribe’s worth by the size of their adversary. We need challenges here. We also need a devil’s advocate. It is funny to talk that way about doom because normally a devil advocate keeps optimism in check. We need to keep our doom grounded in science and reality. Doom like corn porn is easy to jump to the level of abstract and fantasy. We are frankly talking about “what ifs”, maybe’s, and likely. I believe collapse is occurring now but the corns are in charge if only for a short time more. I do believe questioning the oil patch people is one area Marm lacks substance IMHO. That is a long winded angle but the point is try to have fun with Marm and take his pokes in stride. He bitch slaps me on a regular basis and I need it. It keeps me humble. Yet, Mak rubs me wrong so we all have sore spots and I accept you all have yours.
Davy on Fri, 14th Nov 2014 6:29 am
Apnea, great summation that I am agreement with. I would caution the spiritual criticism. While I do believe there are nut cases out there that delve into the spiritual in reckless ways I do see the spiritual will be a highly import part of this coming descent. I say this because when collapse occurs the spiritual will regain importance that it had through most of human history. We had shamans, mystic, and holy men that guided us through that human need for meaning.
We know that sciences grip on man will be greatly diminished in a collapse. I hope it will remain but it is highly likely entropic decay will destroy a great deal of the collective knowledge. This is especially true of the digital. We will need a connection to ourselves and nature that science just can’t offer.
Right now I am rereading my parts of my library that deal with this subject. I am doing this comparatively. All the great traditions east, west, and indigenous. I am doing this for balance because I am very wrapped up in science now in my approach to doom. I feel this is more of an individual exercise because I am not going to preach spiritual plan B’s and lifeboat ideas like I do with doom. Yet, I feel each of us needs to dust off our spirituality for what is coming.
Appnea, I feel we will eventually go extinct like most other creatures will and have. I would put my money on the lowliest and toughest of bacteria but not humans. If we don’t destroy ourselves in the near term it will be a geologic event down the road. Our species relies on too much complexity to survive a cataclysmic event that have regularly visited our earth over history.
Our feelings of exceptionalism is probably a natural species trait of survival needs. Our high level of knowledge expresses that innate survival need through a feeling of exceptionalism. It has attained a level of danger because of our industrialization. We have used exceptionalism as an excuse to rape and pillage our mother earth. The earth is exceptional not us that should be what our knowledge tells us.
Davy on Fri, 14th Nov 2014 6:33 am
Damn, Hark, I had the same response from my family doctor who is my friend. I wanted to stock up on some meds. He told me when I feel that doom coming on turn to optimistic thoughts. I gave up at that point. I didn’t get to the “all bad” level. I save that for very few who show the ability to handle it.
nony on Fri, 14th Nov 2014 2:08 pm
Tod is dead. Peakers crying. Nutter fringe hsnging out. Staniford turns bsck on peaker crwp and concentrates on his underemployment in it. Rapier anf hwmilton try to say they were never so freaky. Deffeyes and campbelll and ace hide. Ruppert kills himself. Wow. Im blinded by the superiof science of the peakers. Not.
Northwest Resident on Fri, 14th Nov 2014 2:38 pm
Davy — On your post yesterday at 6:05 am.
I get what you’re saying about needing a few corns to debate with. But do we get any real debate with marm? I can’t remember seeing any. And look at the post above by our other favorite cornucopian. What’s to debate? I think all the really smart and sincere Cornucopians quietly switched sides and became closet doomers long ago, leaving just a ragtag group of stragglers to carry on the corny cause. Their arguments are so lame, based on such easily disproved nonsense, that all they really are is whipping posts. That’s fine, we need a few of those to politely kick around from time to time — especially when they seem to enjoy the abuse so much. (see above) Cornucopianism is a dying philosophy. Not to say that there aren’t a whole lot of people that are totally ignorant of peak oil and peak oil concepts who still believe that everything is just fine — but those fall into a whole different category, imo.
shallowsand on Fri, 14th Nov 2014 3:42 pm
Northwest: The “corns” you refer to tend to make snide comments without anything at all to support their position.
I don’t necessarily agree with the doom and gloom, but I’m not going to disparage you or anyone else about it, especially if you provide a basis for you position.
I have been looking at a lot of the production histories from the Bakken and Eagle Ford, as well as cost information published by the leading public companies, and plugging in various oil prices. Nothing scientific, mind you, but just taking random wells that are at the high, middle and low end of productivity.
What I find is that there are a significant number of wells that have not and likely will not payout at $100 oil (WTI), even without considering interest payments and the time value of money. At $70 oil (WTI) this figure goes up substantially, in my opinion it is the majority.
I also notice that many wells in both formations are periodically shut down for a month or two, after a significant drop in production (usually under 100 bopd) and then resume at a higher rate for a few months before falling off significantly again. There are two explanations for this. First, there is an offset well being drilled, requiring the well to be shut in, which then results in some built up flush production. Second is a refrac. If these are refrac’s they seem to be coming very early, within just a couple years after IP. At another $1+ million per refrac. I assume the explanation is usually the first.
I am in an area where, to drill and complete a well, it ironically costs about 1/100 of what a Bakken well costs to drill and complete. It appears to me the average Bakken well produces gross oil of about 230,000 bbl in the first 60 months. So for comparison purposes to what I am familiar with, it would be as if the average well in our area would produce 2,300 bbl in the first 60 months. Keep in mind we are in a field discovered over 100 years ago. It is on its last legs. We would not drill wells hoping for 60 mo. gross of 2,300, at $100 WTI, let alone at $70 WTI. Even though at the end of year 5, our wells are probably declining 2% or less, as opposed to 10% or more on Bakken wells five years out.
I know this may not make sense to many on here, and I am sure I am over simplifying, but I just do not see how these Bakken wells are going to work. There are some good areas, like Parshall and Sanish, where they can work much much lower than $70. That is because in the first 60 months they make 3 or more times oil of the average Bakken well. In fact they skew the average higher. The fact that shale drillers debt levels kept increasing at much higher oil prices than present, in my opinion, is a major tell.
It really all comes down to math that takes into account a correct production figure and the correct costs. I have no corns respond to any of my posts, other than copious, who pointed out the Harvard professor’s report and then copious did a simple calculation that didn’t take the cost of anything into account.
The problem I have with the Harvard professor’s report is that he assumed Bakken cumulatives of 600-800 barrels, and on average these wells are not halfway there at 60 moths and have produced the vast majority of their primary oil by that time.
I have not seen any corns doing any real math. I admit mine is simplistic. I would really like a petro engineer to post and tell me what all I am missing. I would really like to see it from someone with some facts prove me wrong.
Northwest Resident on Fri, 14th Nov 2014 4:36 pm
shallowsand — I would define a Cornucopian as someone who is aware of Peak Oil and who has been exposed to the Peak Oil arguments, but who for whatever reason fails (or refuses) to see the logic and mathematical certainties that even your simplified numbers prove.
And then there are the totally unaware masses who have no idea what the Peak Oil debate is all about and may not even be aware that we are rapidly approaching a moment in time where energy shortages will shake the foundations of the our “advanced” technical civilization, and shake it hard.
The cornies that we see flitting in and out of this forum, leaving a trail of insults and name-calling and frivolous statements wherever they post, are a special breed of denier. You know, some folks are so invested emotionally into their beliefs that sometimes those beliefs come to define who they are. Very religious people are often this way. Those people frequently tend to deny any fact that would upset the balance of their belief system, and they become irate and angry when presented with facts that are uncomfortable and inconvenient for them because those facts threated their sense of identity. I think our resident cornies fit that personality profile — that’s the way it seems to me.
I’m pretty sure that most of the petro engineers and scientists and others who may have at first taken the Cornucopian point of view have since studied the numbers, digested the facts, and converted. I read a lot of financial oriented “experts” saying that Peak Oil is a myth, but I can’t find any actual experts who are trying to deny Peak Oil.
There is no logical scientific argument against Peak Oil. And it seems to me that all of the people with half a brain who know how to use it can see that there is so much energy required to extract shale/unconventional oil that the net energy and profit margin MUST be very slim indeed, if at all. Then, looking at the huge debt accumulated and realizing that they only way those outfits can continue operations is with continual injections of new investment, just makes it obvious that something is really not working here.
Before I knew anything about the actual numbers that demonstrate how bad of a deal shale oil extraction is, I recognized the massive propaganda attempts to hype shale oil production investments. Just seeing the hype and recognizing it for what it was convinced me that there must be a big problem with shale, otherwise why would they need to hype it so much. And then of course I found the details and the math and the science that explained just how bad it is.
Hey, final note. How can you not agree with the doom and gloom? The world economy is standing on ice so thin that its already cracking in multiple places. Rapid price drops in not just oil but all commodities recently point straight at a widespread deflationary event and economic hardship in the making. There is NO good news on the horizon as regards the global economy or the environment that I can see. What’s not to be doomy and gloomy about!? 🙂
Thanks for your post. Excellent reasoning, from my pov.
oilystuff on Fri, 14th Nov 2014 4:46 pm
Mr. Shallowsand, a guess for why wells get shut in for several months after a significant drop in production would be that they simply stop flowing from induced frac energy and it takes 2-3 months to get them put on rod lift. I imagine that WOR time up there can be at least 2 months. They go on pump and look pretty good for a month or so drawing down the annulus, then start their inevitable decline. That is my guess. I do not believe they have started the re-frac game yet up there, if they ever will given the spacing they drill those wells on.
I appreciate your work and agree with you, about all of it. In the EF in Texas I am told by some folks that upwards of 65% of those wells will never reach payout. I think there will be a time where we look back on this shale thing and realize it was a great hoax played on the American people.
Northwest Resident on Fri, 14th Nov 2014 5:04 pm
“I think there will be a time where we look back on this shale thing and realize it was a great hoax played on the American people.”
oilystuff — Not a hoax for the sake of playing a hoax, but a hoax nonetheless.
Who was it that said production from shale is not a revolution; it’s a retirement party. I can’t remember, but it strikes me as being very true.
This shale oil “boom” has been the last hurrah, the final shot in the arm, the last big extravaganza for the oil industry. From here on out, it is a pretty sure bet that it’s all downhill, slowly at first, but picking up speed nicely as we move forward into the uncertain future.
The shale oil revolution was more than a Retirement Party. It was, and is a transition, a marking point. On one side of the line in the sand we have the age of oil. On the other side of the line we have the beginning of the end of the age of oil — the final chapter in the story about the age of oil. And my guess is that it won’t be long and we’ll be writing an epilogue, but that’s still a ways out.
The shale oil revolution, like I said several times before on this forum, was NOT an energy play, it was a financial play. The main goal was to pump up the economy, to keep the oil industry working along with all the financial and support and service components that ride the same boom/bust waves as the oil industry. It was all about keeping BAU inflated and viable for a little while longer.
I’m sorry guys. It looks like it is starting to wind down. And I just don’t see where we have enough oil or for that matter enough of any other “reasonably accessible” resources to fuel another boom.
So this is it. Retirement Party over. The Last Bust. What comes next is what the doomers are always speculating about. That’s my point of view, unpopular as it may be.
shallowsand on Fri, 14th Nov 2014 5:23 pm
Oilystuff. I didn’t consider it would take that long to get them put on pump, but I should have. Thanks for the input. My calculations are unscientific. I enjoy doing them. Also have a vested interest in trying to get a feel for the price of crude long term, although I admit that is likely impossible to determine.
Northwest, I agree there is a lot to be worried about and I am always trying to make sure I am aware. However, I also believe there is both a God and karma, and try to stay positive. My wife, thankfully, is a very positive person and that has helped me for many years. I’m going to remain aware and keep on living. My personal opinion is that you all may be right, but you are early. Hopefully.
oilystuff on Fri, 14th Nov 2014 5:39 pm
Shallow, I think with nearly 11,500 Bakken wells on pump or getting close to going on pump, the wait on workover rigs is long and frustrating. And with the regulatory governance these days up there, and all the safety stuff, I’ll bet a rod job and a tbng. trip to change out a TAC is 80K, minimum. Twice a year, too.
When you figure out what prices are going to do, near term or long term, I’d sure appreciate a heads up. I am lost at the moment.