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Page added on March 15, 2015
Technology revived, will sustain oil industry
Technological innovation revived the nation’s oil and gas production after decades of decline, and innovation will help the industry through the current oil price slump.
That was the key message of Jon Olson, newly named chairman of the Petroleum and Geosystems Department within the University of Texas Cockrell School of Engineering.
Participating in the “UT In A Day” event in Midland, Olson attributed the “innovative application of technology by petroleum engineers” as responsible for the recent oil and gas boom. He told those in attendance the current shale-oil-fueled boom, which lasted about eight years, has by far surpassed the last great domestic oil discovery in Alaska.
“In 2004-05, Texas began reversing its production decline. The U.S. is the world’s most mature producing nation and Texas is the most mature producing region in the U.S., and to go from 1 million bbl/d to 3 million bbl/d is incredible. It offers great entrepreneurial opportunities, it offers great technological opportunities,” he said.
It’s important because the world wouldn’t have access to these new energy resources without innovation in technology and the application of that technology, Olson said.
An internationally recognized expert on hydraulic fracturing, he referenced opposition in some parts of the country to the technology.
“If we banned those technologies, those resources, we ban half our oil and three-quarters of our natural gas, which depend on these technologies” he said.
Olson estimated that about 82 percent of the nation’s energy comes from some form of fossil fuel or hydrocarbons, while 8 percent comes from nuclear power, 1 percent from wind and 0.5 percent from solar power.
“We should pursue every form of energy in a responsible way,” he said. In the future, energy demand will climb, particularly in developing countries like China and India who want standards of living equal to the U.S. and European nations.
While he said all sources of energy will be needed, “I don’t think we have the luxury of renewables replacing fossil fuels.”
Wind and solar are the two forms of renewable power that can expand. Texas is the nation’s leader in wind power, which provides 8 percent of the state’s electricity and is home to 9,000 wind turbines. Each turbine provides about 3 megawatts of power, or the equivalent of an oil well producing 10 bbl/d.
Olson added that those wells producing 10 bbl/d will be important to the nation’s energy future, as will the new resources from shales around the country.
Just how long these new reserves will produce “is the million dollar question,” he said. He cited Energy Information Administration projections that estimate the production will last 30 years.
“Tight oil, or shales, will be a significant fraction of our total oil production, 25 to 30 percent of total U.S. production for another three decades, or until we find the next great resource.”
Technology and innovation will play a role in finding that next resource, as well as keeping the nation’s oil and gas producers producing in the current low-price environment, Olson said.
The role of UT’s engineering school is to provide an environment for research and innovation into technologies that can squeeze more oil out of the ground economically, he said. He cited research into a nanoparticle application that makes foams more effective in getting more oil out of a formation.
“The oil and gas industry offers opportunities, technology matters, and that’s why we need engineers,” he said.
In this low-price environment, producers won’t stop activity, but they’ll wait for service costs to come down, he said after his presentation.
Asked about concerns the downturn would dissuade younger workers from joining the industry, he said: “The brunt of the adjustment is falling on the service companies. They’re big hirers. Once stability occurs, that will help employment concerns.”
He said $50 oil is workable and as prices rise, more wells that are more technology-dependent will become economical.
The rate at which producers ramped up production from the shale plays was unanticipated, he said.
With the United States set to become the world’s largest producer of both crude and natural gas, he said some believe the nation could also replace Saudi Arabia as the world’s swing producer to control oil prices.
23 Comments on "Technology revived, will sustain oil industry"
Texas Engineer on Sun, 15th Mar 2015 7:15 pm
“With the United States set to become the world’s largest producer of both crude and natural gas, he said some believe the nation could also replace Saudi Arabia as the world’s swing producer to control oil prices.”
Is this an Onion article?
penury on Sun, 15th Mar 2015 8:04 pm
Even The Onion has better sense than publish this kind of trash.
Makati1 on Sun, 15th Mar 2015 8:08 pm
Another techie dreaming of an impossible future…
Technology needs to find a way to revive the dying economy or it will slip into “a world made by hand” technology, not a petroleum powered one.
Careers to NOT go into:
IT
Nuclear
Oil rig worker
Geologist
Chemist
Physics
etc.
Suggested careers:
General med practitioner
Mid-wife
Teacher
Farmer
Carpenter/cabinet maker
Wheelwright
Mechanic
Mason
etc.
Plantagenet on Sun, 15th Mar 2015 10:48 pm
Mak is nutso. The facts are pretty clear that people who earn degrees in STEM fields (Science, Technology, Engineering, Math) do far better then people who eschew college and choose to become laborers.
That does’t change just because we are in an oil glut.
Poordogabone on Sun, 15th Mar 2015 10:57 pm
Plant, Mak was talking about the future.
Maybe Howard Kunstler is also a nutso but on this site at least, I’m sure that a lot of folks think that he’s onto something.
Makati1 on Sun, 15th Mar 2015 10:59 pm
Plantagenet, that is in the BAU world of yesterday, not the post collapse world of tomorrow. In 10 or 20 years, (or less) there will be few, if any, jobs in the careers I list as Don’ts. While the list of Do’s will be in demand as they can be bartered for or traded.
No need for engineers when there is nothing to engineer with/for. The exotic engineering careers are a product of the excess energy age and will go when it goes.
Ditto for all of the so called ‘economy’ careers. Think of what the Wall Streeters will do when there is no Wall Street? No Central Banks? No IRA’s, 401ks, mutual funds, etc. No investments other than the land you have improved to farm for self-sufficiency? Can you imagine a world without Capitalism? It’s coming, and fast.
Apneaman on Sun, 15th Mar 2015 11:26 pm
Lil Planter. Where are you getting your facts on STEM? I started my apprenticeship in 1990 and 5 years later was a journeyman with a inter-provincial red seal which is good to work anywhere in the world. I made about $250.000 in that 5 years (only worked 6-8 months per year with food, accommodation and travel covered). The 8 months of trade school was about $4,000. I bet there are some STEM people from 1990’s still paying off their student loans. More than one way to skin a cat. Of course them STEM folks don’t have to get dirty.
Ralph on Mon, 16th Mar 2015 6:58 am
A degree in science or engineering will be very useful in the future as well as the past.
The skills will put you in good stead in the detritovore economy that will drag on for several more decades on the downslope of industrial society. Mechanical engineering applies as well to designing bicycles as to SUVs.
Davy on Mon, 16th Mar 2015 7:34 am
Ralf, I would agree if this is a long emergency where BAU’s descent is reasonable for a hybrid engineering of new and old. We need only look to the Romans with what they did with complex primitive engineering. I love incongruous juxtapositions.
shortonoil on Mon, 16th Mar 2015 8:39 am
The shale industry is a net energy negative process. Because of that it will always produce a long term monetary loss. Its present existence has only been possible through massive debt formation; debt – which can never be repaid. No amount of technology will alleviate it intrinsic deficiency. Any energy production process that requires more energy to perform than is returned by it is doomed to failure. The technology employed is irrelevant, and only serves to dazzle, and entertain ignorant minds.
http://www.thehillsgroup.org/
marmico on Mon, 16th Mar 2015 9:40 am
The shale industry is a net energy negative process
Ya, that’s why domestic petroleum demand is increasing, while LTO supply is rising to flat and LTO drilling is falling 30%, all year on year to date.
The February 2015 ETP ratio will be 30%, a rise from the 28% ratio in January. March 2015 may re-test the January ratio. You are an ETP buffoon.
Davy on Mon, 16th Mar 2015 10:33 am
Marmie, I love when folks like you show cognitive dissonance with attacks on those ideas or systems that threatens their reality. Google some Gandhi, Marmie and check out his quote on this subject.
It is obvious ETP is a dangerous concept for your Freddy Fluff world since it is worth the effort of your ridicule. If ETP was not significant you would not bother a response. You amaze me Marmie how you are always showing you hand.
marmico on Mon, 16th Mar 2015 10:58 am
ETP is crapola. It can be calculated within 1 percentage point monthly due to data lags. The question you should ask yourself is why the quart shy of oil buffoon is still quoting 2012 annual data of 54% when March 2015 will be ~28%.
I’ll tell you why. The ETP is nothing but a WTI price proxy. The entire narrative falls apart when you understand that. What variable changed dramatically between 2012 and March 2015. The price obviously.
The ETP monthly formula is:
ETP = (a x b x 4.9 x 2.9)/d,
where,
a=petroleum volume (product supplied in the EIA accounts)
b=WTI $price (EIA data)
d=GDP
4.9=constant (thermodynamic)
2.6=nonpetroleum to petroleum energy consumption ratio (EIA data)
Can you figure out GDP?
The b variable (or WTI $price) drives the ETP formula.
rockman on Mon, 16th Mar 2015 8:16 pm
“…innovative application of technology…”. Clever wording, if y’all didn’t notice. He didn’t say “new technology”. He’s focusing on the application of existing technology that has suddenly become applicable. An the source of that innovation? Oil prices tripling on a few years. All the basic technology used to make the shales blossom existed when oil was less than $40/bbl.
“Just how long these new reserves will produce “is the million dollar question,” A question I’m pretty sure will be answered by the end of summer. It’s truly is astounding how the cornies constantly bragged how the rising rig count produced a surge in US oil production. There’s no denying that truth. But now with a falling rig count the cornies avoid that subject like the plaque. It’s truly shocking given the universal acknowledgement of the high decline rates of the shale wells: with half of the rigs currently drilling (with the decline still happening) that everyone isn’t anticipating a production decline. The wells drilled in the last two years pushed us to a record high. And by the end of 2016 those wells will have declined 40% to 60%. And they are not being replaced with an equivalent number of new wells.
Very simply the decline of the older wells cannot be offset by the reduced number of rigs drilling. Yes: 1600+ rigs got us to record production. And no: half that number of rigs won’t. And folks can ignore the “improved efficiencies” of new wells. There was a very nice learning curve that did nicely improve productivity…a couple of years ago. Initially it took 30+ days to drill an EFS well. But that was reduced to 12 – 14 days in a few years. And that’s where we’ve been stuck for more than a year. And many of the recent wells are looking pretty good…thanks to going from a dozen frac stages to 36+ stages…an the associated big jump in costs.
Makati1 on Mon, 16th Mar 2015 8:37 pm
Ralph, you assume that the economy is going to ‘drag on’ for a few more decades. Really? Maybe it will collapse next week. Have you considered how interconnected the world is today? I would bet that most of your stuff comes from Asia. That is about 10,000 miles from the US by plane or boat. Those miles cost money. When money is not available, what then? I suspect really valuable things will still cross the oceans, but not techie toys or even A/C units. Maybe gold, drugs, etc.
“Scrap yards are preparing for record numbers of freighters as shipping rates tumble to all-time lows.
Owners may demolish 40 million deadweight tons of dry bulk carriers, more than double last year’s total, according to Arctic Securities ASA in Oslo. Rates to ship commodities slumped 66 percent last year amid a glut of capacity, the worst performance since the global recession.” http://www.hellenicshippingnews.com/ships-beached-for-scrap-as-returns-reach-record-low/
No, engineering is not a trade I would suggest to my grand kid thinking about college. It will cease to exist before he/she could raise a family. Maybe a mechanic instead? There will be a lot of things needing repaired for a while after. A mechanic’s skill would help to keep the stuff useable. But his kids would need to be survival oriented, not career oriented, unless it was as a farmer or medical practitioner.
Davy on Mon, 16th Mar 2015 8:47 pm
Most of the things we don’t need come from Asia like barbie dolls, cheap plastics furniture, and substandard cheap cloths. That is about all the Asians can make with slave labor. We look to Europe for the good products.
Apneaman on Mon, 16th Mar 2015 8:54 pm
Mak, Speaking of shipping Scrap yards…what a nasty existence. I imagine this is the type of work many of the West’s 99%ers will be competing for in the near future along with the same pay scale. Might take a few years to scrap industrial civilizations infrastructure.
Scrapped: Chittagong Cutters (RT Documentary)
https://www.youtube.com/watch?v=_fqrRhqv0Iw
Apneaman on Mon, 16th Mar 2015 11:37 pm
Hey marm-A-dork, go play with these numbers.
US Economic Data Is Having Its Worst Year Since At Least 2000
http://www.zerohedge.com/news/2015-03-16/us-economic-data-having-its-worst-year-least-2000
GregT on Tue, 17th Mar 2015 1:55 am
Davy,
The ‘good’ products are pretty much all manufactured in Asia now. Europe makes diddly squat for the NA market. As does Canada and the US. I know that you have a real hate on for the Mak, but that doesn’t change the facts. Try not to let your hatred get in the way of sound judgment, or the truth.
GregT on Tue, 17th Mar 2015 2:50 am
The great Marmico has a question:
“Can you figure out GDP?”
Yes Marmico. GDP is a measurement that the eCONomists use to identify the rate at which human beings can turn the natural environment into waste, in return for pieces of paper with numbers printed on them, or 1s and 0s in computer programs.
The problem is, those pieces of paper and electronic digits are not what give us all life, and the longer that human beings listen to idiots like you, the worse the predicament will be for all life on this planet.
Do you have a conscience Marmi? If you do, now would be a very good time to wake the fuck up.
Davy on Tue, 17th Mar 2015 7:04 am
Greg, Marmi is a BAUtopian poster child. I think he works at the STL Fed because almost every one of his charts are Freddy Fluff. We know the Fed practices manipulating data with selective facts. The fed practices goal seek based upon what is now and what is needed to maintain BAU. This is possible for a while but lies propagate lies and eventually you hit limits of lies and diminishing returns of their effectiveness. Yes Marmi, limits and diminishing returns not only hit growth they hit lies. Marmi, get out of your cubical and away from your CRT and see the world as it is. Quit worshipping your eConomists gods that got us into this predicament. You eConomist gods that are giving us the Trojan horse of a bottleneck. eConomist will eventually be lynched at the tree of truth for their lies and deceit.
marmico on Tue, 17th Mar 2015 8:20 am
ETP is crapola, nutters.
Kenz300 on Tue, 17th Mar 2015 11:30 am
If tar sands production in Canada is one of the highest cost producers why have we not heard about huge cutbacks?
High cost technology still competes with low cost producers.