Peak Oil Not Dead: America’s Next Top Gamble

Apparently, we’ve been “dead wrong.”

“Those behind the [peak oil] theory appear to have been dead wrong, at least in terms of when the peak would hit, having not anticipated the rapid shift in technology that led to exploding oil and natural gas production in new plays and areas long dismissed as dried up,” says Energy Wire.

“Subsequent reports and studies have corroborated that view. The Energy Department says 2013 will post a record surge in U.S. oil production, while a recent analysis by Boston Company Asset Management LLC said “structural shifts” in energy industries combined with lower demand in the West now mean the industry is poised to keep climbing, even as the thirst for crude continues to soar in China and other developing nations.”

Really?

The truth — Peak oil has nothing to do with running out of actual oil.

Peak oil means we’ve peaked as far as finding cheap oil supply. And we don’t believe the world will just “eventually” run out of cheap oil in 10 to 12 years.

It’s already happening.

The United States has already reached its peak oil date. In fact most oil producing countries have reached their production peaks — and the good ole days of discovering easily accessible, conventional crude are behind us

The era of cheap oil really is over…

Every barrel that will come to market will be much more difficult to produce, and therefore much more expensive. Just ask U.S. oil experts, Germany, England — they are all fearful of this fact. Ask respected analyst Charles Maxwell.

Still, people don’t get it.

Citigroup, for example, just said:

“The belief that global oil production has peaked, or is on the cusp of doing so, has helped to fuel oil’s more than decade-long rally. The resurgence of US gas production to well over its 1970s peak and into the number one slot globally over the last seven years is a result of hydraulic fracturing – fracking – techniques being applied to shale gas reserves across the US.”

But what Citigroup doesn’t understand is that hydraulic fracturing is an expensive way to get oil and gas out of the ground. We’re now drilling under oceans and turning to fracking because the “cheap oil has already been tapped.”

I’ll say it again.

Peak oil has nothing to do with running out of oil. Peak oil refers to the flow rates. It refers to the fact that the “easy to get to” oil is gone. It’s the “hard to reach” expensive oil that we now have to go after. Hydraulic fracturing – like I said – is more expensive than traditional drilling techniques.

The question is not the amount of oil that remains but the amount of energy required to extract it now that the easily accessed oil reserves have been exploited.

Our future will now be shaped by shale and fracking…

Fracking, as we discussed the other day, helped the United States produce some 11.654 million barrels a day, according to the Energy Information Administration (EIA), as the Saudis pumped 11.252 million barrels a day. The oil and gas booms of the Bakken and Texas pumped four million of those barrels a day with the help of fracking.

Even the Niobrara shale is leading us toward greater energy independence because of the technological advancements.

But these aren’t the only hot spots around.

In fact, according to petroleum geologist Ed Duncan, Alaska’s North Slope geology may “yield bountiful untapped resources as vast as the unconventional oil plays at Texas Eagle Ford and North Dakota’s Bakken shale fields,” according to Environment and Energy.

Duncan apparently shocked the oil industry when he picked up half a million acres in an area once dismissed by other energy giants. The shale Duncan is looking at could hold up to two billion barrels of technically recoverable oil and up to 80 trillion cubic feet of natural gas, according to a 2012 US Geological Survey.

Royale Energy (ROYL), for example, holds 100,000 acres in the Alaskan hot spot, and could easily get swept up in the bullish news. Subscribers to The Cheap Investor were advised to buy Royale Energy at just $1.98 in September 2010 before it ran to $7.90.

Examiner.com