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Continuous Resources Vs Traditional Oil Fields

General discussions of the systemic, societal and civilisational effects of depletion.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby Bruce_S » Sun 30 Oct 2011, 01:14:25

$this->bbcode_second_pass_quote('Moto', ' ')I trust industry numbers more than the state.


Beware those with skin in the game.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby rockdoc123 » Sun 30 Oct 2011, 12:11:10

$this->bbcode_second_pass_quote('', 'I') am somewhat surprised they are still at it, considering A) the US is still drilling like crazy and B)calculations such as those above showing the validity of the method in general.


just so it is understood by all and sundry, the oil industry does not give two hoots about EROEI as it doesn't instruct on whether a project can be profitable or not. The numbers they are interested in are capital costs (wells and facilities), operating costs (fixed and variable), commodity price, tarriffs, royalties and taxes. Cashflow profiles can be built for the life of a particular well/field and NPV discounted at an appropriate value (usually 10 or 15%) along with IRR and other measures such as discounted profit to investment ratio are calculated. Companies I've worked for usually look for something that will generate a minimum of $1 NPV/boe, 20% IRR and discounted profit to investment ratios greater than 0.4

At current gas prices new dry gas shale projects in some areas (eg. Quebec, BC Montney and Horn River) are uneconomic, needing prices closer to $5/Mcf. The liquid rich gas shale projects such as the Eagleford are quite profitable at current gas prices with breakeven prices just north of $2/Mcf.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby Bruce_S » Sun 30 Oct 2011, 14:23:22

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'I') am somewhat surprised they are still at it, considering A) the US is still drilling like crazy and B)calculations such as those above showing the validity of the method in general.


just so it is understood by all and sundry, the oil industry does not give two hoots about EROEI as it doesn't instruct on whether a project can be profitable or not.


Really? Certainly calculations from Pstarr's information would seem to back up this statement. Would you venture a guess as to why there is such a fascination with a useless metric? Within the PO world EROEI is talked about as though every engineer and geologist at every company is sitting around all day worried about energy inputs and outputs, rather than how much money there is to be made.

$this->bbcode_second_pass_quote('rocdoc123', '
')At current gas prices new dry gas shale projects in some areas (eg. Quebec, BC Montney and Horn River) are uneconomic, needing prices closer to $5/Mcf. The liquid rich gas shale projects such as the Eagleford are quite profitable at current gas prices with breakeven prices just north of $2/Mcf.


Amazing that these projects are mentioned with such disdain. Or not so amazing if the design of peak oil is to drive interest in alternatives (preferably only those approved in advance by the peak oil powers that be). It is good to have some industry folks around to keep the more faith based posters honest RocDoc. Thanks for the insight.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby Bruce_S » Sun 30 Oct 2011, 14:35:50

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('rockdoc123', 'j')ust so it is understood by all and sundry, the oil industry does not give two hoots about EROEI as it doesn't instruct on whether a project can be profitable or not.
True, but hey, the oil industry does not give even a single hoot about AGW either.


Sure they do. It certainly isn't some EROEI bean counting bureaucrat who is doing this little piece of work, but an honest to goodness oil company.

http://www.energy-pedia.com/article.asp ... eid=134204

$this->bbcode_second_pass_quote('pstarr', '
')Of course EROEI instructs, at the margins. Obvious EROEI shortcomings explain why the investor-class has yet to put it's paws into oil shale like Green River.


I made an offer to take all the EROEI=6.1 or EROEI=1 oil you can deliver to a refinery of my choice. Backup your statement, tell me how much of this oil I can expect, where and when, and I will pay you for it. If you do it, you will have proven your own statement incorrect. If you can't do it, you will have proven the method of estimating EROEI wrong. The choice is yours.

$this->bbcode_second_pass_quote('Pstarr', '
')To those who understand Net-Energy-Analysis, there are "plays" that are so obviously crap and energy intensive that even the most greed-addled investors will fail to scam a grannie out of her pension.


Net energy analysis was used to show how all drilling would stop in the US by 2005 (Hall and Cleveland, 1981). How many thousands of new wells were drilled recently? Needless to say, in the 30 years since that paper was written, I am betting investors have had enough time to sort out how and when to spend their money, and have no need for academic (and obviously invalid) conclusions on how the energy business works.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby Bruce_S » Sun 30 Oct 2011, 19:41:50

$this->bbcode_second_pass_quote('pstarr', 'Y')ou have revealed your Shortiness by disparaging academica (Hall and Cleveland have published hundreds of peer-reviewed papers)


While this reference might be meaningful to someone with experience in the vastness of internet forums where claims are substituted for facts with abandon (now where did that solution gas reseroivr named the Bakken go? :lol: ) I live in a world where comparing the predictions of academics to reality is a time tested and true way to determine the validity of the methods they use and the conclusions they draw. Certainly I disparaged them not at all, they already know that their prediction from 1981 was proven incorrect by history, so I am not mentioning something they haven't already discovered for themselves.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby Bruce_S » Sun 30 Oct 2011, 21:38:41

$this->bbcode_second_pass_quote('pstarr', ']')I'll repeat the same; take it up with the Journal where the article was reviewed. Post a response. I'm sure it'll be printed :lol:


The article was in Science. February, 1981, and certainly does not require a response, having been judged by history.

In the meantime, and to keep this conversation on topic, it should be noted that neither Cleveland or Hall (in that paper) tried to differentiate between continuous reservoirs or traditional oil fields, such concepts being beyond them that early in their careers. Based on the idea that EROEI matters, if it does, it would seem that they should have at least noted this difference, even back then.
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Re: Continuous Resources Vs Traditional Oil Fields

Unread postby Moto » Mon 31 Oct 2011, 11:28:41

Just a heads up that I am gone for probably the next three weeks. Might have internet might not.

Thank you everyone for your help. The third post is up, but it basically what was said here. I will probably clean it up and add a little before everything is said and done. (I will probably even add a back link to this thread.)
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