[TheAntiDoomer]

http://oilprice.com/Energy/Crude-Oil/US ... ology.html

The cheapest and most profitable oil North America has ever seen is now “flooding” into the market, as producers once again use old technology to create a wave of new profits.

Producers are using “waterfloods”— pushing water into underground formations to flush a large amount of oil out to nearby producing wells — to increase production and profits. It’s the next big money-making phase of the Shale Revolution

Pinecrest is very vocal about their waterflood potential. They say they can double the amount of oil they recover (called the Recovery Factor, or RF) from a well — at less than $15/barrel — half the price of primary recovery costs, which are over $30/barrel

http://oilprice.com/js/common/tinymce/j ... AE1815.png

[ROCKMAN]

Thank goodness someone has come up with a new idea on increasing recovery from fractured reservoirs. From 1967:

http://www.onepetro.org/mslib/servlet/o ... d=00001788

Pressure Pulsing - An Improved Method of Waterflooding Fractured Reservoirs

“Atlantic's researchers studied oil recovery by imbibition on Spraberry cores in 1952 and then carried the process to the field in 1952 through 1955. Based on laboratory results, field recoveries of about 30 percent of oil initially in place were hopefully anticipated. Results of the field test, however, were disappointing and showed that imbibition alone was too slow a process to be of practical value. The first pilot project by Atlantic was followed by other pilot water injection projects by Humble in 1955 through 1958 and by Sohio starting in 1961.”

OTOH the Spraberry isn’t a shale and has significant matrix porosity and permeability compared to the typical shale.

But that isn’t to say some potential to increase recoveries via water flooding some fractured reservoirs isn’t real. The prospect of $100/bbl oil makes for many potential efforts. I truly wish the boys at Pinecrest lots of luck. If their projects work really well they might be able to double their current production of 3,100 bopd from all their wells. Given their current balance sheet I might wait to see some results before buying their stock. OTOH I’m not nearly as big a risk taker with my money as am with others. LOL.

Checked on EOG’s efforts in the Eagle Ford. They are unchallenged as the leader in the EFS IMHO. They have expressed some optimism about the WF potential in the Bakken but don’t see it in the EFS. They are doing some initial research into some other (and undisclosed) EOR methods. Apparently one of their major concerns about WF any shale is the potential for the water to cause the clays to swell and completely kill flow. But if anyone can squeeze more oil out of the EFS I would put my money on EOG. They are the Top Gun in the shales IMHO. Right now it looks like they are leading the charge to prove that drilling on closer spacings is a viable approach. That could very significantly increase their recovery for their huge current lease position.

[Econ101]

They are seeing a lot of changes including spacing, increasing number of frack zones, different mixtures and types of sand and slurry, well bore size, fracking patterns, stacking legs vertically, multi bore holes from the same pad are all contributing to a rapidly rising flow rate initially and over time. The amount of the reserve they are going to recover is rising all the time. At some point many things that make sense on top will be tried down hole. Some are going to work and some arent but the end result is far more oil than you thought you had.

[Lore]

Yet, world oil production remains flat. The expense of oil right now is keeping demand in balance with supply, along with a pathetic and over extended world economy.

We continue to use up our cheap energy reserves in a never ending fight to extract more expensive oil. No good can come from that economic model.

[Plantagenet]

$this->bbcode_second_pass_quote('Econ101', '.')..a lot of changes including spacing, increasing number of frack zones, different mixtures and types of sand and slurry, well bore size, fracking patterns, stacking legs vertically, multi bore holes from the same pad are all contributing to a rapidly rising flow rate initially and over time. The amount of the reserve they are going to recover is rising all the time.

[ROCKMAN]

P – As you may gather I’m not exactly a shale cornucopian. But water flooding most likely would be done with existing wells and thus may require little additional drilling. Could be economical at existing or even somewhat lower prices. OTOH I don’t come close to buying some of those pie in the sky expectations of high increased recovery factors. The ultimate enemy of a water flood is “by-pass”: the water sweeps more readily thru portions of the porosity and thus doesn’t sweep all the oil laden porosity. I don’t have any experience water flooding a fractured reservoir but I imagine the potential for by-pass may be even greater than a conventional reservoir. More important successful and economical water floods don’t usually produce high flow rates but rather nice consistent flow rates over fairly long periods. A good and bad aspect.

[Plantagenet]

$this->bbcode_second_pass_quote('ROCKMAN', '.').. water flooding most likely would be done with existing wells and thus may require little additional drilling. Could be economical at existing or even somewhat lower prices.

[ROCKMAN]

P - That's one of the factors that most EOR cornucopians don't appreciate. I've rarely seen any EOR project that could justify much new drilling. Field A might have great EOR potential if the original wells were still available. But once they've been abandoned and the production infrastructure removed EOR is no longer viable even at high oil prices. But I am looking at one in west Texas but it will require drilling new horizontal wells. First we would drill a pilot project that may prove the economics still don't work at today's prices.

[Buddy_J]

$this->bbcode_second_pass_quote('ROCKMAN', 'T')hank goodness someone has come up with a new idea on increasing recovery from fractured reservoirs. From 1967:

http://www.onepetro.org/mslib/servlet/o ... d=00001788

[Buddy_J]

$this->bbcode_second_pass_quote('Lore', 'Y')et, world oil production remains flat.

[Lore]

$this->bbcode_second_pass_quote('Buddy_J', '')$this->bbcode_second_pass_quote('Lore', 'Y')et, world oil production remains flat.

[Buddy_J]

$this->bbcode_second_pass_quote('Lore', '')$this->bbcode_second_pass_quote('Buddy_J', '
')10% increase in crude production since about the time TOD declared peak oil.

[ROCKMAN]

Buddy – Not sure if this helps resolve your debate with Lore. But it's how I see it.

I’m glad to cut some folks slack when they are new to the energy discussion and just repeat what some experienced “experts” offer. It’s the “experts” I get pissed when some of them intentionally avoid what the new critical factor is: oil prices today and NG prices back in ’08. The technology is constantly being fine-tuned but the basics haven’t changed significantly. IMHO there would be very few shales wells drilled today even if oil prices had doubled from the late 90’s prices.

Even worse is offering the false hope that all this new tech will bring us back to the days of “cheap” oil. Granted it might not seem logical at first glance but IMHO the increase in US oil production supports PO. If not for higher oil prices we wouldn’t be drilling many of these once marginal/non-commercial reservoirs IMHO. And the higher oil prices are a result of the POD…Peak Oil Dynamic.

BTW “TOD” has never declared a date for PO. Some folks on the site have done so. During my time on TOD not only did I not make such claims but also emphasized IMHO the relative unimportance of that date whatever it might be. There often seems to be a blind spot by some folks on both sides of this debate: any prediction of an increase/decrease in rates or proved reserves is as much dependent upon the price assumption as the geology. In many cases even more so. For instance someone may say there are X billion bbls of proven recoverable Bakken oil perhaps without realizing this estimate is based upon a price assumption they are making…perhaps subconsciously. And let’s assume that estimate is correct for that price assumption. But I can use a significantly lower price assumption and instantly wipe out a large percentage of those X billions of bbls. So who would be correct? No one knows since no one can know exactly where oil prices will go during the next 10+ years. Free to make any assumption of course but only time will prove what the reality will be. For instance consider that pretty EIA chart. What future price of oil are those predictions based upon?

As a wise man once said: ”Sometimes knowing what you don’t know is more important than what you know.”

[Econ101]

Im not sure how cheap oil is supposed to get? The days of cheap oil, the days of cheap milk, the days of cheap gas, the days of cheap anything are over and always have been. Nothing was ever cheap for long, but longing makes us think it may have been.

The ratio of the value of a barrel of oil to an OZ of gold has been holding around its historic mean of 16 or so, 16 barrels of oil = 1 oz gold. It is higher than that now: 17.40. That shows us that oil is getting cheaper when compared to gold. About 2 weeks ago you got 16.48 barrels of oil for an OZ of gold. This data shows oils value fluctuating but in historic line with key commodities. It is not particularly expensive or cheap by historical standards. I dont know about heavily regulated gasoline.

as the market forces work to influence the mix of the four factors of production: management, labor, capital and land/resources, its important to keep your eye on the ball. None of these factors is fixed and changes in one will bring about adaptive change in the others. If oil gets too high priced something will change. Maybe you will get shale production, water flooding or federal lands might even be opened?

I have heard we have anywhere between 40 - 100 years of known recoverable reserves now. (how can you calculate eroei if the estimates of EUR are that far apart?) That's if we dont explore another day or see another advance in technologies like waterflooding and fracking. Of course exploration and research are on-going because the key for the oil industry is to keep looking and developing. They are never going to boast of huge supplies or low costs.

[Lore]

$this->bbcode_second_pass_quote('Buddy_J', '
')
Lets see. 72 million * 0.95 * 0.95 *0.95 = 61 million barrels a day because of natural, and some would say artificially low decline. But instead, we now have 75 million. So So we replaced not only some 11 million barrels a day in decline, but increased it another 3 on top of it.

So yes, balls to the wall effort, and some damn sizable results. We effectively have found a Saudi Arabia, somewhere, somehow, in just 3 years. Sounds about right, based on the "we need a new Saudi Arabia every 3 years metric".

Is there a mistake in my math somewhere? We do count the always present, never going away, forever happening natural declines don't we? Rockman, can we have a ruling on this one? Is it possible all natural field declines suddenly stopped over the past 3 years, and we only increased global production 10% since the 2009 low, rather than the 23% it would otherwise appear? And are these types of new production increases really what we expect this deep into the post peak world?

[Buddy_J]

$this->bbcode_second_pass_quote('ROCKMAN', '
')BTW “TOD” has never declared a date for PO.

[Buddy_J]

$this->bbcode_second_pass_quote('Lore', '')$this->bbcode_second_pass_quote('Buddy_J', '
')
Lets see. 72 million * 0.95 * 0.95 *0.95 = 61 million barrels a day because of natural, and some would say artificially low decline. But instead, we now have 75 million. So So we replaced not only some 11 million barrels a day in decline, but increased it another 3 on top of it.

[SeaGypsy]

Blathering Buddy. Where is the next new SA going to come from? Federal Lands perhaps? Then the next? Then the next? Meanwhile back at the ranch, the vast majority of fields are depleting and the frackers and flooders are eyeing old fields, the US is still importing most of it's oil, demand globally continues to grow. Meanwhile, where is the "Seamless transition" you were touting last week, the one that "Amazes" you?

[Lore]

$this->bbcode_second_pass_quote('Buddy_J', '
')I don't know. What do you consider keeping our heads above water? Certainly with recent news along the lines of something like this, it sure appears that keeping ones head above water means continuing some really counter productive behavior. Either that, or income in certain segments have been growing faster than some of the labor stats have suggested. You would think BAU never ended.

"Automakers finished the first quarter with more than 3.67 million new-car sales, a 6.3 percent gain over the same period in 2012 and a strong start that should see the industry reach more than 15 million by year's end."

[ROCKMAN]

Buddy – I’ll guess you haven’t hung out at TOD as much as I used to. Many raging debates about when/if global PO has occurred. Maybe just me but I’ve never thought of TOD as some entity that had a specific position on anything. Every one of my many thousands of conversations were with other members and not something called TOD. But no big deal either way. I just felt a bit obligated to represent the TOD members who feel much as you do.

Good luck with your cost/supply curve. I don’t think I ever seen anyone or any organization offer a detailed one. But lots of supply projections. And I’ll remain hard-nosed about my position that any future supply projection not tied to a price forecast is not only worthless but foolish. Foolish because it denies one a valid excuse for being wrong about their projections. Consider the shot you can take at those who, say in 2000, had predicted US production would never increase to levels we see today. If they said that projection had been based upon the assumption of $40/bbl oil thru 2015 then you might fault them for their price model but not their production model. I doubt you would argue that we would have had the oil production increase we've seen had oil been selling for $40/bbl the last 6 years.

What pricing forecast does my company use? Similar to how many companies do it: take the current price, shave $5 or $10 off it and use it with very little or no price inflation for the next 100 years or so. And do we believe that price model will prove correct? Hell no. LOL. We know what we don’t know but we need to use some price forecast to do our future cash flow analysis. That way when we are wrong we simply say we never knew what future prices would be.

SeaGypsy – Exactly why I’m one of those geologists not very optimistic over how many big fields are left. I’ll readily admit I’m not an expert on foreign exploration plays. Bound to be some big fields left to find but except for the Arctic most basins have been drilled to a fair degree. Development of Deep Water drilling/production certainly has opened up a good bit of potential. Brazil is an obvious example. But look at the capex and, equally important, the time needed to bring it on line. I’ve seen a number of Brazil experts question whether that country will ever be a major oil exporter. In addition to the long lag time in bringing production on there’s an assumption of a significant growth in Brazilian consumption.

As far as US Deep Water that play is much more mature and developed than a lot of Joe6Packs appreciate. The first field went on line about 35 years ago with more than 160 fields developed to date. But certainly more big fields left to find. But IMHO past its prime. And how available are offshore fed leases? In just the last 12 months President Obama has authorized almost 100 million acres (including a lot of DW tracts) for bidding. And how much has the industry chosen to lease: less than 6%. That should indicate how much potential folks who know those trends better than anyone else feel there is left out there. So 100 million acres available for less than $400/ac and a 1/6 royalty (compared to $thousands/ac and 1/4 royalty in some of the shale plays) and the companies only want to lease 6% of what’s offered? Armchair generals like Yergin may say otherwise but most aren’t putting up any money to back their convictions.

Onshore trends? I don’t see the next layer after the currently developing trends. Productivity of the current shale plays seems to have been rather well scoped out. A few other shales still being evaluated but nothing popping up like the Bakken and Eagle Ford. Last stat I saw more than 80% of the oil shale production is just from those two formations. But companies are still experimenting. The latest disappointment after some initial optimism was with the Tuscaloosa Marine Shale.

Federal lands? Despite what some believe most of those leases have been available for many decades. Unfortunately many of those leases are in areas where little hydrocarbon potential has been established. BTW: the largest single mineral owner that has leased in the Bakken play: the US govt including the tribal lands.They've offered every lease for bidding that the oil patch has nominated. Also should be noted that more oil/NG in the US is produced from govt lands than any state or individual mineral owner. The US has been a tremendous supporter of the oil patch for more than half a century.