[TheAntiDoomer]

$this->bbcode_second_pass_quote('AirlinePilot', 'I') like the POD moniker. It makes a lot of sense and its intuitive to me.

On the Shale/Tight oil discussions, TOD did a very good piece last fall I believe which likened the current tight oil boom to the Red Queen's dilemma in Alice In Wonderland. She could not understand why the faster she ran, the quicker she went nowhere! This is exactly the problem the oilco's will see very soon. I put up a chart here recently which depicted the LOSSES in capital expenditures for this drilling frenzy. The problem of tight oil decline will become very evident soon, as the company's are basically at or near the drop dead point for losses when it comes to capital required. They are at the end of their ropes when it comes to the amount of money required/borrowed/or levered to keep the pace of drilling up for GROWTH. I dont believe they stop drilling, but very, very soon I believe we do see the point where they cannot keep the pace and growth will be finished. IMHO this is the problem with respect to agencies predicting future exponential growth from tight oil. I do not believe that it can possibly happen given the current price of oil, the demand picture, and the present state of our economy.

Red Queen Indeed!

[TheAntiDoomer]

Bakken Update: The Red Queen Is Just A Fairy Tale Part II

http://seekingalpha.com/article/909761- ... le-part-ii

[ROCKMAN]

Pstarr – I wish Rune would post over here. As you say he does a tremendous amount of work pulling FACTS together and then let’s everyone make their own interpretations.

He came up with a great stat that I still have a bit of trouble believing. But it’s pure numbers straight from the ND regulators. Some here already know the difficulty of predicting ultimate recover from a fracture reservoir well. Takes many years of production to get close with a reliable estimate. But there is one number early on and completely non-debatable: cumulative production during the first 12 months. How long it took to drill the well or how long they had to wait to get a frac crew is not relevant. It starts producing in Month 1 and there’s a cum posted at the end of Month 12. That number can be pulled directly from the state regulator data base. Interpreting those numbers is a different matter. If they are drilling longer laterals and doing more frac stages you might expect those numbers to increase. If they are finding more sweet spot = higher first 12 mth cum. Drilling more sour spots = lower first 12 mth cum.

I don’t want to guess the numbers he came up with but just within the first two years or so of the Bakken boom the first 12 mth cum stat declined significantly. Why did it? Everyone can create their own reasons. But what can’t be changed is the stat: over short period of time the productivity of Bakken wells being drilled declined dramatically. It would be interesting to see if he has an update. Every month he there is a new population of wells that have just finished their first 12 mth cum.

Pstarr – If you still hang at The Oil Drum maybe you could invite him over for me. Tell him I’ll swap him some intersting stories about Chinese refinery expansion.

[AirlinePilot]

pstarr beat me to reproducing that link from Rune's rebuttal to Filloon.

Here is the gist of it......

"Anyone that needs several articles in an effort to produce what they consider a rebuttal I stop following.
The author says (in the article you linked to); "….and believe his study used companies that consistently underperform."
The author then fails to follow up by producing documentation that supports his claim. His readers should demand he did.
The author (Filloon) consistently and repeatedly uses phrases like “I believe”, in other words this is just production of “hot air”. Belief has nothing to do with a scientific approach.

During 2011 around 1 200 new wells were put into production in North Dakota. Filloon presents data for 40. Further he does not care about presenting them in the sequence these were started to flow.
If Filloon should make a point he should present results from a larger data set (more than 10 %) and try to show the distribution of productivity with time.

Since I wrote this post I have added more wells (and updates as data becomes available) and included a lot of random (picked by a third party) wells from all over Bakken and from (hopefully) all the operators. So far this has not changed much about the profile for the “average” well. Data on first year total production (running average) wobbles between 80 000 - 100 000 bbls for 2011. However as more data for the second year production are available it now appears as the decline from first year year to second year is higher than what I used for this post.

- Rune"

And the response??? Crickets of course. Opinion is one thing, fact based analysis is another. Finding an internet opinion piece to support your "belief" is just not going to work here. It's also intellectual laziness. We allow too much of this here IMHO. We spend far too much time exposing the BS around here instead of talking about what is really going on.

I tried to invite Rune over here along with one or two other folks(from TOD) I think do a good job on factual reporting. I think they probably have their hands full, it was a while ago. I also believe that since we are a bit more lax on allowing the Trolls here they would rather not waste their time. I frequent TOD also but mostly as a lurker.

[ROCKMAN]

pstarr - IMHO the trolls here aren't nearly as distracting as some of the regulars on TOD. As you say we can always use more folks reporting facts and not just unsupported opinions. I wonder if I tried to snatch some away if some sort of Internet hit would be put out on me? LOL. I've tried to tempt westexas. Maybe I'll try Kurt next. I want to inspire him to write his next novel about the Chinese move into refining.

[TheAntiDoomer]

AP- You crack me up AP, but if being a troll means being right, then ill call myself a troll.

Remember when "trolls" said Ace's forecast was bologne? Trolls were right.

Remember when "trolls" said the economy was improving and markets would be better than before? Trolls were right.

Remember when "trolls" said US oil production would increase? Trolls were right again.

oh and feel free to quote me, but ND Oil Production will hit 1 MBPD easily.

Also US Nat gas production will show no signs of slipping over the next 10 years.

So feel free to come back and see who the real trolls are, Us or Rune and Berman.

[AirlinePilot]

Ask yourself WHY the economy appears to be improving? Its not because of natural economic growth. If you cannot understand what QE means and why it will fail then I refuse to have a discussion about it here with ANYONE. I am finished banging my head against the wall explaining and pointing out FACTS which indicate how far out of whack our economy is due to government intervention or how MARKETS have decoupled from economic indicators. The evidence is EVERYWHERE but if you continue to remain locked into traditional econ and market analysis you are blinding yourself. It simply means you are not armed with the proper intellectual tools to understand what is coming or why the last 3-4 years are a giant ruse being perpetrated on YOU.

As to Bakken production I dont doubt it can make 1mbpd, I dont believe I ever said it would not. What I disagree with is the predictions of future GROWTH and how long it can go on given the type of resource that it is, and how the economic picture affects this. I understand that oil co's will continue to drill etc despite costs, but at some point, the bean counters put a stop to how much you go in the hole to do it. There is evidence we are reaching those limits already.

I really could give a rats ass about who is right, Im old enough to know it doesnt matter. Only internet trolls and Children seem to need this. I just want to know what is happening to the best of my ability. I have adjusted several of my own thoughts and conclusions about PO because as time goes on we are getting a better picture of what is happening. I am not, nor have I ever been invested in "doomersism".

[ROCKMAN]

TAD - Interesting that you would identify with the "troll" tag. IMHO you're a useful member of out little tribe. Not that you and I are ever going to swap spit or agree with each other much.

[TheAntiDoomer]

right AP the economic establishment has fallen for a gigantic ruse and you have it all figured out.

[AirlinePilot]

$this->bbcode_second_pass_quote('ROCKMAN', 'T')AD - Interesting that you would identify with the "troll" tag. IMHO you're a useful member of out little tribe. Not that you and I are ever going to swap spit or agree with each other much.

[ROCKMAN]

AP - Got that from Eastwood alla Gunny Highway alla "Heartbreak Ridge". Just been waiting for the right time to use it. Despite what some may think they haven't seen the really silly side of me yet. The POD is so dang depressing it's all I can do to laugh.

[SamInNebraska]

$this->bbcode_second_pass_quote('TheAntiDoomer', 'A')P- You crack me up AP, but if being a troll means being right, then ill call myself a troll.

Remember when "trolls" said Ace's forecast was bologne? Trolls were right.

Remember when "trolls" said the economy was improving and markets would be better than before? Trolls were right.

Remember when "trolls" said US oil production would increase? Trolls were right again.

oh and feel free to quote me, but ND Oil Production will hit 1 MBPD easily.

Also US Nat gas production will show no signs of slipping over the next 10 years.

So feel free to come back and see who the real trolls are, Us or Rune and Berman.

[ROCKMAN]

Good point. I suspect much of the motivation to broaden the concept was the inconsistencies popping up. As an example if we’re “running out of oil” then how could we be increasing US oil production? And if we’re increasing oil production and heading for “energy independence” why is oil still so expensive? And if the economy is in good shape why do we still have so many unemployed/underemployed folks?

It forced the conversation to get into more of the dynamics especially the feedback loops. The magical date of when PO occurred didn’t tend to answer any of the really important questions

[Oily Stuff]

When I first asked what the point was I was referring to what I believe essentially amounts to a propaganda program by the tight oil segment of the oil and gas industry to deceive the American public. I stand by that. Actual production data seldom corresponds to the hype, the constant bombardment of press releases and cable news about EUR's and URR's, of 4 MBOPD and 50 BBO of URR's, of suggestions that we will exceed Saudi production rates and become energy independent, about an energy "revolution"...there is a motive in that I find interesting and worthy of debate. Truthfully, I don't understand what the hell that segment of my industry is trying to accomplish. Yes, it is about money, of course; about keeping Wall Street happy, about stock values and stock options. Clearly, however, there are other ramifications to the tight oil hype...and it works! As Mr. Likvern suggests about the Bakken; the hype is a sales pitch. People buy into it, big time. Re-read some of these posts.

Those of us that grasp the significance of 75% decline rates in the first 3 years of production life I think understand the incredible costs, (money, water, steel, land use, etc.) that will be required to get to 2 MBOPD in the EF and Bakken, must less sustain that. Some simply cannot get their arms around that no matter how much factual data is available. I am with some of you; I am battle weary. And really, what difference does it make is also a good question. In 3-4 years we'll know we (us wise 'uns, LOL) were right not to rely on this tight oil resource to offset declining conventional production. The hype that has possibly lured the American public into yet another, deeper round of complacency about the energy future of our world, is temporary. In that I think I might have answered my own question. In the not so distant future the propaganda will not have mattered much. So, the "point" is mute.

Matt Simmons was a very strong, outspoken critic of the lack of transparency in reporting oil reserves, much of his criticism directed at the Middle East. It's ironic to me that essentially we now have the same problems here in our own country. The ASPO-USA is launching a membership campaign it refers to as "truth in energy." Check it out!

[Oily Stuff]

I should practice what I wish to preach about truth in energy so this mornings production report for the previous 24 hour period was 172.5 BOPD. That is from 53 wells, not one. One electric motor burned up over night, one well blew its stuffing box rubbers and made a mess, we are rigging up on the Drenner 20 to fish parted rods, two hands called in sick wanting to make this a 4 day holiday weekend instead of a 3, the backhoe has a flat again, got 2 loads picked up over night and had one rejection slip for high tank bottom. Oh, and there is a mama cow on the Brown lease walking around with a plastic thread protector stuck on her leg. My production jefe says everything else is bastante, so far, but its early yet.

That's as transparent as I can be.

[Pops]

$this->bbcode_second_pass_quote('', 'W')hen I first asked what the point was I was referring to what I believe essentially amounts to a propaganda program by the tight oil segment of the oil and gas industry to deceive the American public.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')hose of us that grasp the significance of 75% decline rates in the first 3 years of production life I think understand the incredible costs, (money, water, steel, land use, etc.) that will be required to get to 2 MBOPD in the EF and Bakken, must less sustain that. Some simply cannot get their arms around that no matter how much factual data is available.