[rockdoc123]

I had an interesting conversation with a friend of mine who runs a shale gas/liquids company the other day. He was one of the forerunners in this industry, not far behind CHK in understanding there was some money to be made here. What he pointed out was that a lot of the companies jumped into the very liquids rich windows in the shales across North America thinking that ..hey more oil, more money, without understanding deliverability. These are ultra tight formations and when you look at relative permeability curves gas over pure liquids is gold. His view on this is the sweet spot was gas with liquid yields around 20 - 60 bbls/MMcf. Sounds incredibly light fraction when you look at almost pure oil plays but his comment was the high gas content means overpressure which equates to deliviverability. Given the extreme low permeability in shales and the fact that gas has a much larger apparent permeability than pure liquids this makes good sense. Also with lots of gas your pressures are higher so IP will also be higher. To me this explains why there is still so much gas production given low price....it makes sense because the liquid yield is enough to drive the economics wildly positive.

[Lore]

$this->bbcode_second_pass_quote('Graeme', '[')b]Shell Says Shale Oil Reserves "Difficult to Find and Develop"

$this->bbcode_second_pass_quote('', 'H')ere's an interesting tidbit from today's Wall Street Journal:

Royal Dutch Shell PLC on Thursday posted a 60% drop in second-quarter profit, largely because the oil and natural-gas giant wrote down the value of its North American shale assets by more than $2 billion after tax, highlighting the difficulties that energy companies face in finding new oil they can pump at a profit.

....Shell cited disappointing drilling results at its North American shale assets, which it said turned out to contain less oil than it had hoped. Even excluding the charge on those assets, Shell's earnings fell well short of analysts' expectations as the company struggled with production declines and rising costs.

I wouldn't make too much of a single report like this, but it does fall in line with other evidence suggesting that although North America has a lot of shale oil, it probably doesn't have quite the gargantuan quantities that some people think. What's more, the shale oil we do have has turned out to be fairly expensive to get at. Plus shale oil deposits tend to deplete rapidly. Bottom line: don't get too caught up in the shale oil hype.

[ROCKMAN]

It's also good to remember that what any public oil company posts as their "profit" for a quarter or for the year has no bearing on the profitability (or lack thereof) of their drilling efforts today or at anytime in the past. It's just a quick snap shot of the balance between their income and spending less such huge adjustments as the Shell write down.

[Graeme]

$this->bbcode_second_pass_quote('ROCKMAN', 'I')t's also good to remember that what any public oil company posts as their "profit" for a quarter or for the year has no bearing on the profitability (or lack thereof) of their drilling efforts today or at anytime in the past. It's just a quick snap shot of the balance between their income and spending less such huge adjustments as the Shell write down.

[kublikhan]

$this->bbcode_second_pass_quote('dissident', 'W')hatever. When are we going to see a kerogen to syncrude conversion plant, even an experimental one?

[TheDude]

The Mahogany test plant operated by Shell extracted 1700 barrels. A Shell subsidary, JOSCO, has plans to get as high as 60 kb/d in Jordan. Petrobras operates a small scale plant or two as well.

[Subjectivist]

The EIA 2014 speech linked to here is for America from 2014 to 2040. Everything is coming up roses, more domestic oil and more domestic natural gas, economic growth, but no growth in greenhouse gas emissions.

2.4% annual economic growth as far as the eye can see. Lots of graphs showing happy days are here again.

http://youtu.be/_0PJ23zKmJA

[No-Oil]

Yeah but you can draw anything you like for the right side or future side of any graph. The left side is 20-20 Hind sight, as in History & much of that can be fudge to suit your needs

[Graeme]

Just How Off Is EIA’s Renewable Energy Outlook? How About 20+ Years?

$this->bbcode_second_pass_quote('', 'I')s the US Energy Information Administration’s (EIA) forecast for the future of renewable energy in America wrong? It’s an important question, considering policy decisions and private investments are often set by EIA guidance.

EIA’s “Annual Energy Outlook 2014” early release overview predicted renewables would supply only 16% of US electricity demand by 2040, but a new analysis of EIA’s own data finds the outlook is “almost certainly wrong.”

According to the Sun Day Campaign, renewables will make up a much larger percentage of America’s energy portfolio, much faster than EIA projects – roughly 20 years faster, in fact.

EIA data shows renewable energy sources (biomass, geothermal, hydropower, solar, and wind) grew from less than 9% of total US supply in 2004 to nearly 13% in 2013 on the strength of solar photovoltaic and wind energy’s rapid growth.

Is the US Energy Information Administration’s (EIA) forecast for the future of renewable energy in America wrong? It’s an important question, considering policy decisions and private investments are often set by EIA guidance.

EIA’s “Annual Energy Outlook 2014” early release overview predicted renewables would supply only 16% of US electricity demand by 2040, but a new analysis of EIA’s own data finds the outlook is “almost certainly wrong.”

According to the Sun Day Campaign, renewables will make up a much larger percentage of America’s energy portfolio, much faster than EIA projects – roughly 20 years faster, in fact.


EIA’s Renewable Energy Forecast “Simply Wrong”
EIA data shows renewable energy sources (biomass, geothermal, hydropower, solar, and wind) grew from less than 9% of total US supply in 2004 to nearly 13% in 2013 on the strength of solar photovoltaic and wind energy’s rapid growth.

[Subjectivist]

Shoot I didn't see the other thread when I made this one, Moderator please merge?

the-eia-thread-pt-2-merged-t61745-580.html

[Tanada]

Merged on request, above link points to the part 2 section in the archives.

[Graeme]

EIA Releases Complete Annual Energy Outlook 2014 Report

$this->bbcode_second_pass_quote('', 'T')he U.S. Energy Information Administration released the full content of the Annual Energy Outlook 2014 (AEO2014). The complete report includes a Legislation and Regulations section that discusses evolving policies incorporated in the projections, a Market Trends section that highlights projections for energy demand, supply, and prices, a comparison of the AEO2014 Reference case with projections from other organizations, and descriptions of the 29 alternative cases completed as part of AEO2014. The Reference, or base, case by itself was released on December 16.

The full-content version of AEO2014 also includes components that were released over the past several weeks, including several Issues in Focus articles, which provide in-depth discussions on topics of special significance.

[phaster]

May 21 (Reuters) - The U.S. Energy Information Administration (EIA) on Wednesday cut its estimate of recoverable oil in California's Monterey shale by 96 percent, casting doubt on what was once thought to be America's next major energy play.

http://www.reuters.com/article/2014/05/ ... 3N20140521

anyone here any inside info on this? In other words is there any extraction technology that would work given the formation here is difficult to "frack"

[dolanbaker]

monterey-shale-oil-reserves-cut-by-96-t69758.html

[ROCKMAN]

Plaster - As Dolan shows we've been beating on that subject for a while. Not so much a technology question per se IMHO...just refine the frac process a bit to be prospect specific. The bigger questions are the economics and what amount of recovery is reasonable. Despite the big cut I would still question the validity of the new number especially given they don't offer a time frame: all that new oil in the next 10 years? 25 years? 50 years? And when does this new boom begin? In reality it already started many years ago. I'll post those details shortly.

[ROCKMAN]

Phaster - Here you go: First, this is the Monterey FORMATION: a geologic unit that contains a number of conventional and unconventional reservoirs. In the last 34 years production from Monterey FORMATION peaked in 1982 at 170,000 bopd but almost all from the Stevens Sandstone conventional reservoir. The reservoir is a very good quality sandstone reservoir deposited in the deep water muds of the Monterey FORMATION. Currently production is down to 35,000 bopd. The actual shale play in the Monterey FORMATION has been in the McLure Shale. It’s the new play that has been frac’d in both vertical and horizontal wells. It peaked in 2001 around 160,000 bopd and is now doing about 35,000 bopd. There are other shale reservoirs in the Monterey FORMATION such as the Antelope and Reef Ridge Shales which are doing a combined 40,000 bopd. So besides being a ridiculous overestimate of recovery the "study" ignores the details of where the actually production is coming from today and, more important IMHO, is the fact that there’s a 15 year history of development in the shales of the Monterey FORMATION such as the McLure, Antelope and Reef Ridge Shales which have remained relatively flat since oil prices boomed. IOW those plays have been much less active in the last few years then when oil prices were less then half of what they were when their production rates peak. IMHO what the folks who actual drill in CA are doing (or not doing, actually) is much more pertinent then what a small consultant group on the other side of the continent has to say about the potential.

And that the key take away IMHO: the shales in the Monterey Formation have been horizontally drilled and frac'd for some time. Began when oil prices were much lower. So with a history of production and much higher oil prices for several years why are the talking about future drilling potential...it should be in full swing by now just like the Eagle Ford and Bakken. Makes you wonder: if the companies that already understand the shale reservoirs in the Monterey formation haven't used $100/bbl oil to justify getting one or two hundreds rigs drilling already perhaps we want to just ignore even the new much lower reserve number until they figure out how to make the play economic at the current high oil price. Just my opinion, of course. I'm not nearly as knowledgeable about the play as that "think tank" in the heart of the oil patch...Virginia. LOL.

[ROCKMAN]

And along those lines it's not that difficult to predict such outcomes...just follow the Benjamins:

SAN FRANCISCO, May 29 (Reuters) - The California state Senate on Thursday rejected for the second year in a row a bill that would have put a temporary stop to the controversial oil-producing practice of fracking in the state. The measure failed with a handful of Democrats joining Republicans in defeating the bill. "This is the second time a house of the California state legislature has soundly rejected a moratorium on a routine practice that's been deemed safe repeatedly," said Dave Quast, California director of Energy in Depth. He said fracking in California creates jobs, increases state revenue and lessens the state's dependence on oil imports. Fracking opponents said they were disappointed in the "shamelessly unprincipled" Democrats who sided with the oil industry by blocking the moratorium.

[phaster]

thanks all for poining me the the right direction!

[ROCKMAN]

Phaster - Too bad you didn't get to the party sooner. Folks had a fun time poking that foolish consulting group with a sharp stick. LOL

[JV153]

This EIA report shows the real situation with tight oil in the US. I won't comment otherwise.

http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf

Clearly stated in the footnotes is that tight oil production values in this report include condensate production.