[Pops]

$this->bbcode_second_pass_quote('Tanada', 'G')iven the last 9 years of anemic to non existent economic growth that green zone seems hopelessly optimistic. When I first joined this looney bin back in 2005 I thought we were dead set for the yellow zone because I have seen humans historically speaking connive their way through one disaster after another. Unfortunately after 9 years of following the topic closely I have seen little if any movement towards adaptation for an orderly contraction.

[vtsnowedin]

Orderliness and humanity seldom go together very long. I think you can see some orderly adaption in the developed world. Smaller cars becoming more standard fare and people moving closer to work whenever the opportunity presents itself , Some wind farms and PV solar plants being put in place etc. Where the cliff is the sharpest is in the third world where population is still growing at unsupportable rates. The Arab spring and the current rise of ISIS or what ever their name is today are perhaps the first of that bubble bursting. When real year on year decline becomes a fact there will come a time when the developed world will not be able to produce and ship food to the third world and what is going on today will seem like a picnic by comparison.

[Pops]

True, I think it was presumed as well that there would be an overall realization of the fact of limits and so efforts at mitigation. That might happen eventually but at this point a general acceptance that there might ever be a peak is not very apparent. In fact there is a big effort to promote the opposite.

Add in the "we'll all boil in our skins" faction who thinks burning FFs should be curtailed right away and orderliness is quite the pipe dream, LOL

[Graeme]

Pops, I just read Staniford's post and saw the following conclusion at the end. Let's hope he's right.

$this->bbcode_second_pass_quote('', 'W')hat this suggests is that for the next few decades we will mostly be in the green zone (shocks aside). The US economy can probably get 3-4% less oil intensive each year by slowly replacing the vehicle stock with more efficient vehicles. As Econbrowser has been noting, this has begun. I don't doubt growth will be affected - there is very unlikely to be enough oil for the developing countries to grow their economies as they would like. The fact that BRIC countries will continue to grow faster than the US and Europe will place more pressure on the western economy's oil usage than a global analysis might suggest. However, this theory does imply that some economic growth will be possible for quite a long time.

[Pops]

We can hope G, I'd do my planning on the alternate outcome tho... that way even if you're wrong you still come out right.

Matt at CrudeOilPeak.info has a new post on this very subject - but instead of EIA data he's using IEA data:



Same conclusions though ... he's always worth a look.
http://crudeoilpeak.info/iea-report-imp ... -peak-2016

[JMB]

Looking at the IEA graph of the peak in 2016, it looks like we fall off the shale peak, and move to a ... plateau? As I suspected, we're on a plateau forever.

[ralfy]

One can also consider the cost of increasing production, the price that the global population is willing to pay for it, and the effect of high prices on various middle class conveniences that are part of global economic growth.

[Pops]

$this->bbcode_second_pass_quote('Pops', 'L')TO decline rate is important because it could compound the shock of our underlying decline. We (US) could experience a greater decline over the next 10 years than we have in the preceding 40 if shale declines as advertised. Like so:

[dcoyne78]

I wonder if the proved reserves for North Dakota reported by the EIA are accurate? At the end of 2012 they were at 3.7 Gb, typically 2P reserves would be a little higher than this maybe 5 Gb. Laherrere is estimating a North Dakota URR of 6.2 Gb.
From 1981 to 2012 about 1.7 Gb of oil was produced in North Dakota (EIA data) so that would be a minimum URR of 6.7 Gb if my 2P estimate is correct, this would also mean no reserves are added in the future in North Dakota, a questionable assumption at best.

I would love to hear from experts on EIA proved reserves and reasonable estimates of 2P reserves based on proved reserves.

[Plantagenet]

$this->bbcode_second_pass_quote(' ', '
')

Good god, WHEN are some of you going to learn?

Jean Laherrere a year ago, on the Bakken
$this->bbcode_second_pass_quote('', 'I')n the figure, Laherrere finds a time lag of just around one year. And, since we see a drop in the number of exploration rigs in 2012, it seems likely that production will start declining soon, perhaps during the present year.

[copious.abundance]

Oh yeah, can't forget this Laherre from 1998.

http://www.hubbertpeak.com/laherrere/ogj1998/



Oops!

[vtsnowedin]

$this->bbcode_second_pass_quote('Plantagenet', '[')

The Permian is just ramping up now. Its estimated to have about 70 BILLION bbls of oil. If it gets up to 3 million bbls day it would still take 70 years to work through.

[Pops]

$this->bbcode_second_pass_quote('copious.abundance', 'G')ood god, WHEN are some of you going to learn?

[dcoyne78]

On the Bakken there is often confusion about the USGS April 2013 assessment for 7.4 Gb of undiscovered technically recoverable resources (UTRR).

This is for North Dakota and Montana with about 80 % from North Dakota (5.8 Gb) and does not take any account of economics to determine the economically recoverable resources (ERR), which depends on many factors, especially the price of oil.

The proved reserves in North Dakota have increased from 0.5 Gb in 2007 to 3.7 Gb in 2012 and most of these added reserves are likely to be Bakken/Three Forks reserves (about 3.2 Gb), in addition about 0.5 Gb of oil was produced from the ND Bakken through 2012 so the minimum ND Bakken/Three Forks URR would be 3.7 Gb if no more Bakken reserves are added after 2012.

If oil prices were very high (so that economic constraints on oil production were low) then possibly 5.8 Gb might be added to Bakken reserves in North Dakota (ND) for a total URR of 9.5 Gb.

A final thought is the proved reserves are typically about 75% of proved plus probable reserves (2P reserves) so if the EIA reserve estimate is correct and this 75% estimate is also correct then ND Bakken/Three Forks 2P reserves would be about 4.3 Gb and the technically recoverable resources would be 10.6 Gb.

If we model Bakken output and use reasonable transport costs, discount rates, OPEX, well costs, and royalty and tax assumptions and the EIA's AEO 2014 reference scenario oil prices to find the ERR for a scenario that results in a TRR of 10.6 Gb, the ERR ends up at about 9 Gb with a peak of about 1250 kb/d in late 2017 to early 2018, decline is gradual until 2021.

Would be interested in comments on EIA proved reserve estimates.

Economic assumptions, Transport costs $12/b, OPEX $4/b, royalties and taxes 24.5% of wellhead revenue, real discount rate 7% (costs done in inflation adjusted $), well cost $9 million, NG revenue assumed to offset other costs, real oil price follows AEO reference case, average new well EUR30 is 364 kb in Dec 2013.
Chart attached (I hope)

[Plantagenet]

$this->bbcode_second_pass_quote('vtsnowedin', 'T')hey have been water flooding and CO2 injecting the Permian oil fields for decades and have already pumped out 15 BBO. Here is what one recent study comes up with for the Region.
$this->bbcode_second_pass_quote('', '.') The mean
USGS estimate is that an additional 2.68
BBO could be added to reserves in the
18 fields evaluated. There is little chance
that reserve additions could be more than
4.5 BBO or less than 1.05 BBO.

[Pops]

$this->bbcode_second_pass_quote('Plantagenet', 'I')ts highly unlikely that tight shale oil production will end in the next few years when the amount of tight shale oil in the Permian basin is so huge.

[ROCKMAN]

Plant - "Its highly unlikely that tight shale oil production will end in the next few years..." Unless oil prices crash. Which I think isn't likely to happen either. At current prices there are still a lot of holes left to poke. A finite number but still a fairly large one.

[Pops]

I thought I'd link to the relatively new drilling productivity report for those who haven't come across it yet. You can see a PDF here:
http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf

Or the viewer on slideshare here:
http://www.slideshare.net/MarcellusDN/e ... ugust-2014

here is the first slide, bakken:


The big picture is the second row graphs showing the increasing rate of depletion in leagacy wells (>1 month since start of production).

Kudos to the EIA on making the info readable finally, whether or not it is accurate is another discussion, LOL

[Plantagenet]

Of course it is possible that oil production in the Permian will fall to zero if the price of oil drops too low, or a giant meteor hits odessa, or zombies rise from their tombs and start eating fracking rigs, but all those things seem highly unlikely.