[Plantagenet]

$this->bbcode_second_pass_quote('Pops', ' ')the decline is over 5 times that amount and production has barely doubled. What does that tell you about the longevity of all those new wells?

[shallow sand]

Ok. I'm mixing up terms again. Legacy refers to well and not field. And legacy is a well older than 30 days. I assume the explanation for the increased legacy decline is all of the high decline horizontals which are considered legacy wells in month 2. Will be interesting to see how long till they hit a wall with the drilling frenzy. Looks to me they are about to hammer the short term crude price. That may cause a slowdown, but usually the big companies keep on going at a loss, like they appear to be doing in the shale gas areas. I'm not quite a legacy producer yet, at least in my book. Acquired first production in 1997, what a wonderful time in the oil patch. However, dad has been in a lot longer so really started paying attention long before that. Definitely have what anyone would consider legacy wells and equipment. Think long term, however, going to become more and more difficult to fight the decline, which is ALWAYS present. Going to be interesting.

[vtsnowedin]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('vtsnowedin', 'O')ne think that continues to disturb me is the flaring of gas in North Dakota. How much would it cost per unit to capture and liquify that gas to allow it to be marketed? Wasting that gas is akin to cutting the last tree on Easter Island.

[Synapsid]

vtsnowedin,

It's a common problem, I think. Nigeria is another big flarer, and not the only one.

With oil you can start to move the stuff out with trucks if you have to, to get it to a terminal where you can load it onto railcars, or to a pipeline, but with NG you have to have access to that pipeline. To ask that the drilling wait until the infrastructure for gathering and transporting NG is in place is to postpone oil production and the cash flow that comes with it; it looks like North Dakota found itself not so inclined if the thought came up at all.

I seem to remember Rocky Mountain Guy, at TOD, once saying that in Alberta infrastructure for collecting and transporting NG does indeed have to be there before drilling can begin, but that may just be faulty memory on my part. I agree with you that that is the way it ought to be, in this best of all possible worlds.

[vtsnowedin]

$this->bbcode_second_pass_quote('Synapsid', 'v')tsnowedin,

It's a common problem, I think. Nigeria is another big flarer, and not the only one.

I agree with you that that is the way it ought to be, in this best of all possible worlds.

[Synapsid]

vtsnowedin,

Cashflow is king in the oilpatch, as we are reminded semi-daily. If developing oil had to wait for NG infrastructure how would ROCKMAN keep buying that single-malt Scotch?

Not going to happen, I'm afraid.

[KingM]

$this->bbcode_second_pass_quote('Plantagenet', '
')tu esta un ... oilman? si senor? ...con mucho dinero?

[ROCKMAN]

Alberta/Canadian NG flaring: from http://www.theglobeandmail.com/report-o ... e14088342/

"Canada’s oil and gas industry is burning off an increasing amount of natural gas into the atmosphere, a controversial practice known as flaring, driven by a drop in natural gas prices and an increase in unconventional and remote drilling. After years of making progress to reduce flaring, the oil and gas industry acknowledges it has been backsliding and needs to capture more of the gas for both economic and environmental reasons.

The rise in flaring in Alberta comes despite industry efforts, through a group known as the Clean Air Strategic Alliance (CASA), to cut back on flaring as well as venting, which is the direct release of natural gas into the atmosphere. CASA, which includes industry, environmental groups, government and other stakeholders, came up with a flaring management framework and recommendations to address the impact of flaring and venting. Chris Severson-Baker, managing director of the Pembina Institute, which was part of the CASA process, says new bitumen production, as well as hydraulic fracturing techniques known as “fracking,” are to blame for the rise in flaring. He points to a cluster of flaring and venting to the north and west of Calgary, where dozens of wells have sprung up in recent years, alongside public concerns."

FYI: every mineral owner, be it governmental or privately owned, has the option to ban all flaring. Companies only do what they are allowed to do. The Canadian provinces each determine if NG is flared/vented.

[vtsnowedin]

They should pay the full market price for every cubic foot flared off and wasted. Make that the rule of law and they will turn off the spigots in a heartbeat.

[Graeme]

$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('Graeme', 'A')ren't we in the green zone for global oil production?

[Pops]

G, without US production - from LTO - world production would be flat from mid 0'5- 1st qtr '14. I haven't proofed this chart but it is through the 1st quarter, sorted by change 05-14; biggest gainers on top and losers on bottom. The lime color at 20k-30k contains all the other countries whose production stayed relatively the same <1k bopd change over that time frame.



Some of those countries at the bottom of the pile are politically constrained and not really peaked: Syria, Iran, Libya and Iraq and somalia (hidden in 'other') are all artificially constrained.

As for the world production declining at 4-5% per year, the journalist (and maybe Dr. Miller) doesn't specify what exactly is declining. If they had said old, legacy well production is declining then yeah, thats within what I always read. We hear all the time about how fast fracked tight shale wells decline; 40-50-60+ percent the first year. Old conventional wells decline too, just much slower (not all the time but most times I think).

But overall production isn't declining 4.5% because there are still new wells left to drill. New little fields or pockets or old fields getting reworked or infilled or whatever, even some big fields waaay deep offshore or up north or wherever. Peak oil doesn't mean there will never be another well drilled or discovery made, just that they won't be enough to keep production increasing. Right now they must be putting 3-4mmbopd of new production online every year to make up for the decline in old well pooping out.

That of course is how it has always been, old wells always decline and are replaced with new ones - its just getting harder to find new locations to drill.

The obvious point to be made is production isn't increasing either, at least not by historic norms. Drilling as fast as they can, they haven't increased production much, again by the historic standard of 2.5% year average. So what comes next is either a surge in production; shale fracking everywhere maybe, or peace could breakout in the muslim world - that would put 3mmbd online quickly, or ... I can't really think of anything else

On the flip side, fracking could peak in the US and not spread, the old giants could really take a tumble. I think 15% of the wells produce 70 of the oil (but don't quote that) and they are oldies but goodies. If a bunch were to flood out over a span of a few years ...

[Pops]

A little off topic but here is another chart, this one from last year showing regions:



Notice especially Eurasia (Russia) that has doubled production since 200 but has plateaued these last few years, they offset the decline in the north sea (Europe) which, though never ever mentioned ahs combined with the growth of China to be the root cause of the production struggle since 2002-3.

The N sea is declining faster than the average because it is all offshore in nasty water and those wells are designed to pump the stuff out fast since it costs so much to operate out there.

[Plantagenet]

$this->bbcode_second_pass_quote('Pops', ' ')fracking could peak in the US and not spread ...

[Graeme]

Pops, Thanks. It's certainly worth while putting US LTO production in a global context. Looking further down in same article, I saw this:

$this->bbcode_second_pass_quote('', 'D')r. Miller is co-editor of a special edition of the prestigious journal, Philosophical Transactions of the Royal Society A, published this month on the future of oil supply. In an introductory paper co-authored with Dr. Steve R. Sorrel, co-director of the Sussex Energy Group at the University of Sussex in Brighton, they argue that among oil industry experts "there is a growing consensus that the era of cheap oil has passed and that we are entering a new and very different phase." They endorse the conservative conclusions of an extensive earlier study by the government-funded UK Energy Research Centre (UKERC):

"... a sustained decline in global conventional production appears probable before 2030 and there is significant risk of this beginning before 2020... on current evidence the inclusion of tight oil [shale oil] resources appears unlikely to significantly affect this conclusion, partly because the resource base appears relatively modest."

In fact, increasing dependence on shale could worsen decline rates in the long run:

"Greater reliance upon tight oil resources produced using hydraulic fracturing will exacerbate any rising trend in global average decline rates, since these wells have no plateau and decline extremely fast - for example, by 90% or more in the first 5 years."

[vtsnowedin]

As the supply curve turns down the demand curve will have to follow it very closely. The question is what price will it take to accomplish that and what effect that will bring to the world economy. The idea that demand will continue to grow at a steady rate regardless of price or supply is quite short sighted.

[ROCKMAN]

vt - "Make that the rule of law and they will turn off the spigots in a heartbeat." I suspect you understand that those who make the "rule of law" don't want the spigots turned off. Doesn't matter if it's N Dakota or Nigeria.

[vtsnowedin]

$this->bbcode_second_pass_quote('ROCKMAN', 'v')t - "Make that the rule of law and they will turn off the spigots in a heartbeat." I suspect you understand that those who make the "rule of law" don't want the spigots turned off. Doesn't matter if it's N Dakota or Nigeria.

[vtsnowedin]

$this->bbcode_second_pass_quote('vtsnowedin', '')$this->bbcode_second_pass_quote('ROCKMAN', 'v')t - "Make that the rule of law and they will turn off the spigots in a heartbeat." I suspect you understand that those who make the "rule of law" don't want the spigots turned off. Doesn't matter if it's N Dakota or Nigeria.

[JV153]

$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('Plantagenet', 'W')ith an estimated 70 BILLION bbls of oil

[Tanada]

$this->bbcode_second_pass_quote('Pops', 'H')ats off to Ron Patterson at POB for continuing good work, this is from a post by David Archibald

$this->bbcode_second_pass_quote('', 'T')he seven years of production of tight oil in the US has produced enough data to
enable estimation of the amount of oil that will be recovered from these systems and
the timing of peak production. Based on data to May 2014, the four main tight oil
basins will produce a total of 7.7 billion barrels with a peak production rate of 3.9
million barrels per day in mid-2015. Following that peak, production is predicted to
decline as rapidly as it rose. That in turn is expected to cause a re-assessment of the
ability to produce sufficient transport fuels based on current policies.

The Bakken in North Dakota

Jean Laherrere has plotted monthly oil production from the Bakken Fm in North
Dakota using Hubbert linearization:




...