[ROCKMAN]

Farmer - Doc is correct of course. But your tale is still great. LOL. The problem with the shales isn't the quality of the oil...it's the cost to extract it. So from a financial standpoint they are crap. LOL.

[efarmer]

I do stand corrected on the quality of the goods once the effort is expended to get them. And I thank my petroleum technology mates for the quantity and quality of their contributions here. I do however find the reserves reporting system to be a shaky piece of data. The cost of recovery should be tied to the amount of the reserve being reported, so that a layman such as myself could look at a graph and see what portion of the substance is in reserve at a price point that is attainable in present terms, and which portion is there awaiting dire financial circumstances or a technological breakthrough in order to be viable. rockdoc123 and Rockman are indeed the good stuff.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')he cost of recovery should be tied to the amount of the reserve being reported, so that a layman such as myself could look at a graph and see what portion of the substance is in reserve at a price point that is attainable in present terms, and which portion is there awaiting dire financial circumstances or a technological breakthrough in order to be viable.

[StarvingLion]

Shale is mostly gas. Here is all the gas you think you have:

While a gas well in a Qatari reservoir might produce 4 million m3/day, a shale gas well (without stimulation) might produce only 0.15 million m3/day.

Gas Hydrates dwarfs all other sources of natural gas combined. And gas hydrates will never be commercialized.

There is all your "riches"...what do you have...basically nothing. Thats why all the excuses about environmentalism in Europe is preventing shale development. The geologists are simply lying. There is none.

[efarmer]

Thanks for that tutorial rockdoc123, it is very much appreciated.
So on the 264 Billion barrels what is your basic opinion on how much
is in the 3 P brackets, how much contingent, how much potential, and
how much is left in that area that either is raw optimism or that activity
which makes Pinocchio's nose grow?

[rockdoc123]

S$this->bbcode_second_pass_quote('', 'h')ale is mostly gas. Here is all the gas you think you have:

While a gas well in a Qatari reservoir might produce 4 million m3/day, a shale gas well (without stimulation) might produce only 0.15 million m3/day.

Gas Hydrates dwarfs all other sources of natural gas combined. And gas hydrates will never be commercialized.

There is all your "riches"...what do you have...basically nothing. Thats why all the excuses about environmentalism in Europe is preventing shale development. The geologists are simply lying. There is none.

[AdamB]

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'T')he cost of recovery should be tied to the amount of the reserve being reported, so that a layman such as myself could look at a graph and see what portion of the substance is in reserve at a price point that is attainable in present terms, and which portion is there awaiting dire financial circumstances or a technological breakthrough in order to be viable.

[rockdoc123]

A$this->bbcode_second_pass_quote('', 'r')guably, the best explanation for the general concept still appears to be the EIA paper on the subject:

[StarvingLion]

The Shale Scam is easy to understand:

Drill horizontals so the gas comes out faster to fool investors into believing a huge economic reserve exists. Technology isn't increasing the amount of gas there per unit of area. The only thing the technology is doing is lowering EROEI probably below 1 under a marxist ideology of drilling faster and faster. No wonder they are not interested in anything resembling EROEI...they would have to admit the Shale "Revolution" is destroying the economy, not contributing...The Wind Scam piled on top of the Shale Scam is not interested in profitability either except of course for the party officials.

The Shale and Wind Scams are a revolution, alright...A Communist Revolution. But it fits right in with the Amazon-China Scam too. The producer makes no profits and neither does the retailer.

The Shale Fiasco will continue at whatever price of oil happens to be. And the "investors" will continue to be all the rest of unwilling suckers to be fleeced.

[AdamB]

$this->bbcode_second_pass_quote('rockdoc123', 'A')$this->bbcode_second_pass_quote('', 'r')guably, the best explanation for the general concept still appears to be the EIA paper on the subject:

[dissident]

$this->bbcode_second_pass_quote('radon1', '')$this->bbcode_second_pass_quote('ROCKMAN', 't')ita - "What exactly do these 264 billions means?" Easy answer: if you drill down thru THE ACTUAL DATA THEY PRESENT, that number includes all probability sets of reserves (such as the lowest probability) AND undiscovered reserves which actually don't even reach the value of RESOURCES. LOL.

[StarvingLion]

Russia is selling off its oil assets to China because it has no economic engine just like Scamerica. There is no such thing as an oil and gas company any more.

Apple Iphone sales are in 5th place in China.

Elton "Rocket Man" Musk dumped his Powerball (meant to say Powerwall) battery warranty. Sells Kamikaze Kars to stupid people.

The S&P 500 is an A.I. computer. Layoffs layoffs layoffs...Never ending...the corporations are liquidating themselves by destroying their customer base. The stock market is a total bizzarro world of machine logic > humans.

The Banks are trying to save themselves with utility-scale and vehicle batteries and solar cells. They know the power is going off the instant the liquid fuels shortages hit which is imminent. The very existence and acceptance of Fiat digi money is now in question.

The soft doomers like Greer, Tverberg, Patterson, Coyne, etc are collapse deniers. None of them believe this shit show is going to instantly collapse. They are completely out of their minds dreamers. They think their fake digi money is safe and that high prices will bring more oil supply. It won't be long before they start totally shitting their pants. They don't get this etp stuff, ...and neither do the oil cronies.

[AdamB]

$this->bbcode_second_pass_quote('StarvingLion', '
')The soft doomers like Greer, Tverberg, Patterson, Coyne, etc are collapse deniers. None of them believe this shit show is going to instantly collapse. They are completely out of their minds dreamers. They think their fake digi money is safe and that high prices will bring more oil supply. It won't be long before they start totally shitting their pants. They don't get this etp stuff, ...and neither do the oil cronies.

[ennui2]

$this->bbcode_second_pass_quote('pstarr', 'S')audi America will rise from the ashes of its Green River cauldron! Rah!

[rockdoc123]

$this->bbcode_second_pass_quote('', 'A')nd just because they are supposed to have a P90, doesn't mean they calculated them in a probabilistic fashion. Sure the software exists. Doesn't mean they use it. 
But why don't we see THOSE results than just this pro forma crap they pump out for dog and pony shows?

[ROCKMAN]

farmer - Ready for a dose of reality? LOL. I've done this off and on for 4 decades: generating "booked reserves". And as Doc will confirm those reserves are typically blessed by INDEPENDENT third party consulting companies. And thus should be rather accurate.

Not let me explain how the Rockman and other skilled reservoir geologist got third party confirmation of "proved reserves" that had very little chance of ever being produced. First, those 90% Ps reserves: they aren't 100%, are they? And why not: because we push bbls in there with little chance of existing. But do we just push an extra 10%? Maybe 15%...or 20%...or 25%? We push what we can get away with to the auditors. How much depends on how good we are, how not so good the auditors are and how desparate this companies are for our business. You do understand that the auditors are paid by the companies they are auditing, right?

What we do is ESTIMATE the reserves...we can't calculate exactly what they are. I've seen engineers/geologists with THE SAME COMPANY disagree significantly from each other. And not just on the numbed but on the presence of producible reserves in a well. I've probably been in at least 50 heated debates between staff members who aggressively argued whether there were any producible hydrocarbons in a zone let alone an estimate of volume. And a reminder: I'm just talking about the 90% probability. Think about the 10% Ps. So one geologist thinks it's 10 million bbls and the other thinks it's 40 million bbls. Each one is basicly making up his number: at a 10Ps you're essentially saying you really don't have a f*cking clue what that number is because you lack sufficient data...which is exactly why you give it a 10% Ps. Big deal, right: 1 vs 4 million bbls of 10%Ps reserves. But what if the 90%Ps reserve is 4 million bbls: thus Ps 90+10 would range between 5 and 8 million bbls. That's more then a 50% increase over the low side estimate. And trust me: we don't spend much time arguing internally about 10%Ps estimates because they are EXTREMELY rough guesses.

Not that's just the INTERNAL analysis. Now third party auditors: there's always a certain amount of fudging room. It's not entirely like negotiating when buying a new car. And sometimes a lot less ethical. LOL. Many years ago I presented a company's reserves to an auditor in Tulsa. That company also has an office at our home base in Houston. So why go to Tulsa? Because that office manager would be more "flexible" in their evaluation because his office was in greater need of that consulting fee.

So there you go: a wide range of results based on honest disagreements, salesmanship and ethics. But understand this only referes to audited reserves. Most of the numbers you're seeing are unaudited where no varifiable data is offered. Which is why there's such huge variations: individual fields/wells are not being analyzed: it's entire trends where gross estimates are made with little data to develop anything close to provable probability of success.

[Zarquon]

I've read somewhere (can't remember where) that the initial reserve estimate, when compared to the ultimate recovery of a field, added up at the end of its production life, is often 50% off or sometimes even more - but that the estimate can be wrong in either direction. Would you say that this is a reasonable rule of thumb for the uninitiated?

[rockdoc123]

Rockman I have worked for numerous companies from multi-national to small independent in size. I think your description might be true of some of the small private companies but I can tell you it would not fly in any of the companies I worked for. In most of those companies we created reserves sheets for wells and pools that highlighted what the calculated important variables in the reserve equation were...ie. thickness (measured from logs and interpolated with seismic), porosity (logs calibrated with core), area (seismic and well information), connate water saturation (log measurements) and formation volume factor (determined from PVT lab data). This data left very little room for argument and error around variables such as porosity height could always be calculated. That data is what the third party auditors saw along with the raw information which they would spot check. Before that information went to the external auditor it was signed off by the qualified internal reserve auditor. In many of the producing fields which are not subject to strong water drives material balance calculations are the gold standard, again error bars on the bottom hole static pressures can be used to narrow in the range. From your description it seems that the variability you speak of is not related to proven reserves but rather probable and possible. The SEC is generally only concerned about proven numbers and the need for companies to move probable to proven in a timely fashion. There is a recent crack down on PUDs.

$this->bbcode_second_pass_quote('', 'N')ot that's just the INTERNAL analysis. Now third party auditors: there's always a certain amount of fudging room. It's not entirely like negotiating when buying a new car. And sometimes a lot less ethical. LOL. Many years ago I presented a company's reserves to an auditor in Tulsa. That company also has an office at our home base in Houston. So why go to Tulsa? Because that office manager would be more "flexible" in their evaluation because his office was in greater need of that consulting fee.

[ROCKMAN]

Z - Very rarely in my 41+ years have I ever seen anyone's URR exceeded. In fact seldom ever reached. But don't get me wrong: that's exactly how it's suppose to go. Finding commercial reserves is always difficult and often meets with failure. So why do we drill in the first place? For the upside win. Every aspect of what we do is GAMBLING. It might be a very educated and scientific based but it will never be a sure thing.

Remember it's not the geologists/engineers that make drilling decisions. It's management/owners/investors. In 41+ years I've never seen a well drilled that didn't require convincing the person that writes the check to be sold on it. And typically based on the upside potential and not the most likely. The relationship between prospect generators and the decision makers is often semi-adversarial.

Hard to believe? Consider the $BILLIONS spent on buying lottery tickets when the odds of winning can be anywhere from 20 million to 250 million to one. In the oil biz the odds might appear better but the payoff is seldom hundreds of $millions for a $1 investment.

I've said this before: I never look at the economics presented on an exploration well? Why would I: every one, with not one exception ever, shows a very juicy profit potential. Just as every one of the dry holes I've seen drilled. I've always based my recommendations on the logic supporting a prospect...not the economic outcome proposed. I've drilled many profitable wells but seldom have they found 100% of the projected reserves.

Which is exactly why no investor without a very strong tech background in the biz should ever invest in a drilling prospect. NEVER. LOL