[AdamB]

$this->bbcode_second_pass_quote('EdwinSm', '')$this->bbcode_second_pass_quote('', 'T')he International Energy Agency (IEA) has predicted US oil output next year will see the steepest fall since 1992 thanks to low oil prices.

US oil production has increased to a record high in recent years as high prices made investment worthwhile.

Prices halved over the past year as demand fell in line with slower economic growth.

Meanwhile, Opec producers, particularly Saudi Arabia, have maintained high levels of production.
....
The IEA said the resulting lower oil prices would boost demand to a five-year high this year, a trend that the IEA said would help Opec countries.

Opec controls more than a third of the world's oil output. It typically cuts production when prices fall to attempt to push prices higher.

Its recent strategy has been to keep the taps turned on fully in an attempt to curb US output, which is uneconomical at lower prices.

The IEA said: "Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day, the biggest decline in 24 years."

Non-Opec supply contracted by one million barrels a day in 1992 from the previous year after the Soviet Union broke apart.

The IEA expects US oil production to drop by 0.4 million barrels a day in 2016. It grew by 1.7 million barrels a day in 2014.

[AdamB]

$this->bbcode_second_pass_quote('Revi', 'G')ood, that could offset the decline from conventional sources, or will it?

[coffeeguyzz]

Tanada

Excellent synopsis.
Couple of add ons ...
Newest wrinkle in completions (frac'ing) is implementation of micro proppants, ie., ceramics with size of 200 to 400 mesh.
According to CEO of Core Labs, this could double the amount of reservoir volume that is effectively propped open.
An additional consequence would be a flattening of the decline curve as these numerous, microscopic pathways very slowly allow liquids to work their way into the wellbore.
Gas re-injection is being successfully implemented by both EOG and Granite Oil to effect EOR.
Water injection operations by Crescent Point and, soon, by EOG, are expected to reintroduce formation pressure in an economic framework.

Biggest near term happening with 'unconventional' development is the spread to more conventional, reservoir-type targets in the Powder River Basin, the Clinton Sandstone, and the Codell in eastern Colorado.
These types of techniques are increasingly becoming within reach of smaller operators in "fringier" areas.
The success or failures in these efforts will have big consequences for future hydrocarbon production.

[ROCKMAN]

Coffee - Good post...Mucho thanks. Since I haven't been doing much frac'ng I don't try to keep up with the tweaking. I'll mention it to my engineer for when we get back to drilling our 17,000' Smackover play in Mississippi. Still waiting for owner's approval to get back to drilling on the 3d we shot. Amazing what can image in the Smackover now compared to 40 years ago when it was essentially invisible in many areas.

And that's what I keep trying to emphasize to the newbies. Frac'ng, horizontal drilling, 3d seismic: none of it is "new technology". But thanks to higher oil/NG prices so many new applications are made it allowed experiments to refine many aspects of those techs.

For instance when I first began drilling horizontal wells offshore 23 years ago geosteering was as much art as science. Now, with rotary steerable systems it's feast to take it for granted. And then I think back to 1976 when we got excited because we built an hole angle to 60° and missed the target by ONLY 1,200'. LOL. So you newbies get the joke: today, if everything works just right, I can hit a 40' target 3,000' away from the rig with a 90° hole.

And little of this improvements would have developed had not higher commodity prices provided the monetary incentive. Very little new tech development allowing us to recover more oil/NG resources will come along unless the necessary pricing motivation also develops.

[AdamB]

$this->bbcode_second_pass_quote('coffeeguyzz', 'T')anada

Excellent synopsis.
Couple of add ons ...
Newest wrinkle in completions (frac'ing) is implementation of micro proppants, ie., ceramics with size of 200 to 400 mesh.
According to CEO of Core Labs, this could double the amount of reservoir volume that is effectively propped open.
An additional consequence would be a flattening of the decline curve as these numerous, microscopic pathways very slowly allow liquids to work their way into the wellbore.

[coffeeguyzz]

Re: Herculean ...

I don't know if folks, in general, can grasp what the heck has occurred in this 'shale revolution' and where it may be headed.

Couple of data points ...
The folks at North Dakota's EERC have found that ethane is the best medium for EOR in the Bakken due to high formation temperature (129 C). Oil mobility was near 100% in lab. Steve Hawthorne has great presentations viewable on the net.

Few days ago, the fuzzy heads at Los Alamos released a paper on re-frac'ing shale wells. They have high optimism that using energized fluids, especially supercritical CO2, can prove very effective.

Regarding energized fluids, some people feel the future in frac'ing - especially high clay content formations - may ultimately be best accomplished with some form of supercritical field gas, possibly along the lines of that VRGE-type waterless frac'ing that never got off the ground.
Hardware for it is already built and in the field (LNGo from Dresser Rand/Siemans).

The best is yet to come.

[AdamB]

$this->bbcode_second_pass_quote('ROCKMAN', '
')For instance when I first began drilling horizontal wells offshore 23 years ago geosteering was as much art as science.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')hose were the days. The beginning of the modern shale era, it was like being around when rockets were young and seeing all the new and cool stuff going on.

[wildbourgman]

$this->bbcode_second_pass_quote('', '
')
$this->bbcode_second_pass_quote('', 'R')OCKMAN wrote:
For instance when I first began drilling horizontal wells offshore 23 years ago geosteering was as much art as science.

[Cog]

If we are due for a major decline in oil production,why is Saudi Arabia begging everyone to cut production? Seems like a self-solving problem.

[Revi]

Fracking and other techniques only work with higher oil prices. The oil price might not be going to be over $43 next year, and this year it didn't go over the $56 that was predicted by the Etp model. Does that pay for all the fancy stuff that is required to make oil that sells for under the price of WTI? Is it really working? Or is it just some kind of a boom created by easy credit and funny money pumped into the industry by the Fed in a desperate attempt to hold our financial system afloat? The reason the whole thing worked so well was that oil used to give over 100 to one EROEI. Now it's down to less that 20. We are making more of the stuff, but at some point it won't matter. Something will have to give, and no amount of financial shenanigans will cover it up. I think maybe we could just use less of the stuff, but that's not going to happen. We use as much oil just for driving around as China uses for everything, and they have 1.3 billion people. Who is more efficient? We borrow about a trillion a year extra just to hold the system up. How long can we do this?

[asg70]

$this->bbcode_second_pass_quote('Revi', '
')Is it really working?

[ROCKMAN]

Revi - So frac'ng only works at higher oil prices? Then how do you explain the rig count more then doubling? How do you explain a shortage of frac equipment in the Permian Basin? Is it because the shale players just can't wait to lose more money? LOL. There would be shale wells worth frac'ng at $20/bbl. But not as many as at the current price. And certainly not nearly as many at $90/bbl. Of course there would still be a lot of shale wells not worth drilling at $120/bbl. As 70 just pointed out above there is no one price that determines if shale wells (or any other well) are worth drilling. Anyone that post such nonsense is profoundly ignorant of the petroleum industry and their opinions should be avoided at all costs. LOL.

And for Dog's sake stop listening to those idiots posting that EROEI was once 100 or anything close to it. They probably took the energy needed to drill the discovery well and then used the field's total recovery to estimate those ridiculously high EROEI values. What they failed to do is to take into account the 50+ additional wells it took to recover that fields URR.

And while we're on the subject are you aware that the EROEI (whatever that number might be) of wells currently being drilled has increased significant from similarly drilled wells a few years ago? And the reason for the IMPROVEMENT is the lower oil price.

[AdamB]

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'T')hose were the days. The beginning of the modern shale era, it was like being around when rockets were young and seeing all the new and cool stuff going on.

[AdamB]

$this->bbcode_second_pass_quote('Revi', 'F')racking and other techniques only work with higher oil prices.

[AdamB]

$this->bbcode_second_pass_quote('GASMON', 'T')he oil & gas industry is using ever higher tech to "squeeze the sponge".

[Cog]

Revi wants doom because he is already living the doom dream.

[tita]

So now, we have some knowledge about the behaviour of LTO production. There was no sharp decline because the activity didn't stop... 60% of current US LTO production comes from new wells drilled in the last two years, after the big fall of prices and drilling activity. Each year, the average new well production rate is higher, but also the decline is sharper, so the total production from a well doesn't change much... It's just a faster recovery. Production becomes more sensitive to the drilling activity (less lag-time).

We now see a strong return of LTO activity, and february saw a turning point, production is clearly growing (not only in the Permian, but also in Eagle Ford and Bakken). What amaze me is how fast this is going. Producers don't have the money themselves for this, so this is due to heavy investment to pubcos. They now get refinanced, are able to service their old debt while contracting another one. Everything's fine, no?

Well, this only works when growth is there. Even at the lowest point of prices, activity maintained with investors lending money, because there was still money to invest. It seems that the profit is not part of the equation.