[smiley]

I think this presentation gives a nice overview of the challenges associated with non-conventional oil.

http://www.iea.org/Textbase/work/2004/opec/knapp.pdf

Update on Competitiveness of Update on Competitiveness of Non-Conventional oil
David Knapp
Energy Intelligence Group

Second Joint IEA/OPEC Workshop on Oil Investment Prospects

Paris, April 28, 2004 Paris, April 28, 2004

[TonyPrep]

Jeroen van der Veer, CEO of Royal Dutch Shell has said that, in his opinion, we are past peak on conventional oil. The story is here. He says, "My view is that “easy” oil has probably passed its peak. But there are other reserves that are still a long way from their peak. In unconventional oil and gas – resources that are harder to tap – there are plenty of reserves."

But how likely is it that unconventional oil can both make up for declines and increase the total oil production to match anticipated demand growth?

Tony

[MonteQuest]

Absolutely zero. And even if they could, they couldn't do it as cheaply as conventional oil.

Peak oil is about the end of cheap, readily available energy, not energy sources.

Prime example, the oil sands.

1mbpd production that is projected to triple in 10 years.

So? 3mbpd in a world that will consume perhaps 120 mbpd in 10 years.

Won't keep up with demand or decline.

Insignificant.

[TonyPrep]

$this->bbcode_second_pass_quote('MonteQuest', 'A')bsolutely zero. And even if they could, they couldn't do it as cheaply as conventional oil.

Peak oil is about the end of cheap, readily available energy, not energy sources.

Prime example, the oil sands.

1mbpd production that is projected to triple in 10 years.

So? 3mbpd in a world that will consume perhaps 120 mbpd in 10 years.

Won't keep up with demand or decline.

Insignificant.

[MonteQuest]

$this->bbcode_second_pass_quote('TonyPrep', ' ')So the CEO of Royal Dutch Shell is effectively admitting that (in his opinion) we have passed peak. It should be an interesting year.

[Jack]

$this->bbcode_second_pass_quote('MonteQuest', 'A')nd all of this must be done while sequestering the new CO2 and reducing CO2 emissions from exisiting sources by 60-70% to avoid runaway global warming, and still growing the economy to service the debt, provide new jobs, housing and food for an expected 3 billion increase in the population by 2050.

[Raxozanne]

$this->bbcode_second_pass_quote('MonteQuest', '.').. and reducing CO2 emissions from exisiting sources by 60-70% to avoid runaway global warming,...

[Doly]

$this->bbcode_second_pass_quote('MonteQuest', '
')And all of this must be done while sequestering the new CO2 and reducing CO2 emissions from exisiting sources by 60-70% to avoid runaway global warming, and still growing the economy to service the debt, provide new jobs, housing and food for an expected 3 billion increase in the population by 2050.

[Mihoda]

I've been doing a lot of diggin on peak oil recently and there's one subject I haven't found much on: are rates of non-conventional oil production limited?

Natural pressure falloff occurs in conventional wells leading to a decline in oil production. When taken as a sum over all the wells overall production is Gaussian (the Hubbert curve in an idealized, non-constrained system).

However, extracting oil from the Athabasca tar sands rather resembles mining. There is no need to worry about dipping pressure in the well, because, among other things, there is no well.

Has anyone done any studies as to what, if anything would limit the production rate of the Athabasca tar sands? Or of Venezuela's Orinoco oil belt?
(environmental reasons aside)

[Tanada]

An interesting refresher on what we know compared to what we thought we knew.

[ROCKMAN]

P - And what do we know now?

[AdamB]

$this->bbcode_second_pass_quote('ROCKMAN', 'P') - And what do we know now?

[GHung]

$this->bbcode_second_pass_quote('AdamB', '')$this->bbcode_second_pass_quote('ROCKMAN', 'P') - And what do we know now?

[onlooker]

We know that EROEI has been steadily falling especially with the focus on non conventional. We know that the Shale/fracking has been relying on high lending to produce. Other than that, I am will not comment as I know we have experts who are more qualified to opine.

[Tanada]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Tanada', 'A')n interesting refresher on what we know compared to what we thought we knew.

[ROCKMAN]

Looker - "We know that EROEI has been steadily falling especially with the focus on non conventional." No, we don't actually. The EROEI of what gets drilled is very dependent upon the price of oil as well as other factors. As explained before when oil prices shot upwards about 10 years ago it took less bbls of oil (which generated higher revenue due to high prices) to generate an acceptable rate of return. Thus EROEI decreased significantly...however it was calculated. But when oil prices fell a couple not years ago a well had to produce more bbls to generate the same revenue to produce that same acceptable ROR. Which is why the rig count fell: there were much fewer of the remaining prospects that would produce that sufficient number of bbls. Even the current rig count indicates a lack of larger recovers to justify drilling as many prospects as we did during the boom.

Simply put the EROEI (however it!s calculated) of wells drilled today had to increase significantly compared to those drilled a few years ago. And if oil prices decrease further EROEI will continue to increase. Conversely if oil prices increase to former levels the EROEI will decrease as it did 10 years ago.

Now let's look at a completely unrealistic model: oil prices stay at the current level for the next 50 years. Also assume the amount of energy used to drill remains the same. IOW no great new technology to increase drilling efficiency. So the cost (in both Btu's and $'s) remain the same and companies hold to the same required ROR the EROEI will hold constant. But given the decreasing number of sufficiently large prospects remaining fewer and fewer wells will be drilled. In theory there might be only one prospect that's economical to drill in 2067. And its EROEI will be the same as those drilled today.

Back to the same point repeatedly made: the industry has never, does not today and will never make drilling decisions based on any calculation using EROEI. Those decisions are based on economic analysis.

[ROCKMAN]

And once more: the is no thing as "unconventional oil". There is oil produced from reservoirs using unconventional completion methods. Or if you like we can call those unconventional reservoirs. But as far as the molecular structure of the oil I'm producing condensate from a convention reservoir using a conventional completion method identical from a frac'd horizontal Eagle Ford Shale well. My "convention oil", if you insist, is being produced from a deep NG/condensate well in S Louisiana from a high permeability reservoir that did not require frac'ng. There have been BILLIONS OF BBLS of similar oil produced in this trend.

Oil is oil regardless of its API gravety, if it's from a frac'd well or not, from a vertical or horizontal well. I can give you a sample of 44 API oil and no lab analysis will tell if it came from the EFS or my Louisiana well.

This confusion has been going on too long.

[AdamB]

$this->bbcode_second_pass_quote('GHung', '')$this->bbcode_second_pass_quote('AdamB', '')$this->bbcode_second_pass_quote('ROCKMAN', 'P') - And what do we know now?

[AdamB]

$this->bbcode_second_pass_quote('onlooker', 'W')e know that EROEI has been steadily falling especially with the focus on non conventional.