[SeaGypsy]

Nice story shaved, thanks for the link.

http://www.inspirationpeak.com/shortsto ... erman.html

[ROCKMAN]

Keith - Just the opposite. The oil patch, as far as employment goes, is a dying animal. One of the last career paths I would advisor someone starting college would be in a related field. Just last week I advised a young salesman he should consider the long term prospect of moving towards another industry. His company’s future will be directly proportional to the number of wells drilled and not the price of oil/NG. Even with the current push into the shale plays and the Bakken the rig count is flat to sliding a bit. IMHO it will be much lower in 10 years or so. Thanks to high prices we are tapping the last significant accumulation of oil in the US. IMHO there is no “next commercially viable” oil play regardless of price after the shales and Deep Water are exhausted.

[Ibon]

$this->bbcode_second_pass_quote('ROCKMAN', '.') IMHO there is no “next commercially viable” oil play regardless of price after the shales and Deep Water are exhausted.

[Duende]

Oh, and I forgot to mention also -

Strict economic arguments about what happens on the backslope are rendered irrelevant by the potency of political intervention and subsidization of special interests.

[ROCKMAN]

Ibon – I can only toss out a qualitative guess. But as long as oil prices stay up the Eagle Ford and Bakken will be drilled. But only for a while. The hottest play on the planet back in the 90’s was the Austin Chalk in Texas being horizontally drilled and frac’d. You don’t hear much about it today because it’s been fairly well drilled up with few viable locations left even though oil prices are higher now than when it boomed. And you notice I didn’t mention plays other than the EFS and Bakken. Last time I saw the stat more than 80% of the oil producing from the unconventionals was from these two formations. For quite a while now companies have been testing many dozens of other fractured shale formations and they haven’t hit the next big play yet. Lots of chatter about the Monterey Shale but no one has made a splash yet out on the west coast.

Operators are drilling longer laterals and doing a lot more frac stages in both the EFS and Bakken which, IMHO, is being driven by the poorer productivity of the remaining leases. I’ve heard that some of the frac jobs in the EFS are now costing more than what it takes to drill the well. As far as “exhaustion” one could say we’ve already fairly well exhausted the number of available leases in both plays. Much of the acreage is already tied up and is just waiting for someone to drill a well. I’ll just lean on the expectations of some of the most optimistic proponents of these plays and guess we’ll be well on the down slope of rig count in both plays in 5 or 7 years. That’s one of the problems those projecting much high rates from both plays: it requires a rapid drilling of the remaining wells which reduces the number of future wells very quickly. And when you add that to the proven high decline rate of fractured reservoirs those high production rates will quickly vanish compared to conventional reservoirs.

There may be some reservoir comparable in quality to the EFS and Bakken left to be found. But many hundreds of wells have already been poked in those dozens of other shale plays. I could toss out a list of 15 fractured shale formations and I doubt many hear would recognize many of them. That’s the point I was making about a low expectation of finding new booming oil plays in the US: we’ve been beating on every potential one for a number of years now and no additional “booms”…yet.

EROEI of 1:2 or 1:3? Won’t ever happen due to economics. The energy consumed in drilling and frac’ng a shale well is a relatively small component of the total expense. Typically around 10%. If a well produces just 3X the energy needed to drill it would definitely be a money loser. Just my WAG but once the EROEI gets below 5 or 6 the poor economics will kill the project. Remember the oil patch does give a hoot about EROEI. It’s all about rate of return. A well producing less than a 5 EROEI or so will likely have a negative ROR. And no one is going to intentionally drill such a well.

Think about the numbers: if I spend $1 million on the energy used to drill a well that costs $8 million to drill/complete and that well produces $6 million in energy I’ve got an EROEI of 6 but lost $2 million on my investment. From the beginning folks have been way over estimating how low EROEI can get when it comes to drilling. EROEI has never been nor ever will be a direct determining factor of what does or doesn’t get drilled. Just follow the money, baby! LOL

[Pops]

$this->bbcode_second_pass_quote('', 'I')n all likelihood what's already occurring will continue to occur: those with the means will still enjoy cruises and commuting to work while numerous others will get priced out of the game

[Plantagenet]

$this->bbcode_second_pass_quote('Pops', ' ')trying to noodle out why prior predictions failed and the mechanics of how society can afford to pay more for harder oil.

[Ibon]

$this->bbcode_second_pass_quote('Pops', 'e')rgo we must increase utility and use less in order to pay more.
.

[Ibon]

$this->bbcode_second_pass_quote('Duende', 'O')h, and I forgot to mention also -

Strict economic arguments about what happens on the backslope are rendered irrelevant by the potency of political intervention and subsidization of special interests.

[Keith_McClary]

$this->bbcode_second_pass_quote('ROCKMAN', 'K')eith - Just the opposite. The oil patch, as far as employment goes, is a dying animal.

[Loki]

$this->bbcode_second_pass_quote('Ibon', 'F')uel stamps anyone?

[Keith_McClary]

$this->bbcode_second_pass_quote('Shaved Monkey', 'W')hy would you need to be rich ?
Im going to be like the Mexican fisherman

http://www.inspirationpeak.com/shortsto ... erman.html

[ROCKMAN]

Keith - That's the deceptive part of energy pricing. One factor for an increase in pricing is the lack of new production coming on line. A lack of production increase due to a lack of drilling opportunities. A lack of drilling opportunities equates to a lower manpower requirement for both the prospect generation and drilling aspects. There used to be 5 of us with my company. Now there are three. The two no longer here were experts in deep NG exploration. But we couldn't find enough of those prospects at today's prices to justify keeping them on. They were good guys. It wasn't personal...just business. We don't treat our won any better than the public. If the remaining 3 of us don't find enough viable oil prospects to drill we'll be gone also.

We've been thru a number of busts during my career. Interestingly the salaries don't really get slashed very hard. If you have a job you still make a good living. The problem is that you can't find a job. And the sad truth is that geologists aren't good for much else. LOL.

[Shaved Monkey]

$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('Shaved Monkey', 'W')hy would you need to be rich ?
Im going to be like the Mexican fisherman

http://www.inspirationpeak.com/shortsto ... erman.html

[Dybbuk]

$this->bbcode_second_pass_quote('Loki', 'G')etting poor slowly isn't as compelling as that angry Max fellow, but it seems the most likely scenario. The price of oil will just be one of many insults to our previous expectations.

[basil_hayden]

$this->bbcode_second_pass_quote('Pops', ' ') we must .... use less in order to pay more.

[Cloud9]

Ladies and gentlemen look around and trust your lying eyes. Every strip mall and shopping center in the country is dotted with empty store fronts. Every neighborhood is blighted with distressed homes and vacant houses. Just like in the 1920’s, our sky lines are graced with grand structures that were built on dashed dreams and failed expectations that will never be utilized to capacity. Every year we drive less.

The bubble of borrowing has now moved to student loans enslaving a whole generation to a debt that must be paid down with part time jobs.

Half the population is either directly or indirectly subsidized by some kind of federal program.

Congress is more despised than cockroaches and lawyers.

Listen to what you are hearing. Eighty four billion a month is being conjured out of thin air just to keep the government’s doors open. There has been a corresponding flight into precious metals and hard assets. American citizens now buy enough guns and ammunition to outfit a World War II army every nine days. Home Land Security has grown to a standing army of almost four hundred thousand if you list the private contractors in the overall count. HLS has ordered enough ammunition to fight a twenty year war and has taken delivery of 2700 armored vehicles designed to fight urban wars.

A third of the population expects a revolution. The collapse is taking place all around us.

[Pops]

$this->bbcode_second_pass_quote('Cloud9', 'L')adies and gentlemen look around and trust your lying eyes.

[Ibon]

$this->bbcode_second_pass_quote('Cloud9', 'L')adies and gentlemen look around and trust your lying eyes. Every strip mall and shopping center in the country is dotted with empty store fronts. Every neighborhood is blighted with distressed homes and vacant houses.

[Cloud9]

I don't know if its rugged individualism or a frantic attempt to retain some control and some options here at the end of empire.