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Page added on September 20, 2014
Is the Shale Revolution a ‘Ponzi Scheme’ or the End of Peak Oil?
A lot of folks are fervently forecasting that shale gas and oil production is a bubble about to pop, possibly producing an economic collapse similar to the one in 2008. Earlier this week, the left-leaning Center for Research on Globalization in Montreal dismissed the shale revolution as a “Ponzi scheme” and “this decade’s version of the Dotcom bubble.” In a column last year for The Guardian, Nafeez Ahmed of the Institute for Policy Research and Development cited studies predicting that U.S. shale gas production will likely peak in 2015 and oil production in 2017. In a July 2013 report for the Club of Rome—the same folks who brought us 1972’s doom-mongering classic, The Limits to Growth—the University of Florence chemist Ugo Bardi declared that the “idea that a ‘gas revolution’ that will bring for us an age of abundance is rapidly fading” because “the data show that the gas bubble may be already bursting.” A month later, Richard Heinberg of the Post Carbon Institute said, “It turns out there are only a few ‘plays’ or geological formations in the US from which shale gas is being produced; in virtually all of them, except the Marcellus (in Pennsylvania and West Virginia), production rates are already either in plateau or decline.”
So was President Barack Obama wrong in 2012, when he claimed, “We have a supply of natural gas that can last America nearly 100 years”? Perhaps not.
The renaissance of oil and gas production in the United States has largely been the result of applying the technique of hydraulic fracturing (fracking), which releases vast quantities of hydrocarbons trapped in tight shale formations. The bubble theorists make much of the fact that production tends to drop more rapidly in fracked wells than in conventional ones, forcing the frackers to drill more holes just to keep up. They overlook the fact that drillers are working ever faster and cheaper and that newer wells tend to be more productive than earlier wells. How do we know this? Because the number of drill rigs has not increased in most shale fields, yet production continues to go up.
So what about Heinberg’s claim that “production rates are already either in plateau or decline”? He’s just wrong. The September drilling productivity report from the federal Energy Information Administration (EIA) notes that since 2013, that gas production is up in every one of the “plays” cited by Heinberg. Production in the Bakken region of North Dakota grew 8 percent; the Eagle Ford, Permian, and Haynesville regions in Texas increased 15, 7, and 97 percent, respectively; the Niobrara region in Wyoming and Colorado rose by 29 percent; and the Utica and Marcellus regions in Ohio, Pennsylvania, and West Virginia surged 142 and 47 percent. “We’ve been tracking this for 10 years, and recovery rates have gone up dramatically,” says EIA forecaster Philip Budzik.
Meanwhile, the EIA’s Annual Energy Outlook 2014 shows the potential U.S. oil and gas resource bases are increasing, not decreasing. Bubble forecasters insist those estimates are way off-base. They point to the EIA’s recent big flub when it came to estimating how much petroleum might be pumped from the Monterey shale formations in California. The agency initially prognosticated that as much as 13.7 billion barrels of oil might be produced, but it cut its estimate by 96 percent, to 600 million barrels, once it recognized the extraction challenges posed by the complicated geology of southern California. Whoops!
That’s bad, but in the scope of estimates it’s a blip, not a fatal error.
Back in 2000, the EIA Outlook report estimated that the U.S.’s technically recoverable petroleum resources were 124 billion barrels; it put natural gas resources at 1,111 trillion cubic feet (tcf). (“Technically recoverable” basically means that the resource can be extracted using current technology if the price is right.) Proved oil and natural gas reserves amounted to 22 billion barrels and 176 tcf, respectively. (“Proved” generally means the amount of resources that can be recovered from the deposit with a reasonable level of certainty.) When it came to shale and other tight rock formations, the 2000 report estimated that only 2 billion barrels of oil and 50 tcf of natural gas were technically recoverable. “Basically, in 2000 no one was even thinking that you could produce this stuff,” says Budzik.
How time and technological progress make fools of all prognosticators! The 2014 EIA Outlook estimates that the U.S.’s technically recoverable oil resources are 238 billion barrels and natural gas resources are 2,266 tcf. Proved U.S. petroleum reserves have increased from their 2009 nadir of 19 billion barrels to over 30 billion barrels, and proved natural gas reserves are at 334 tcf now. In other words, estimates of technically recoverable U.S. resources of both oil and gas have nearly doubled in the past 15 years. Proved oil reserves have increased 50 percent, while proved gas reserves have also nearly doubled. Technically recoverable resources from shale and other tight rocks is now estimated to be 59 billion barrels of crude and 903 tcf of gas—a 30-fold and 18-fold increase, respectively, over the 2000 assessments.
Take the figure of 2,266 tcf of natural gas. Last year, Americans burned through 26 tcf of natural gas. At that rate, the estimated resource would last 87 years. Not the 100 years claimed by the president, but close enough for government work.
While EIA reserve and resource estimates have been trending steeply upward over the past decade and half, the agency tries to take into account uncertainties by sketching out scenarios to 2040 in which domestic oil and gas supplies are either 50 percent higher or lower than its reference case. Production of shale gas and oil is the key difference in the scenarios. In the high supply case, technically recoverable crude and gas plus proved reserves amount to 431 billion barrels and 3,683 tcf. Consequently, domestic oil production rises to 13 million barrels per day before 2035 and imports decline to near zero. Tight oil production peaks at 8.5 million barrels per day in 2035 compared to the reference case peak of 4.8 million barrels in 2021. Cumulative tight oil production reaches 75 billion barrels, up from 44 billion in the reference case.
In the low supply scenario, crude oil totals 210 barrels and gas totals 1,814 tcf; oil production reaches 9.1 million barrels per day in 2017 and then slowly falls to 6.6 million barrels per day in 2040. Tight oil production peaks in 2016 at 4.3 million barrels per day with a cumulative production of 34 billion barrels. Interestingly, the difference in price in the high and low supply scenarios is only $20 per barrel—$125 versus $145 (using 2012 dollars) in 2040.
The shale bubble proponents essentially are betting on the EIA low production scenario. They will be proven right if shale oil production does peak in the next year or two. We shall soon see. “The history of the industry is that we are always running out,” says Budzik. “So long as we have a well functioning economic system that allows the price mechanism to adjust and encourages innovation we will see the resource base grow rather than diminish.” Rising prices at the beginning of the 21st century did, in fact, promote more exploration and faster technological progress, resulting in the shale revolution the U.S. is currently enjoying. If this dynamic is not unduly hampered, it’s a good bet that the prophets of bubble-bursting doom are wrong yet again.
74 Comments on "Is the Shale Revolution a ‘Ponzi Scheme’ or the End of Peak Oil?"
Beery on Sat, 20th Sep 2014 6:55 am
I like that the author puts his cards on the table in the first sentence, with emotive words like “fervently” – saves me reading yet another nutty cornucopian rant.
Davy on Sat, 20th Sep 2014 8:05 am
Yea, Beery, right wing cornucopian if you go to the Reason site. Obviously they have not taken the step beyond spouting off all the achievements. That step is the serious challenge of maintaining and increasing those achievements. Isn’t that the definition and requirements of our growth based system? Instead here at PO our resident experts are showing through science, math, and economic results that price, economics, and production quality/quality are in a compression. This compression is a fundamental issues with affordability of the end user and the producer in a symbiotic relationship of supply and demand. Both sides of the coin matter. One without the other does not represent the coin. This is not a coin toss with heads or tails winning. We have to have a healthy end user and producer. Today we have neither and we have the supporting economy in an obvious bubble. The dangerous part of the bubble is it consist of multiple bubbles including a human population bubble. We also have the global system under serious stress with geopolitical issues, limits of growth, and diminishing returns. If this were not enough the black swans circle and the predicaments multiply, converge, and increase in size.
shortonoil on Sat, 20th Sep 2014 8:48 am
“The history of the industry is that we are always running out,” says Budzik.
The history of humanity is that we are always running out of common sense.
The author says: “Because the number of drilling rigs has not increased in most shale fields, yet production continues to go up. ” From this they base their entire argument that everything is wine and roses in the shale industry.
The number of rigs does seem to have peaked, but the reason for this is that the drillers are now drilling up to eight laterals from one pad. That is, they are drilling “more” wells to get the same increase in production, although URR is probably going down. The cost of production is not going down, it is going up. Of course, a little common sense tells us that this has to be the case; the cost of producing oil has been going up for the last hundred and fifty years. The Second Law mandates that it will continue to do so.
A little common sense also tells us that there has to be a price level where the consumer can no longer afford the cost of oil. At that point the most expensive to produce oil will be phased out first. We are now very close to that maximum price level, and shale is one of the most expensive to produce oils on the planet.
Within a couple of years we will hit that price point. The shale industry is not trying to suck the last remaining petroleum in the world out of the ground, they are trying to suck the last $ out of the few remaining naive investors.
http://www.thehillsgroup.org/
Plantagenet on Sat, 20th Sep 2014 8:55 am
Obama is not a right wing cornucopian. When he proclaimed that fracking had unlocked enough natural gas to supply the US for 100 years it was left wing cornucopianism.
Davy on Sat, 20th Sep 2014 9:17 am
Planter, Obama is a stooge of TPTB/1%ers and a sell out to the left wing platform. You can see this with his favorite past time today being golf. You give him too much credit and the continuous “O” references dilutes some of your other excellent comments. Yet, being fair, I do the same with other issues. Just pointing out constructive criticism. I welcome a retort from you on mine in fairness.
Nony on Sat, 20th Sep 2014 9:36 am
Rock will be along to say how it’s all a price response and how nothing has improved since his horizontals in the Chalk. Don’t buy price being the ONLY factor, really, even for oil. Just read an industry veteran say there has been a lot of evolution even since 2004).
But for natural gas, the argument is just exploded. You have a 50% increase in overall production while price is stuck at $4. The Marcellus truly is mighty. And the wells are getting BETTER, not running out of sweet spot and getting worse.
Davy on Sat, 20th Sep 2014 9:43 am
Noo, some of what you say is true but it is still a high cost source that is running directly into the economic compression of the end user and producer. This compression is in the economy in general not just the oil segment. The same can be said of the agricultural and processed food segment. It is, as short says, the second law in action.
peakyeast on Sat, 20th Sep 2014 9:57 am
Obama was right there is enough for a 100 years.. It all depends on the level of consumption that is implied by the statement…
And since the world population is “supposed” to be growing to 10-12 billion that is going to be much less per capita.
Brent on Sat, 20th Sep 2014 9:58 am
Yeah I just love how all these cornucopian authors say basically technology blah blah blah and then just squeak in at the very end a few lines about the price level that oil has to be to actually use this technology. Consumers are decreasing in their break even price level every day because everything is going up.
Nony on Sat, 20th Sep 2014 10:03 am
http://edge.media-server.com/m/p/o829rngd/lan/en
Cool webinar for CLR’s investor day. Listen to the audio, not just read the PPT. Lot of content in there, especially for the Bakken. Intriguing comments on expected recovery in the Bakken (60 billion barrels, not 8 of the USGS). Challenging, but still…look how much further the Bakken has come versus all the previous estimates.
Brent on Sat, 20th Sep 2014 10:21 am
And then their is also this http://www.dentonrc.com/local-news/local-news-headlines/20140919-pressure-building.ece
Kenz300 on Sat, 20th Sep 2014 10:25 am
There are limits to fossil fuels………
Wind and solar…….. not so much…..
Seems like smart money is now betting on alternative energy for the future.
The Inevitability of Solar
http://www.renewableenergyworld.com/rea/news/article/2014/09/the-inevitability-of-solar
Brent on Sat, 20th Sep 2014 10:37 am
And finally http://www.youtube.com/watch?v=oLWGHRWzCaY
steve on Sat, 20th Sep 2014 11:10 am
I can see why people like stories like these, hell I want to believe it! But I just know better and I have known better since 1990…Sometimes you have to go with your gut, My gut tells me the SHTF will happen real soon and it is going to be hard on all of us. A lot of people won’t be able to handle it and commit suicide for most people physical work is tantamount to torture. But I rather enjoy it especially when it is a team. My gut also tells me the deep state is trying to start a WW and if that happens we might all die anyway…and all those provisions will be for the next race that discovers earth a million years from now.
Davy on Sat, 20th Sep 2014 11:26 am
Noo, I know short would not agree with this but TPTB will keep the shale boom going until the bitter end. It is a matter of national security and a geopolitical lever. It is an American source of pride. This is part of the systematic dysfunction and irrationality of descent I speak about so often. We know here its expense will doom it as a net energy provider sooner than later. I expect tax waivers to be the next step to keep it economical. The fed is trying to normalize rates so expect further capex compression. There is allot for you Cornucopians to pat yourselves on the back about but there are limits to hydrocarbon production economics. The US shale effort is nearing the dynamics of supply/ demand affordability from both consumer and producer. As short says common sense tells us the second law dictates cost will go up In resource extraction over time.
rockman on Sat, 20th Sep 2014 11:26 am
Folks have covered the important aspects of this post so all I’ll add is it’s initial blunder common for folks who don’t know sh*t about the long history of oil/NG development.
“A lot of folks are fervently forecasting that shale gas and oil production is a bubble about to pop”. They toss that out as some form of proof that folks making such claims don’ts understand the current dynamics. Of course the Eagle Ford, Bakken and Marcellus are bubbles. Why should any one expect them to be different then every other oil/NG play ever developed on the planet? Every oil/NG play has been a bubble: discovery followed by the boom followed by the bust. Every producing trend has followed this model. In the late 1930’s thru the late 40’s the Middle Frio oil trend in Texas boomed after it was discovered. Individual fields with 100 to 150 million bbls of recoverable oil each. Ultimately many billions of bbls discovered. And then in the 50’s? Nothing…a huge bust in the trend. Why? Low oil prices? Lack of technology? Insufficient capex? None of the above. Very simply all the large fields were discovered. A number of smaller fields in the following decade but on the order of 50,000 to 100,000 bbls of oil each.
And as None graciously points out one doesn’t not have to go back half a century for an example. The Austin Chalk carbonate shale play of the 90’s was the hottest oil play on the planet at the time. A much bigger boom then any of the current shale plays. Horizontal drilling allowed the AC development to cover an area several times larger the current Eagle Ford shale play. And did so at time when oil was selling for one third of current prices. And then…BAM! The late 90’s came and the AC bubble burst. Not from low oil prices. Not because of a lack of capex or technology. Even with improved tech and much higher oil prices little AC drilling is currently happening. The bust came as it has for all oil/NG trends: very few locations left to drill.
Even if prices stay high, technology continues to be refined and capex is still available the EFS, Bakken and Marcellus “bubbles” will pop. It just a simple matter of geography: all trends cover a specific areal extent. Once that are drilled up those plays wither quickly.
Nothing new to look at here, folks. Move along. LOL.
Plantagenet on Sat, 20th Sep 2014 11:57 am
roc makes another excellent post. However, his analysis ends at the most interesting part—-WHEN will the shale oil bubble pop? Some here think in 1-3 years. I think it will last longer because the math says it will last longer—-Bakken has 7 BILLION barrels and the Permian basin maybe 70 BILLION barrels of shale oil. Do the math—at current production rates it will take decades to produce that much oil.
marmico on Sat, 20th Sep 2014 11:58 am
North Dakota state.gov has revised the state (mostly Bakken) oil production estimate to 2 mb/d peaking in 2020.
Perk Earl on Sat, 20th Sep 2014 12:07 pm
“Consumers are decreasing in their break even price level every day because everything is going up.”
Reflective of declining EROEI.
Plantagenet on Sat, 20th Sep 2014 12:19 pm
Check out Marmico’s link to projected ND oil production in his post just above. At 2 million bbl/day the Bakken will be producing at peak levels until 2025, and will still be producing 1 million bbls day in 2070.
There is just an FFing lot of oil in those shales. They won’t stop the global peak, but they are a godsend allowing us more time to transition to a non-carbon economy.
shortonoil on Sat, 20th Sep 2014 12:42 pm
“Reflective of declining EROEI.”
That’s right Perk, and here is the graph that proves it. From 1960 to 2009, and the ERoEI is going down every year.
http://www.thehillsgroup.org/depletion2_016.htm
http://www.thehillsgroup.org/
shortonoil on Sat, 20th Sep 2014 12:48 pm
Who do they think they are kidding. Look at the black line – no drilling. These are wells with a 70% first year decline rate. Shut down the drilling, and production will go down like a dead whale. This is ND propaganda at its best!
Nony on Sat, 20th Sep 2014 1:03 pm
Shut down coal drilling and it goes down immediately. Shut down seeding a field and you are done after the next harvest. Stop investing capital in a factory and it will shutdown eventually, too.
Why do you all expect oil recovery to only be an annuity? Look at oil sands. That truly is “manufacturing”.
The only thing that matters is investment and return. Who cares about the decline? Even conventional fields have decline.
You peakers are emotional rather than analytical. You were skeptical about the Bakken, Eagle Ford, and Marcellus and they have VASTLY overperformed all your skepticism. It’s nothing for me to go back and read the forums or TOD threads and see all the people saying we would never get to a million bpd oil. You’re just pissed off that you made predictions and got your ass kicked. Well…instead of being childish and not facing the truth. Man the eff up. FACE FACTS.
Rock’s 100/bbl drum-banging has way more legs than all your shale skepticism. That’s not a dotcom. I wish I had bought CLR at the IPO!!!
Davy on Sat, 20th Sep 2014 1:17 pm
That’s right Noo investment and return. There are serious issues with shale ROI. If you can’t admit that you are practicing blind faith.
Nony on Sat, 20th Sep 2014 1:24 pm
Those “issues with ROI” sure have not stopped capital from coming into the plays. Have not stopped the incredible appreciation in the value of leases.
ghung on Sat, 20th Sep 2014 1:27 pm
Plant: ” Do the math—at current production rates it will take decades to produce that much oil.”
Still looking at trees and not the forest, eh? Continued drilling at these levels depends on a lot. Looking at the last 40 years of GDP/Debt/energy production and consumption, there seems to be a de-coupling going on the last few years.
This “energy revolution” doesn’t seem to be giving much of an impetus to the rest of the economy to grow, the same economy that energy production requires to be maintained. Certainly isn’t helping to pay down the debt much. Where are the profits, where are they going, and why aren’t we seeing more of an economic rebound from this newfound oil/gas wealth?
Transfusions of expensive oil into an economy that’s hemorrhaging almost everywhere else is a pretty questionable predictor for the long-term sustainability of anything.
Northwest Resident on Sat, 20th Sep 2014 1:45 pm
“Those “issues with ROI” sure have not stopped capital from coming into the plays.
That’s right. The Fed just keeps pumping out the digital fuuny money by the trillions and plowing it into shale oil extraction while keeping the cost of astronomical debt as low as possible with ZIRP. Nony, if all you’re looking at are rising stock prices and shale lease rates then you really are missing the big picture — not seeing the peak oil dynamic that could bite us all in the ass at literally any moment.
rockman on Sat, 20th Sep 2014 2:29 pm
“Do the math—at current production rates it will take decades to produce that much oil.” As I’ve challenged before those X billions of bbl’s of oil to be produced is a meaningless number: show me a map with each one of those wells that has to be drilled to produce that volume of oil. No map…no reserves. I’ve yet to see smile reply to that challenge. That’s how it has been and will always be in the real oil patch: numbers without a map supporting them is BS. If there isn’t enough geographic extent to drill the required number of wells then X billions of bbls won’t be produced. No one can predict the future production of any trend by plotting a graph. The math really is simple: the sum of all reasonably viable locations X reasonably recovery for each well = ultimate recovery from a trend. And you have to have a VALID map to come up with the number of locations.
As I pointed out all previous hot trends came to an end when the extent of the play was reached. What is the eastern limit of the EFS trend? There is one, ya know. Is there enough area between the current play being drilled to produce those billions of theoretical oil before the limit of the trend is reached? Show me that map with each of those future locations. Then we can debate the numbers.
I don’t think many folks understand how the oil patch views such projections made without the supporting mapping with absolute ridicule. No one is drilling any well in any of the trends being develop without mapped geology supporting the idea. And even with a map the wells aren’t guaranteed. Like a well drilled to produce some of those theoretical bbls of Bakken oil. One map was very wrong: not only was the Bakken not productive…the formation wasn’t even present in that area of “mapped Bakken production potential”. And what about the 185 EFS wells Shell Oil drilled in far S Texas that had an average INITIAL PRODUCTION RATE OF 79 BOPD. That was the INITIAL PRODUCTION RATE before the high decline rate kicked in. Shell also drilled on maps drawn by some geologists. Obviously some maps that weren’t worth a sh*t. LOL. Shell lost such confidence in all the THÉORETICAL bbls of oil in the shales they complexly withdrew from all those US plays. I wonder how many of those billion of bbls of oil were expected to be produced by those Shell wells?
In this instance it isn’t “show me the money” or show me the number of bbls. Show me the map with each future well spotted on it.
Nony on Sat, 20th Sep 2014 2:41 pm
Rock, see pages 19 and 20 of the CLR investor day presentation. 32 cores and 215 well logs. A model of OIP and calculations of extraction for the field based on density testing. You may kvetch about the specifics, but there is no doubt that they did a conscientious study including maps.
P.s. The peakers predictions fot the Bakken have gotten spanked HARD for overconservatism. And all the hoi polloi cheered on Rune and Piccolo too. Heck, USGS had to revise their estimates of Bakken TRR twice and are still likely under.
A million barrels per day is not chicken shit.
HIruit Nguyse on Sat, 20th Sep 2014 3:23 pm
Lately I scroll all the way down and see where the article came from, then skim the comments to decide whether to read it, skim over it, or just click over it.
Usually a post from Shortonoil is all that is required.
HN
MSN Fanboy on Sat, 20th Sep 2014 3:57 pm
“Lately I scroll all the way down and see where the article came from, then skim the comments to decide whether to read it, skim over it, or just click over it.
Usually a post from Shortonoil is all that is required.
HN”
Ditto, don’t forget the Rockman LOL
But Nony does make a point.
shortonoil on Sat, 20th Sep 2014 4:07 pm
42% of the production that comes from the Bakken is produced by wells that are less than 1 year old. 57% of the production comes from wells less than 2 years old. Now, if anyone can’t see the problem with that, they really should find some other subject to comment on on. Oil is just not their forte.
Davy on Sat, 20th Sep 2014 4:08 pm
Noo and planter do add important points. The Cornies have allot to crow about but this is a game of nothing more than depletion. Sooner or later there will be nothing to crow about. PO’ers have failed miserably with some earlier predictions but so have the Cornucopians. At this point in the game Rock and short with their economic and geological analysis have a solid argument. This argument is proving out. It is uphill for the Cornies here on out. The boom times are over for geologic and economic reasons. Does this mean tomorrow no but it will be sooner then once thought.
Nony on Sat, 20th Sep 2014 4:26 pm
Bakken predictions at TOD:
1. Piccolo: 150-225,000 bpd overall
2. Rune: 600-700,000 bpd in ND
Actual as of now:
overall: ~1,300,000
ND-only: 1,040,000
Nony on Sat, 20th Sep 2014 4:27 pm
Go Bakken go!
Go Eagle Ford!
Go mighty Marcellus
Go Utica!
Go Permian, Scoop, Niobrara…
Nony on Sat, 20th Sep 2014 4:36 pm
Short: Just keep drilling. After all, rig productivity is up.
shortonoil on Sat, 20th Sep 2014 6:28 pm
@ Davey
We have already used about 75% of the petroleum that will ever be extracted. The last 25% will be very expensive, and only marginally beneficial. The world should now be in a fanatic race to bring about the transition in technology, and lifestyle that will necessary to continue any kind of coherent civilization into the future. We are not. Lies, deception, and blatant stupidity has able to blind us to the risk that we face.
Many of the trolls here are paid hired assassins whose only purpose is to continue the subversion of the truth for the benefit of a few twisted entities. Those entities are willing to place their short term benefit above the well being of the entire human race. A few of those paid minions of deceit I know personally. They view their occupations as mere instances of personal convenience, or necessity.
Stupidity can be marginally tolerated, malevolent stupidity is almost intolerable.
Davy on Sat, 20th Sep 2014 7:22 pm
I am drinkin your message short. Your analysis is solid. I even sent it to my 1%er bro. My comment above was just trying to be nice to the cornies. Normally I give them hell.
Nony on Sat, 20th Sep 2014 7:33 pm
I like it better when you are nice. Was really cool for a while. I noticed and all.
Aire on Sat, 20th Sep 2014 8:51 pm
Nony and Plant can’t see the effects because they don’t count the environmental damage or wealth gap. The gap in economic wealth gap is only gonna get bigger. Sure the 1st world will be able to steal a bunch of resources still and supply their armies. But like others here have noticed and what the whole 99%er notice is that the world is getting worse – more profits to the rich and a deepening of the rest of us to 3rd world status
DMyers on Sat, 20th Sep 2014 9:01 pm
Reason is not a “right wing” anything. Reason is a Libertarian publication. Libertarians have advocated for drug legalization for many years, as well as open immigration, diminished military, and withdrawal from foreign entanglements. Right wing?
For the most part, I find this to be another rehash of the whole Saudi America fantasy. Reason Mag. tends toward the “anything is possible” position when it comes to resource issues. History is replete with examples of people achieving the “impossible”. The limits to growth, from this angle, are failures of human potential, rather than cold, hard facts. In a way, a difficult position to argue with, in the face of so many examples of impossibilities overcome.
But there are historical examples of actual depletion, which was never, and never could be, overcome. As Rockman points out, from personal knowledge, oil plays reach an actual physical limit. My favorite depletion story is the Indiana gas boom at the turn of the twentieth century. Gas so plentiful in the northeast quadrant, that plans were made to move the state capital into the northeast quadrant, and gas was given, yes given, free, to manufacturers willing to adopt Indiana. Twenty years later, the gas bonanza was depleted.
Resource depletion occurs, despite human protest, as an historical and scientific fact. To argue that depletion is merely an obstacle on the path to new abundance, but fail to recognize that depletion has occurred, in specific demonstrable instances, in straight up terminal fashion, is to ignore highly relevant information only because it is inconvenient to one’s principles.
Let us all agree, to begin with, on the recognition that we live on a finite Earth. As to where the limits lie, that is the point of contention. When we hit the wall of those actual limits, and that would be like “splat”, we will know. That is what it will take for us to find out.
Nony on Sat, 20th Sep 2014 9:02 pm
fracking does not affect the groundwater. Sure there is some development, but big deal. WE are talking rural regions. And the liberals winging about it live in Manhattan.
As far as wealth gap…that is commie B.S. There are great jobs in petroleum and for Americans and not just people who went to Brown. Cripes. Commie wimpy crap.
Brent on Sat, 20th Sep 2014 9:26 pm
No wealth gap seriously what are you smoking?
Welch on Sun, 21st Sep 2014 12:32 am
I’m with you Brent. Are those living below the poverty line working at the nation’s largest employer (that would be Walmart) making $7.80/hour are also lazy? You can debate the cause but the wealth gap is certainly increasing.
MKohnen on Sun, 21st Sep 2014 1:08 am
I think Nony et al (cornucopians) are irrelevant. There is no prudence in their message, only recklessness. If the Nonys of this world have children or grandchildren, and actually give a fuck about them, they’d realize the damage their message does to those people. But Nony crows about how everything is all right here-and-now, as if that is somehow “planning” for the future. I’d be willing to forgive the cornucopians if it turns out they are all 12 years old – otherwise they are subjecting our children to a horrendous future all for the sake of the “party on” mentality.
Makati1 on Sun, 21st Sep 2014 2:03 am
Boring weekend? 45+ posts about a dead issue. The propaganda article bubble is to sucker in the last few dollars from the ‘wannabees’. Nothing more.
When the only way a company can grow is to merge with another company, the game is about over. That is the current “growth” in the hydrocarbon industry.
Real growth ended before 1970, when the US went to the Charmin dollar. All ‘growth’ since is printed wealth, not real. Any one still in the Market Casino should get out and put the cash into real wealth that will be useful in the collapse. Skills, shelter, land, etc.
marmico on Sun, 21st Sep 2014 5:54 am
The Austin Chalk carbonate shale play of the 90’s was the hottest oil play on the planet at the time. A much bigger boom then any of the current shale plays… And then…BAM! The late 90’s came and the AC bubble burst
There will be more well completions in 2014 in either the Bakken/Three Forks or Eagle Ford plays than there were well completions in the AC play in the 6 year period from 1990-1995* when it went BAM.
Stick to facts not hyperbole.
*Source: Society of Petroleum Engineers, Paper 145117, 2011, Figure 4
marmico on Sun, 21st Sep 2014 6:10 am
At 2 million bbl/day the Bakken will be producing at peak levels until 2025, and will still be producing 1 million bbls day in 2070.
The peak level and duration is not that much different than the Goldman Sachs chart from September, 2013. The difference is in the post-peak decline rate.
Davy on Sun, 21st Sep 2014 7:03 am
The cornucopians here on this board are always crowing about the US oil plays like “This is it!” These oil sources are not large enough to have a lasting impact on the world’s supply trends. I will admit they have made a difference in the last few years but going fwd the depletion pressure is overwhelming globally with very few bright spots. The US is the largest net importer so these world numbers matter. Are these US oil sources all the cornies here have to crow about? If that is the case they are truly delusional.
Nony on Sun, 21st Sep 2014 7:41 am
The US LTO
1. Has prevented oil from going to 150. Which it would have. Even worse in Campbell-Deffeyes type scenarios of a 2005 peak followed by 2% per year declines.
2. HAve routinely showed up peaker skepticism. The issue here is not just Internet points…but that peakers are not intellectualy honest when they get something wrong. And that they don’t make unbiased estimates but “wishcast”.
3. Has shown that “drill baby drill” actually had meaningful results. The fastest addition of 3 million bpd new production in the history of man.
4. Has NOT solved all our problems: we’re NOT at 30/bbl. But (4) is still consistent with 1-3.