The technique itself is nothing new. Oil crews across the world have been schooled on its simple principles for generations: Identify aging, low-output wells and hit them with a blast of sand and water to bolster the flow of crude. The idea originated somewhere in the plains of the American Midwest, back in the 1950s.
But as today’s engineers start applying the procedure to the horizontal wells that went up during the fracking boom that swept across U.S. shale fields over the past decade, something more powerful, more financially rewarding is happening.
The short life span of these wells, long thought to be perhaps the single biggest weakness of the shale industry, is being stretched out. Early evidence of the effects of restimulation suggests that the fields could actually contain enough reserves to last about 50 years, according to a calculation based on Wood Mackenzie Ltd and ITG Investment Research data.
If the word fracking has carved out a spot in the lexicon of Americans as the nation advances toward energy independence, then refracking, as roughnecks have begun calling it, could be next. And for an industry that has been hammered by the 50 percent drop in crude prices over the past year, the finding on the technique’s potential — at a fraction of the cost of the initial well — provides a much-needed sense of hope.
The risks abound — from inadvertently siphoning oil from an adjacent well to ruining a whole reservoir — and the sample size so far isn’t big enough to be conclusive, but oil giants like Marathon Oil Corp. and ConocoPhillips aren’t waiting to incorporate refracking into their shale operations.
The Octofrac
Mike Vincent, a well-completion engineer who teaches the technique to industry workers, said he’s been overwhelmed by the sudden interest in the class. He even had to abandon plans he had been making to spend a week fly-fishing in the Rocky Mountains over the summer. “I’m booked every week teaching refrack classes out to November,” said Vincent, who runs a Denver-based firm called Insight Consulting. “It’s amazing how much passion there is.”
Years of working on traditional wells have shown that they can be restimulated multiple times, Vincent said. In the industry’s lingo, a well that has been blasted five times is a “Cinco de Fraco.” Eight times gets you an “Octofrac.” When done right, the procedure not only boosts the flow of crude, but can also increase the estimate of reserves held in the well. Vincent said it’s common to see oil recovery climb 60 percent or more.
“I’ve seen a well get 10 fracs through the same perfs, and it appears that we’re adding reserves every time,” he said.
100,000 Wells
A study by Bloomberg Intelligence of about 80 wells that were originally tapped in North Dakota’s Bakken formation in 2008 or 2009 and then refracked again years later shows a clear pickup in output. The wells on average produced more than 30 percent more oil in the month after the refrack than they did after the original completion, according to analysts William Foiles and Peter Pulikkan.
While these kinds of increases are important to traditional drillers, they’re crucial in the shale industry, where output can start falling within days of a well being tapped. Companies such as EOG Resources Inc., the largest shale oil producer, have long acknowledged that they generally are recovering just a small fraction of the oil and gas in place in the biggest and most prolific reservoirs.
“We’ve seen big changes in completion technology, and it looks like that’s only going to continue,” said R.T. Dukes, an upstream analyst at Wood Mackenzie in Houston. He estimates that there are about 100,000 horizontal wells that could be restimulated. “At that point, it becomes significant.”
Many Risks
So far, a few hundred refracks of shale wells have been done in the U.S., a figure that Vincent predicts will grow to at least 3,000 over the next two years. And IHS Inc. forecasts they will come to make up as much as 11 percent of all hydraulic fracturing activity in the country by 2020.
The process to refrack a well isn’t that different than the original frac. Water, sand and other chemicals are pushed down the well, beyond the previously tapped areas, to create new fissures or to re-open clefts in the rocks that have closed.
It’s easy for things to go wrong. If poorly executed, the maneuver could take oil from the producing zones of other wells, or worse yet, ruin a reservoir. Then there’s the concern that some industry analysts have that a refrack only accelerates the flow without increasing the actual total output over the life of the well. EOG is among the drillers that remain reluctant to start using the procedure.
Refracking is still in its “early days,” said Robin Mann, global leader of the resource evaluation and advisory group in Deloitte LLP’s Houston office. “There’s always a risk you’re going to damage the reservoir or create interference between wells.”
‘Compelling Prize’
But in an industry that is desperately trying to cut expenses after oil fell below $60 a barrel from over $100 a year ago, the technique’s low cost has great appeal. Because the first step in the fracking process is already done — the drilling of the wellbore — the outlay is just a fraction of the $8 million or so it costs to tap a new well.
West Texas Intermediate for August delivery added 69 cents to $53.22 a barrel in electronic trading on the New York Mercantile Exchange at 9:16 a.m. London time.
Sanchez Energy Corp., a Houston-based oil producer, expects to spend between $1 million to $1.5 million per well when it starts carrying out its first horizontal-well refracks later this year. The extra oil and gas it will pull out from each one as a result, meanwhile, could have a value, when measured in today’s dollars, of as much as $2.5 million, according to Chris Heinson, the company’s senior vice president and chief operating officer.
“It’s a compelling prize,” Heinson said in an interview last month. “There were a large number of wells out there that we know were originally completed with something that we could do better today. That’s really exciting.”
Boat on Tue, 7th Jul 2015 6:12 am
It is still yet to be seen how well fracking compete will do with a barrel of oil hovering around at $50-$60.
fracking tech that is much cheaper and efficient is just now hitting the fields. I see long term fracking being able to compete well at these prices. Old fields and new.
Makati1 on Tue, 7th Jul 2015 6:41 am
Dream on Boat. The crash is coming and there will be NO fracking when it is over. All the suckers …er… investors will have committed suicide or be dead broke, selling pencils on the street.
shortonoil on Tue, 7th Jul 2015 7:03 am
The shale industry stacked up over one $trillion in debt to produce $360 billion in annual revenue. That was using the best of the resource that could be found, and at $100/ barrel. They are now talking about refracking, which can run half the cost of the original well, and at $52/ barrel. Shale has been a net energy neutral to negative proposition since it began. Refracking wells is not going to change that equation. You can not get energy out of an oil well that is not there to begin with. This is just one more Fantasy Island escapade for the investing public. As long as investors can not distinguish a barrel from a BTU there will be someone to take advantage of the situation!
http://www.thehillsgroup.org/
rockman on Tue, 7th Jul 2015 7:46 am
Above all else understand that the refrac’ng of a well is not at all related to the original leasing, drilling, running casing, frac’ng and installing production equipment. The decision to refrac a well is based solely on the economics of the refract. It’s quite possible that refrac’ng a particular well might produce a better rate of return then the original completion. This could even be true if the refract only produces at lower initial rate and recovers less. And most important: possibly even at $60/bbl.
Consider the initial well: 160 acre lease ($500k) + original drilling ($6 million) + multistage frac ($4 million) + production equipment ($400k) = $10.9 million. Refrac = $2.5 million (with the drilling slump prices have dropped significantly).
So there’s the comparison: $10.9 milling vs $2.5 million. Of course if the operator doesn’t have the capex then he’s stuck. Until someone, like the capex rich Rockman, comes along and buys the nearly worthless production from him on the cheap and makes a much better ROR then the original operator. And does so without debt since the Rockman doesn’t borrow money.
BTW the Rockman has been waiting for the hedges to wind down so he can really put the screws to those Eagle Ford operators. As has been said before: we do eat our own. Nothing personal…just business.
Michael G. McLaughlin on Tue, 7th Jul 2015 8:03 am
I mean, we ARE running out of oil. It seems some people believe in crude oil FOREVER coming out of the ground. These people also are deniers of global climate change and think Obama is Kenyon and that all Mexicans are rapist
Tatonka82 on Tue, 7th Jul 2015 8:09 am
Refracking is not yet reliable. I have had the advance fracking course and we did the math, there are too many potential problems.
mbnewtrain on Tue, 7th Jul 2015 8:24 am
One thing to consider is the net price for this oil when refracking Bakken wells. Transportation costs are now at $15 to $20 per barrel for truck/rail shipment to Midwest and east coast respectively. Cost of salt water disposal and flushing well add maybe $2 to $3 to that. So net is $37 to $42 per barrel at best given $60 per barrel average over the next year. Overall profit in 16 months maybe $1 to $2 million.
Yes this would probably produce some generous short term income for the well owners/operators for about 16 months, but after that the decline returns to historic levels and minimal net revenue stream.
In the scope of overall production for the Bakken, this refracking will not boost output much. New wells must be brought on line every month. Maybe this technique will slow decline once peak is reached, IMO.
ghung on Tue, 7th Jul 2015 8:47 am
In the scope of things, what’s remarkable is that re-fracking these wells is being done at all. Seems like a case of re-scraping the bottom of the barrel; another sign of the end-game.
What’s next? Net energy use per capita has been in decline, overall, attributable by some to ‘increasing efficiency’ and all that. Really? Total economic output has generally tracked nicely with net per capita consumption, always underwritten by energy. The signs that this hasn’t changed much are everywhere, whether or not one chooses to acknowledge it. Economies are addicted to the highest levels of consumption in history, by far, and that’s a big damn monkey to have on one’s back. Contraction is underway.
Idontknowmyself on Tue, 7th Jul 2015 8:59 am
Technip Plans 6,000 Layoffs as Part of Restructuring Efforts
http://www.rigzone.com/news/oil_gas/a/139469/Technip_Plans_6000_Layoffs_as_Part_of_Restructuring_Efforts
carbonates on Tue, 7th Jul 2015 9:04 am
If anyone examined the original recovery rate, the use of refracing would be obvious. It is nowhere near the “bottom of the barrel” because the original recovery might have only been 5% of OOIP. If the well made payback the first time and went on to deliver a good ROR, then yes, a refrac is the obvious secondary step, and it will probably be the obvious tertiary step as well.
Geologically, the refrac is contacting new reservoir rock that the original frac never penetrated, even within the same zone that was fraced. These rocks often have nanodarcy permeability, so the original frac, even ten years later, is not draining most of the rock. It can’t because it did not even contact that low perm reservoir. To move oil and gas through nanodarcy perm takes geologic time.
What most of you seem to be missing is that source rocks never expelled MOST of the oil and gas generated. MOST of the oil and gas created in source rocks, which charged all the conventional reservoirs, still remains to be recovered from the source rock. Those 3 trillion barrels of total resource we used to estimate? Totally wrong. There are many more trillions of barrels than was ever conceived of by those who both failed to understand source rocks and failed by basing those studies on probabilistic estimates of conventional reservoirs and conventional thinking.
Guess what? Refracing is not new either. It has been done almost as long as fracing.
Kenz300 on Tue, 7th Jul 2015 9:23 am
Wind and solar are the future…. it is time to transition away from fossil fuels.
———————-
Listen Up: Pope Calls for the Replacement of Fossil Fuels, Renewable Energy and Solar Subsidies – Renewable Energy World
http://www.renewableenergyworld.com/articles/2015/07/listen-up-pope-calls-for-the-replacement-of-fossil-fuels-renewable-energy-and-solar-subsidies.html
ghung on Tue, 7th Jul 2015 9:25 am
Sure, carbo, thanks for the lesson. Meanwhile, I suggest you take your nose out of the oil patch and look out at the real world where economies are unable to absorb near record production…. and the oil patch monkeys are http://www.rigzone.com/news/article.asp?a_id=139368 :
“…To be sure, Kim Brady, a partner at SOLIC Capital in Illinois, said that almost two dozen public companies have leverages higher than six times. Couple that with the fact that those companies may not have the best assets – which makes production more expensive – and you’ve got a steady stream of companies that are spending more money than they are making. “Some of them will have challenges in terms of meeting the debt service in 2016 and 2017,” he said.
While there has been a handful of companies seeking bankruptcy protection this year, that pace is expected to pick up during the next 18 months as more debt and interest payments become due…”
Some of us are able to see a bigger picture out here. Meanwhile, places like Iran are hoping to dump even more ‘cheaper’ oil on the market, and consumption in places like China is bound to level off and drop, while falling prices have yet to give other global markets much of a boost. Monkey trap indeed.
rockman on Tue, 7th Jul 2015 9:29 am
ghung – “Seems like a case of re-scraping the bottom of the barrel”. Hey bubba…I’ve been scarping the bottom of the bbl for 40 years and have made a decent living at it. LOL. Really: I’ve never been a high falutin’ explorationist like westexas. Been a career development geologist/reservoir engineer poking around old fields for the most part. Like the 300 bopd I’m producing from two hz wells drilled in a 69 year old field that was making 12 bopd from 5 wells when I began drilling.
The bottom of the bbl can be very profitable if you know what you’re doing. OTOH it’s not going to add a lot of production in the big picture. But I’m not drilling for mankind…doing it for me and my owner. I’ll refract an Eagle Ford well if the risk/reward is sufficient.
As far as refrac’g being risky? Hell yeah. LOL. You can frac into drainage systems that have been depleted. You can bust your casing. Etc. Etc.
F*cking damn risky some of the time. Remember I was the young geologist 40 years ago that drilled my first “low risk” development wells in a offshore GOM field based upon the exploration geologists/geophysicist maps. And all of them were dry holes.
F*cking asshole explorationists. Nuthin’ personal westexas. LOL.
ghung on Tue, 7th Jul 2015 9:29 am
Link broken. See here: On The Brink: Upstream Companies Increasingly Vulnerable To Collapse
http://www.rigzone.com/news/article.asp?a_id=139368
shortonoil on Tue, 7th Jul 2015 9:39 am
“What most of you seem to be missing is that source rocks never expelled MOST of the oil and gas generated.”
What you don’t understand is that refracking usually increases URR by only 3 to 5%. Like using any explosive in solid rock, once fired, refiring only produces a minimal number of additional fractures. The fractures from the first firing act as pressure release channels. The Colorado School of Mines has some very good literature on the subject. Your have to pay for it, but perhaps before investing hard earned money in another shale scheme it would be worth it.
http://www.thehillsgroup.org/
chris martenson on Tue, 7th Jul 2015 10:29 am
Well, I ran the numbers from the Bloomberg article using the tried and true eyeball estimate for each monthly data point.
For example, in month 1 I eyeballed that the refrack well was producing 375 barrels/day while the “normal” or un-refrac-ed well was producing 270. this means the refrac-ed well produced an additional 125 barrels per day for 30 days.
Said another way, the normal well produced 8,100 barrels for the month while the refrac-ed well produced 11,250.
Doing this for each month out to month 11, where the curves recombine in month 12, we find that the normal well produced 46,170 barrels and the refrac-ed well produced 76,650.
That’s a difference of 30,480 barrels which is far more than the 30% gain cited, so I’ll assume my eyeballs are not very good.
However, be that as it may, this means that my estimates were more generous at a 40% gain, and still the numbers don’t quite add up for me.
that 40% gain, at $50 a barrel works out to incremental revenue of $1.52 Million….is that less than the cost of a refrac?
If so, it doesn’t pencil out yet at these oil prices…
At much higher prices I think this article is onto something, but not yet.
chris martenson on Tue, 7th Jul 2015 10:30 am
Edit: “this means the refrac-ed well produced an additional **105** barrels per day for 30 days.”
BC on Tue, 7th Jul 2015 10:55 am
Peak Oil and LTG per capita are history, i.e., they have already occurred and are 7-10 years in the rear view mirror.
Plantagenet on Tue, 7th Jul 2015 11:16 am
@BC
Oil production now is higher then it was 7-10 years ago, i.e. peak oil did NOT occur 7-10 years ago.
Do the math, dude.
Plantagenet on Tue, 7th Jul 2015 11:18 am
50 more years of oil from refracting and 100 more years of NG production thanks to fracking.
Better and better.
mbnewtrain on Tue, 7th Jul 2015 11:27 am
Chris, you did not interpret that graph correctly. The lower blue line is the initial production curve, ending at about 60 barrels per day. The well goes from 50 bpd to 350 bpd (red line)due to the refracking operation. So the increase is 290 barrels per day intitally, then declines to 0 barrels per day by month 20 (down to 50 barrels per day production – below level of before refracking).
If you subtract off the 60 to 50 barrel per day production without refracking, then you can calculate the additional revenue, which I estimate at $3 to $4 million based on net of $37 to $42 per barrel (after transportation and production costs). However if oil goes much below $50 per barrel even refracking will not be profitable in most Bakken wells.
chris martenson on Tue, 7th Jul 2015 11:46 am
Mbnewtrain,
Ok. I see that…but then I don’t get the entire way this thing was graphed. The average well in the Bakken as an IP of over 450 bpd, and does not hit 50-60 bpd until month 36-48. They have a decline curve that’s far lower and faster than the one’s I’ve studied.
So I am not sure what sorts of wells are being compared here.
Next, the 30% gain over IP says that a refraced well is 30% better than the original one…if that’s the case, then why is anybody still drilling for heaven’s sake?
Comparing the IP to the refrac, as the graph does (which caught me off guard because I find it difficult to believe that a refrac beats the original…) clearly shows more oil than originally. Ummmmm…I’m skeptical.
I’m going to hang back on this ‘data’ until I get some clarity….something is not right here…
Northwest Resident on Tue, 7th Jul 2015 11:52 am
“Better and better.”
Stupider and stupider is more like it.
Hello on Tue, 7th Jul 2015 12:06 pm
Unfortunately Planter is right, again.
PO is currently not an issue and won’t be for quite some time.
However I wouldn’t want to call that “better and better”, but rather “worse and worse”…. from the point of view of the planet and all living things beside man.
Plantagenet on Tue, 7th Jul 2015 12:20 pm
@Hello
Of course I’m right again. Thanks for your honesty and I appreciate your intelligence and understanding of the issues.
AND, the situation would be far worse if we actually had already hit the peak—-oil production would be falling, gasoline prices would be through the roof, and the global economy would be in a death spiral.
Just count yourself lucky that instead global oil production is still increasing and we are in an oil glut with cheap oil prices.
The global economy is still crappy, but that is more a function of mismanagement of the economy by Obama, Merkel, WB, EU, etc. etc.
Cheers!
Davy on Tue, 7th Jul 2015 12:21 pm
Hello, Hello, who’s authority do you make such pronouncements?
Apneaman on Tue, 7th Jul 2015 12:25 pm
Tell yourself planty. Apes mismanage everything. If we did not we would be a different species. How you managing them fires up there?
Limits to Growth was right. New research shows we’re nearing collapse
Four decades after the book was published, Limit to Growth’s forecasts have been vindicated by new Australian research. Expect the early stages of global collapse to start appearing soon
http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse
Hello on Tue, 7th Jul 2015 12:59 pm
@Plant
As I value the wellbeing of the planet higher than man, I consider any delay in the arrival of PO as bad news, even though it undoubtedly allows me to live a life in luxury and comfort.
Davy on Tue, 7th Jul 2015 1:34 pm
Hello, the actual planetary situation is more complicated than PO or not. You might as well kiss the planet goodbye PO or not with more damage coming PO or not.
Northwest Resident on Tue, 7th Jul 2015 2:15 pm
Hello — Peak conventional oil has long since occurred and that is well documented. The only thing keeping the world from recognizing a “peak oil” condition is the increase in unconventional oil sources, including but not limited to biofuels and other liquids. This gives the propaganda machine (and Plant) room to crow about magnificent increases in oil production. But those increases in oil production above and beyond conventional crude come at a very high price. Just look at global debt — that is a direct result of diminishing energy returns combined with exploding populations and other related factors. The technical term for what constitutes “oil” was changed to hide the fact that we already hit peak oil. From that point on, right up to now, it has all been lies, misdirection, cover-up, fraud and pure propaganda. We are AT peak oil and suffering the consequences, but nothing like what is coming. It gets worse and worse from here on out. Maybe in a few years they’ll classify methane emissions as “oil” which will once again move the goal posts out a little further so they can continue to deny peak oil is on us now. But it won’t matter. Lies and propaganda only fool the fools — the rest of us recognize reality, and the reality is, we are AT peak oil and over the hump, headed down fast.
Plantagenet on Tue, 7th Jul 2015 3:53 pm
@Nordent
Your new fantasy about “magnificent increases in oil production” is yet another of your odd delusions.
Oil production is indeed still increasing but the rate of increase is quite slow—less then 2% per year. The only reason we have a glut in oil production now is that global economic growth has also been quite slow since the 2009 collapse, and oil production has gradually outpaced oil demand, resulting in an oil glut.
Get it now?
CHEERS!
GregT on Tue, 7th Jul 2015 4:08 pm
This is one person here that has repeatedly proven that she does not get it. That person would be you planter.
Smart like stick.
MSN Fanboy on Tue, 7th Jul 2015 4:54 pm
ERR, NR..
“we are AT peak oil and over the hump, headed down fast”
Well that’s just utter rubbish.
We are on an undulating Plateau dictated by price. POD.
I don’t like Plant NR, but please don’t blurt out non-truths.
Cheers BIG EARS 🙂
shallowsand on Tue, 7th Jul 2015 5:32 pm
ROCKMAN. Could you give us some insight on this re frac business.
Am I correct that this may work better on the earlier wells, when the huge fracs with 100+ stages where not common, than the newer wells, where they are “tracking the hell out of them?”
Or with these shale wells, is it correct the fractures pretty much seal off after 5-8 years, and then you can re track them again, regardless of the stages, etc?
I know the answer is much more complicated and my question is too simplistic, but trying to get some free expertise out of you! LOL!
Apneaman on Tue, 7th Jul 2015 5:33 pm
Planty, do you play you’re incessant passive aggressive word games in the real world? You’re both boring and irritating. There are others on this board I disagree with on many things, like rockman for example, but at least they present valuable arguments and ideas in ways that make me think. I never get that from you – ever. Just fingernails on the blackboard.
Northwest Resident on Tue, 7th Jul 2015 6:07 pm
MSN — The only reason it would be “utter rubbish” is because you’re counting unconventional barrels of what they’re calling oil in the “total oil produced” total. Without unconventional, especially without American fracking “miracle”, we would be well past peak oil. Since the contribution of unconventional oil to running the world economy is doubtful, in my opinion, then yes, I personally consider us to be AT peak oil and on the downward side.
Let’s put it this way. We’re at or beyond peak oil for the only oil that really matters.
Thanks for asking!
shortonoil on Tue, 7th Jul 2015 6:08 pm
Of the 4,598 Bakken wells that we took a look at the average well was producing 275 b/d at month 3.4 after IP. That means that the 80 wells that the author shows were refracked at 3.4 months after IP. The unfracked wells produced 57,251 barrels between month 3.4 and month 14; when the two graphs meet. The refracked wells produced 70,594 barrels over the same period. The refracking increased production by 13,342 barrels.
All Plains is showing Bakken at $40.30/ barrel today. 13,342 barrels of addition production generated $537,682 in additional revenue. it doesn’t seem likely that a well can be refracked for $537,682. There is also the question as to how this will affect URR over the life of the well.
http://www.thehillsgroup.org/
Plantagenet on Tue, 7th Jul 2015 6:29 pm
Very good points, short.
Obviously all aspects of fracking economics look better at $100/bbl then they do at $50 bbl.
Davy on Tue, 7th Jul 2015 7:54 pm
Well we have a range of PO opinions above. We can nixed Hello for being an outlier. N/R gives us a quick-ish drop recognizing conventional peak and energy quality drop but acknowledging oil barrel growth from unconventionals and other liquids. Planter is recognizing an economic oil glut from tepid global economic growth or IOW peak demand planter? MSM mentioning price dictated by peak oil dynamics yielding an undulating plateau of supply and demand.
I say yes to all the above because I see the complications of determining PO from point of view with starting and ending points. In any case I booted Hello because saying peak oil is not a problem and not for a long time is the rubbish. We can all admit we do not have daddy’s economy or oil. We have a different situation all together. Yet, we still have the same need for growth.
I feel systematically the approach of peak oil is significant. The fact that we have dynamics of oil quality, price issues, and barrel issues means our vital commodity oil is not within an optimum economic range for smooth growth. We also have a multiple systematic issues of population, resource depletion, and ecological decay requiring higher amounts of energy to combat entropic decay from these systematic tensions then we did in the past. Our corns say efficiency and technological improvements take care of these challenges. I say only marginally and only in some cases. IOW we appear to be losing ground.
We are seeing marginal returns to technology and complexity along with marginal benefits of oil quality, quantity, and pricing. IOW decelerating ingredients of growth. These marginal return issues are being amplified by a financial system reaching marginal returns from debt and market repression. All this marginalization is exerting inertia on the momentum of global system demanding growing from consumption and population pressures. Forced growth is destructive and can damage growth abilities quickly. All this systematically is affected by the human nature of confidence which also is affected by growth issues.
We have a global system of delocalized locals connected by a global system of production and distribution. A global reality of comparative advantage through economies of scale that allows carrying capacity extensions. This system is showing clear rate of growth decreases and possibly actual growth reductions IOW contraction. Can you for example count bad debt and mal-investment as actual growth? Chinese ghost cities, shuttered American strip malls, and Greek tragedies are not growth but entropic decay called growth. We see this everywhere and it is adding up. We see this non growth items considered growth and extended and pretended into the future so as to not affect the appearance of growth. The appearance of growth is critical for confidence and confidence for liquidity and liquidity for growth and back again.
The resulting conditions of deflating growth are wealth transfer and economic decay within what appears to be a shrinking pie. Even if this is just a slowing growing pie with population increasing and all the other systematic issues affecting our global system then the approach of peak oil, the undulating peak oil, and or a reality of peak oil from quality of its economic energy is the end game. The issue for us it timing plain and simple. I don’t know about you but 10 years is an eternity. On the other hand 1 year is significant and within my budget period of short term. That is my peak oil.
Makati1 on Tue, 7th Jul 2015 8:03 pm
Keepin’ up:
http://oilprice.com/Energy/Oil-Prices/Bearish-News-For-Oil-Growing-By-The-Day.html
http://www.rigzone.com/news/article.asp?hpf=1&a_id=139434
(Shale Drillers Lose Most-Precious Asset – the $90 Hedge)
http://oilprice.com/Energy/Crude-Oil/The-Coming-Financial-Apocalypse-For-U.S.-Shale9058.html
Then there is:
http://www.mybudget360.com/not-in-labor-force-americans-not-working-11-million-up-since-2010-2015-data/
http://www.zerohedge.com/news/2015-07-04/us-needs-war-every-4-years-maintain-economic-growth
http://www.nbcchicago.com/news/local/fourth-of-july-weekend-violence-shootings-chicago-311639971.html
http://www.climatenewsnetwork.net/carbon-capture-goes-down-the-tubes/
http://www.truthdig.com/eartotheground/item/puerto_rico_is_emptying_of_people_as_its_economy_disintegrates_20150703
http://www.upi.com/Top_News/US/2015/07/03/Fewer-people-consider-themselves-extremely-proud-to-be-American-than-decade-ago/1711435952494/
And the beat goes on…
Joe Clarkson on Tue, 7th Jul 2015 8:04 pm
oil production has gradually outpaced oil demand, resulting in an oil glut
Plant is absolutely right about this. Oil prices from late 2010 until summer of 2014 were relatively constant at about $100/bbl due to a balance of demand destruction above that price against our increasing need for oil.
Plus, $100/bbl is a good incentive to produce high-cost-of-extraction oil. Supply eventually caught up with, and then exceeded, demand and the price fell.
What Plant is wrong about is whether it is bad that “the global economy would be in a death spiral” without that production. Given the horrific results of human overshoot that are even now becoming manifest and which will become more and more dangerous in the coming decades, I think the best thing that could happen would be an immediate ‘death spiral’ of the global economy. Collapse is going to happen sooner or later. All of us will any concern for leaving a livable planet for (much smaller) future generations should recognize that sooner is far better than later.
Davy on Tue, 7th Jul 2015 8:43 pm
Yea, Joe, rebalance is needed but how fast and how hard is the question and the answer is who knows. That my friend will matter at the local when we are hungry and cold. I am not sure much will be left for the future generation if this is too dramatic. I doubt we can hang on to a fraction of our excessive complexity with a rebalance. Maybe we can keep some core complexities of universal value.
If we are lucky we can stretch this out. Pain, suffering, and death will be a part of this but so will a new dynamics of a postmodern man. Maybe we will advance with spirituality. Sometimes it takes physical stress to cause a spiritual rebirth. That my friend is the extent of my optimism because I am too old to realize an outcome. Maybe my young boys will.
shortonoil on Tue, 7th Jul 2015 8:57 pm
“Let’s put it this way. We’re at or beyond peak oil for the only oil that really matters.”
A barrel of conventional crude in 2015 is delivering 70% of the energy that it was delivering in 2000. That is, it is taking 1.1 million more BTU per barrel to extract, process, and distribute it. Production has increased over the same period by 6.5%. Even including non conventional, which are mostly at best energy neutral, the energy delivered to the economy from liquid hydrocarbons is declining, and the economy is reflecting that fact. World debt increased 40% between 2008 and 2014. The surprising aspect is that the situation isn’t worse than it is?
http://www.thehillsgroup.org/
Davy on Tue, 7th Jul 2015 9:28 pm
Short said “World debt increased 40% between 2008 and 2014. The surprising aspect is that the situation isn’t worse than it is?”
Short, go out on ZH tonight (morning here in Northern Italy). There is one article after another showing your thinking is right on track and snowballing by the hour. Maybe another muddle and close call shakes out of Greece and China but I see shit happening.
OK, I am a doomer with a doom agenda but not by choice that is the difference. You think I want to be hungry and cold at 50 something? Not. When I was 20 something that sounded cool but not now. Let’s be honest at some point excessive leverage at multiple levels in our global system is going to cause a misfire in the engine of not only growth but the engine itself. That equates to being hungry and cold once it trickles down to all of our locals.
All right folks as the old indian says “the dogs are going to sleep” Davy’s rant is over. Time to sleep. Walking in the mountains tomorrow and I need some rest.
ghung on Tue, 7th Jul 2015 10:22 pm
Yeah, Davy. Shanghai Composite down another 5% as I type, with a quarter of their stocks not even trading. Looks ooogly on the China front.
apneaman on Wed, 8th Jul 2015 12:00 am
This chart shows U.S. stocks dependent on China
http://www.cnbc.com/id/102815114
Makati1 on Wed, 8th Jul 2015 1:36 am
And on and on….
http://business.financialpost.com/investing/greece-china-and-oil-troubles-are-adding-up-to-a-world-of-catastrophe-for-investors?__lsa=950e-f463
http://www.bloomberg.com/news/articles/2015-07-06/good-luck-finding-a-place-to-hide-as-global-markets-crumble
I’m glad I have no interest in the markets other than the local fresh foods market. Pity the 401k owners, and retirement plans based on the Market Casino.
http://hosted.ap.org/dynamic/stories/U/US_IMF_US_FINANCE?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT
http://www.ibtimes.com/europes-right-wing-leaders-cheer-greeces-oxi-vote-push-end-european-union-1997752
And then there is:
http://www.ibtimes.com/europes-right-wing-leaders-cheer-greeces-oxi-vote-push-end-european-union-1997752
http://www.zerohedge.com/news/2015-07-07/moron-madness
It is going to be a very hot summer!
shortonoil on Wed, 8th Jul 2015 6:52 am
“This chart shows U.S. stocks dependent on China”
Trading on more than half of the stocks listed on the Shanghai Composite Index have now been suspended. As Red Fox used to say, “this is the big one”.
rockman on Wed, 8th Jul 2015 7:03 am
shallow – I’m in the processof trying to isolate early EFS wells with a small number of fracs vs. later wells with large numbers of frac stages. Also have to qualify with frac lengths. That’s a very time consuming process. I agree that this should be at least one metric to judge refrac’ng potential.
In the case of pressure depletion drive there is a closure force over time. But not necessarily closing the fractures completely. That’s more typical in deep geopressured reservoirs. The fact that the typical EFS well go non-commercial as a result of too much water production would indicate that fracture healing isn’t an issue.
What to refract in an area where there’s been little or no refrac’ng is going to be a crap shoot. You might refract into the fracture system you’ve already depleted. You might not intersect enough undrains fracture to make a decent profit.
OTOH as pointed out above the total capex for a refract is much less then the original well so even at a lower oil price some of the refracs could produce a better ROR then the original well even if it flows at a lower rate and URR is less.
shortonoil on Wed, 8th Jul 2015 12:05 pm
As reported by ZH, the NYSE is down, and the WSJ. Shanghai Composite almost completely closed.