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Page added on April 4, 2015
What Will The Death Of The Great Bakken Oil Field Look Like?
Very few Americans realize just how bad the domestic energy situation will become in the next several years. While U.S. shale oil production has surged over the past five years giving Americans a false sense of energy security, the next five years will certainly destroy this myth once and for all.
Unfortunately, there still seems to be no shortage of articles pushing for U.S. Energy Independence. One article that provided me with a good laugh was, Why American Energy Independence Makes Sense. Here were the two best jokes in the article:
1) Oil is sucking hundreds of billions of dollars a year out of the U.S. economy. If we became energy independent, our trade deficit would be cut tremendously. Not only that but our money could begin to go to American-owned energy producers.
2) With technological breakthroughs, we have been able slowly rise again to our feet, but we still have a way to go. The U.S. needs to free itself from the dependence of foreign oil. Call your Congressman and Senators and let them know that you are for energy independence!
The author states that energy independence would allow money to flow to American-owned energy companies. I find this simply hilarious as the majority of U.S. shale oil and gas companies haven’t made any positive free cash flow and are hemorrhaging from increasing levels of debt. And, this took place when the price of oil was more than double the current price today. Can you imagine what will happen to the balance sheets of these shale energy companies this year with an oil price of $50?
The second joke was even more amusing. The author finishes the article asking Americans to call their Congressmen and Senators and let them know, “You are for Energy Independence.” LOL.
This kind of thinking reminds me of the famous line from the movie Aliens when Sigourney Weaver (found after being in suspending sleep lost in space for quite a while) attended a meeting with the typical business suits saying, “Did IQ’s drop sharply when I was away.”
So, why will the U.S. not become energy independent? Well, if we look at the chart below, it should give us a pretty good idea:
This chart from Jean Laherrere, is U.S. Bakken oil production based on using Hubbert Linearization. Jean sent me this chart which estimates the peak and decline of the Bakken using a total of 4 billion barrels (Gb) of ultimate reserves. As you can see the peak takes place shortly, and by 2025 the Bakken is producing a mere pittance compared to its current rate.
The Eagle Ford shale oil field will also follow the same sort of peak and decline trend as the Bakken. There are two huge problems with notion of U.S. energy independence based on shale oil production:
1) Shale oil well annual decline rates are 40-50% per year.
2) Shale oil needs very high prices to be commercial
Shale oil will not allow the U.S. to become energy independent due to the fact that peak and decline of the Bakken and Eagle Ford were forecasted to take place by 2015-2017. This was according to the work of David Hughes in his excellent report, Drilling Deeper.
Unfortunately, Mr. Hughes based his forecasts at the time when the price of oil was much higher. Thus, the peak of U.S. shale oil may occur even sooner.
To get a good idea of the short lifespan of the Great Bakken Oil Field, here is another chart by Jean Laherrere from August 2014:
This chart of the Bakken is over a longer period of time. Shale oil production at the Bakken started to take off in 2007, and is projected to peter out twenty years later by 2027, and be a stripper play by 2035. So, how the U.S. becomes energy independent based on this sort of production profile baffles me to no end.
The United States will be in serious trouble by the turn of the next decade. As shale oil production declines, the U.S. will have to import more oil. However, the U.S. Dollar may lose a great deal of its world reserve currency status as more countries move to alternative trade systems with the BRICS countries.
How will the U.S. purchase oil with worthless Dollars if no one wants paper Dollars anymore??
Got gold and silver?
23 Comments on "What Will The Death Of The Great Bakken Oil Field Look Like?"
Nony on Sat, 4th Apr 2015 8:42 am
Goldbug silliness.
Peakers failed to predict the LTO boom. Why should we trust them on how it ends when it surprised them to start with.
http://www.theoildrum.com/node/3868
“3. Because of the highly variable nature of shale reservoirs, the characteristics of the historical Bakken production, and the fact that per-well rates seem to have peaked, it seems unlikely that total Bakken production will exceed 2x to 3x current rate of 75,000 BOPD.”
HAHAHAHAHA!
gdubya on Sat, 4th Apr 2015 9:14 am
The oil glut is a glut glut glut.
Ther you go mr plant. Saved you some typing.
peakyeast on Sat, 4th Apr 2015 9:46 am
Nony: There is absolutely nothing to laugh about. That you laugh because of displacement in time shows you do not understand the seriousness of the situation that eventually will happen.
If you understood you would try too would try to figure out the timing and the nature of our common predicament and prepare yourself or your children for it instead of trying too look clever at the cost of others who work seriously to try to understand the situation.
You are a sad case – I am sorry to say. Probably beyond any educational reach.
rockman on Sat, 4th Apr 2015 9:50 am
Nice enough article. But one little flub: “Very few Americans realize just how bad the domestic energy situation will become in the next several years.” I’m pretty sure when Americans saw the gasoline prices jump 400% in just 6 years as a result of higher oil prices they realized that when it came to oil they were f*cked. LOL. Granted it fell 50% for a short period. But then doubled in just a few years. And now falling again.
I think most Americans have a pretty good idea of the volatility and unpredictable nature of oil prices. And if they don’t and are buying any of this “US energy independence” bullsh*t they should seek psychiatric help. LOL.
paulo1 on Sat, 4th Apr 2015 10:02 am
re Rock’s “I think most Americans have a pretty good idea of the volatility and unpredictable nature of oil prices. And if they don’t and are buying any of this “US energy independence” bullsh*t they should seek psychiatric help. LOL.”
I disagree with this one, Rock. I can only speak for my left leaning relatives. They believe there is unlimited FF waiting to be utilized and the only consideration of which deposits should be exploited is AGW effects. As long as the gas stations stay open and the grocery store shelves full of transported food stuffs, all is well. They bitch about the traffic when they are in it, but drive like everyone else.
I think it is much like the Nicholson line in ‘A Few Good Men’. “We can’t handle the truth”.
steve on Sat, 4th Apr 2015 10:46 am
I have talked to relatives and people of all backgrounds and for some neither can comprehend our energy situation. The left has their news…NPR ie.. (National Coporate Radio) the right has their news and then there is the middle and their Kate Middleton crap! Until the ship starts to tilt they will never see the truth…But to be honest if I did not have the internet and only listened to the above news maybe I would believe the 25 years of oil glut story on NPR!
Plantagenet on Sat, 4th Apr 2015 11:12 am
It seems unlikely that Bakken production will fall to zero in a few years when only a billion barrels of oil have come out of there and the latest USGS estimate is that another 6 billion can be produced using current technology.
Don’t look to an end to Bakken production to bring the oil glut to an end —- chances are the Bakken will be producing oil for many many years to come.
jjhman on Sat, 4th Apr 2015 11:22 am
Yet another set of charts showing peak oil occurring next Thursday.
I’m afraid that I’m becoming the farmer who refused to listen to the little boy crying “Wolf”.
I know that peak oil is in our future. But I’m starting to believe that there are so many factors that affect that date that no one has enough information to predict, even within many years, exactly when that will happen. Will it be driven by geology, economics, environment, politics, war or what? It could very well be a result of Russia dropping a nuke on Saudi Arabia.
rockman on Sat, 4th Apr 2015 11:35 am
Paulo – So are you saying your kin didn’t notice the 400% increase in price? or did the just attributed it to something other the price of oil?
Bloomer on Sat, 4th Apr 2015 11:37 am
Oil is what oil does. Shale been a hyped up play and now the bubble is bursting. In the end it will become more of a swing producer, keeping a lid on oil prices if they rise too high.
penury on Sat, 4th Apr 2015 11:56 am
What I find is that no one cares about the price of oil. No one cares about depletion. No one has any interest in the world economic predicament.Life in the U.S. is wonderful, for most people. Gas is cheap, food is cheap, the government has the situation well under control and baseball is starting.I truly believe that fatigue has captured most people. They are tired of the rhetoric on the economy, global warming, wars against everything, and are finally about to accept the final solution no matter what it is. No one really careas any more.
shortonoil on Sat, 4th Apr 2015 12:06 pm
We don’t use Hubbert Linearization because it incorporates too many values that require a judgment call. Although we must admit, Laherrere’s judgments have been exceptional over the years. The method produces a back side to the curve that is very much like the front portion. In its application a normal logistic curve is assumed, and that is probably not the case; conventional production has followed a skewed logistic curve. The tail is heavier than the front. The skewed logistic curve for conventional production is shown here:
http://www.thehillsgroup.org/depletion2_013.htm
Using a skewed logistic curve to do the linearization would almost be impossible. The skewed logistic curve has no mathematical function to describe it, it must be computed numerically using Quantile Statistics.
The methodology also ignores thermodynamic constraints that need to be taken into consideration. The average Bakken well hits the “dead state” after about 77,000 barrels of production, or about 10 months. This will affect the legacy production of the field, older wells will be shut-in much sooner than otherwise expected. We are presently writing software to analysis the Bakken production profile. It would not be surprising if Laherrere’s projections turn out to be optimistic.
http://www.thehillsgroup.org
Plantagenet on Sat, 4th Apr 2015 1:01 pm
Lahore apparently just made up a number for Bakken reservers of 4 billion barrels. But the real number is much bigger—the USGS estimates 7.4 billion, or almost twice the number Laherre estimates
http://www.usgs.gov/blogs/features/usgs_top_story/usgs-releases-new-oil-and-gas-assessment-for-bakken-and-three-forks-formations/
peakyeast on Sat, 4th Apr 2015 1:28 pm
The little boy that cried wolf – actually saw the wolf those 3 first times, but the wolf ran off temporarily.
The fourth time when people didnt listen the wolf dint run away and ate the sheeple.
Morale: Its better to react one too many times than one too few.
shortonoil on Sat, 4th Apr 2015 2:06 pm
The USGS is reporting oil that is technically feasible to extract. At $37 well head prices probably none of it is economically extractable. Technically feasible is absolutely no indication of how much will actually be produced. That is controlled by production costs, and price.
paulo1 on Sat, 4th Apr 2015 6:56 pm
They noticed it Rocky, but believe more in the ‘economy is getting better’ story. It is actually quite unbelieveable.
Regards
rockman on Sat, 4th Apr 2015 7:06 pm
Paulo – As they say: Da Nile ain’t just a river in Egypt. LOL.
hiruitnguyse on Sat, 4th Apr 2015 7:37 pm
Murica post peak……https://www.youtube.com/watch?v=L-Q_3fepmKc#t=136
Sinnycool on Sat, 4th Apr 2015 7:50 pm
We know for sure that peak oil does not follow the geological curve and we know the reasons why.
Hubbert’s graphs only did so because he accepted the then conventional thinking that nuclear power would be readily available as a substitute, as the cost and difficulty of extracting oil increased.
As it turned out nuclear did not substitute for oil in particular regard to our near total dependency on fossil fuel motor vehicles, aircraft and freight transport. Other sources of energy including solar and wind proved too expensive and unable to act as substitutes as well as not being sufficiently available.
As a result ‘conventionally produced’ oil effectively peaked. As a consequence that drove suppliers into fracking and deep sea and created a new market for gas in various forms.
That rising price finally limited demand reduced growth causing economic problems in the form of less serviceable debt.
The overshoot of the falling demand and newly increased production created the current but temporary Plantagenet Glut and fall in prices, which will also briefly overshoot but eventually come to a short period of equilibrium where demand and supply are again in balance and growth in demand from population increase and recovering businesses will again cause the price of oil and gas to rise.
The fall in prices to below the cost of production is crushing those forms of production which are only viable at the previously high prices and also reducing the capital expenditure on future exploration and production.
It should be obvious to everybody that will likely lead to a repetitive cycle. That cycle is likely to become more rapid and form a downward slope because of the practical and financial inability to quickly return to the previous production peaks.
Focusing on the Bakken reserves is no more relevant to our overall situation than to focus on the quantity of fuel remaining in the petrol tank of a crashed car – if demand gets desperate enough and someone has the money then sure we can always syphon a bit more out…
jjhman on Sat, 4th Apr 2015 9:17 pm
Peakyeast:
That’s truly revisionist history. You may not have actually read the story. He got bored watching the sheep and cried wolf to generate some excitement.
I’m not denying that there is a problem downstream. Ive just been at this too long to get really excited about it. Maybe if I was under 70 I’d be more worried about the future. I’m not planning on too much future at this point. I do tell my children they need to spend some time on this type of issue. They do but when you are young, tyey are in their early 30s, living today is pretty all consuming if you have a job, friends, hobbies, romance etc.
Apneaman on Sat, 4th Apr 2015 9:41 pm
“Plantagenet Glut” Lol.
From this day forward all Econ-101 text books will refer to any oversupply, for any reason, as a “Plantagenet Glut”
peakyeast on Sat, 4th Apr 2015 11:06 pm
jjman: Of course, I know the story. :-D.
But I am talking about crying peak-oil and society not reacting to it.
Besides – “no one” (again meaning society as a whole) has reacted to the cry of peak oil.
Not even once. – So its way too early to stop shouting.. But then again possibly also way too late.
peakyeast on Sat, 4th Apr 2015 11:29 pm
Anyway jjman:
As I said I know the story.. But I also know the little known extra part of the story…
Because the MSM version is told by the villagers that were angry – and no-one bothered to hear the boys version of the story later on when things quieted down (which is possibly the real truth.) When he grew up he told me his side of the story which I wrote up there…
😀