Maugeri-- Oil: The Next Revolution

[dinopello]

Dr. Rock has a terrible bedside manner.

Technology and geology I think will have less of an influence on how oil is produced and economics will be more and more influencial. The tight market and volatile prices are a recipe for (those in the know and with the staying power) making lots and lots of money, which in turn makes the system more volatile. Nobody wants the whole thing to collapse though, so there is that.

[autonomous]

Maugeri himself admits it is impossible to predict recoverable reserves from shale/tight oil formations based on available data (page 45):

the huge differences in permeability, porosity, and thickness of a shale/tight oil formation require many more exploration wells be drilled in different areas of the field before making it possible to have an idea of the effective recoverability rate from the whole formation.... it is impossible to make any reasonable evaluation of the future production from a shale/tight oil formation based on the analysis of a few wells data and such limited activity.

But Maugeri goes ahead and makes predictions based on fact-free assumptions anyway. This paper is the same old over-optimistic drivel manufactured by the oil industry propaganda machine.

[ralfy]

Here's the link where it was first discussed:

viewtopic.php?f=1&t=65521

[Pops]

It is instructive to me that many MSM outlets picked up on the "Harvard Study" (even though Harvard published a disclaimer disavowing any complicity) but I've yet to see any posting rebuttals. This is Chris Nelder at FT/alphville (he blogs at http://www.getreallist.com/ )

We must conclude that the key assumptions about reserve growth and its effect on decline rates in Maugeri’s report are muddled, speculative and unverifiable. And sprinkling those assertions with repeated declamations about how peak oil is a non-issue, insisting repeatedly that the only real constraints on his scenario have to do with political decisions and geopolitical risks, suggests that his report is more about grinding a political axe on behalf of the oil industry than offering a serious or transparent analysis. Finally we must note that Maugeri is well known for his hostility to peak oil, as is BP, which funded his report. After taking real-world risks, costs, and restrictions into account, the case for peak oil—which is about production rates, not production capacity or reserves—seems far more realistic.

[Pops]

And yet another, this time with a reaction from Maugeri, h/t Energy Bulletin

MONBIOT PEAK OIL U-TURN BASED ON DUFF MATHS

When I challenged Mr Maugeri about the discrepancy between the 2-3% decline rate and the 1.4%, he said the difference was explained by reserves growth – the tendency to squeeze more oil than originally expected from existing fields, through new technology, the exploitation of secondary reservoirs and so on. But in that case he seems to have counted it twice, to judge by his quote in the paragraph above. Or possibly even three times, since the notion of reserves growth is already accounted for in the existing estimates. Both the IEA and IHS-CERA numbers are observed overall decline rates: they reflect the actual loss of production that happened after – or in spite of – all the industry’s investment to boost flagging output at existing fields.

[pstarr]

Pops, the Strahan piece is excellent. Really enjoyed reading it.

Dr. Rock has a terrible bedside manner.

Technology and geology I think will have less of an influence on how oil is produced and economics will be more and more influencial. The tight market and volatile prices are a recipe for (those in the know and with the staying power) making lots and lots of money, which in turn makes the system more volatile. Nobody wants the whole thing to collapse though, so there is that.

I've re-read my go around with Rocdoc. His critique of my confusion regarding the chronology of horizontal and MRC is correct, but is a minor detail, really simple obfuscation, in the context of my main point; that modern EOR or tertiary technologies, such as MRC and other horizontal techniques, tend not only to recover (or even increase) production in the short term, but also deplete reserves that much quicker. Yibal is a classic example of the consequence, and suggests that the heroic efforts by Saudi Arabia are now hitting the same wall. Rapid depletion.

It it obvious to anyone who has followed the peak-oil story that fracted horizontal wells are prone to the same EOR/tertiary phenomena--increased field production/accelerated field depletion and that anyone like Maugeri who doesn't recognize this is barking down the wrong christmas tree. I stand by my comments

[dinopello]

And yet another, this time with a reaction from Maugeri, h/t Energy Bulletin

MONBIOT PEAK OIL U-TURN BASED ON DUFF MATHS

Maugeri's credentials are impressive. But, those simple math errors on something you intend to widely disseminate are embarrassing - even for a business/econ PhD. Maybe they are not use to calculating declines, only growths ?

[pstarr]

And yet another, this time with a reaction from Maugeri, h/t Energy Bulletin

MONBIOT PEAK OIL U-TURN BASED ON DUFF MATHS

Maugeri's credentials are impressive. But, those simple math errors on something you intend to widely disseminate are embarrassing - even for a business/econ PhD. Maybe they are not use to calculating declines, only growths ?

Maybe their calculators didn't work in reverse?

Maugeri is not an oil-well professional and never had to justify a drill hole. The guy is a professional CEO-type. I doubt he even wrote the paper, and probably delegated it to a "Team" (of sycophants) who implicitly "knew" exactly what "outcome" Maugeri expected. The "Team" was smart enough to know which numbers to fudge for the assigned "outcome." Hope they are good at damage control

[Pops]

You're right Dino, he is an impressive guy, which makes the errors and the fact he hasn't responded to criticism kind of strange. Although I guess there is no reason to respond, the MSM outlets that picked up the happy news certainly haven't printed any of the criticisims.

Although Science did print a couple of letters:

[rockdoc123]

Yibal is a classic example of the consequence, and suggests that the heroic efforts by Saudi Arabia are now hitting the same wall. Rapid depletion.

Sorry but this is wrong once again. Yibal is not at all like the Saudi reservoirs, the rock material is completely different and responds differently to fluid flow. The horizontal wells drilled in Yibal were not the same either, they are short-radius horizontal wells with single boreholes. If a fracture is intersected with that borehole water is coned into the borehole and well shuts down. The gas is still in the reservoir but due to adverse mobility ratio you can’t produce it from that borehole. The Saudi MRC wells are completely different. They have multiple legs, they are much longer in reach and as a consequence the well can be produced at lower drawdown which means it is less likely to produce water. The total ultimate recovery in Yibal is quite low wheres it is very high in most of the Saudi reservoirs.

It it obvious to anyone who has followed the peak-oil story that fracted horizontal wells are prone to the same EOR/tertiary phenomena--increased field production/accelerated field depletion and that anyone like Maugeri who doesn't recognize this is barking down the wrong christmas tree. I stand by my comments

Again, sorry but you are comparing apples and oranges and then applying logic based on banana peels. Shale is not like either the Yibal chalks or the Saudi mixed carbonates, its porosity and permeability, grain sorting, pore throat size etc are all completely different which means it will behave completely different during production. The production history for fraced horizontal shale wells is extremely well documented for many reservoirs with hundreds of well production profiles illustrating the exact same behavior, all of which is predictable. There is intial “flush” production, a hyperbolic quick decline but then a levelling out at a lower rate, that rate capable of being maintained for a number of years which is predictable based on type curve EUR. The levelling out rate is relatively low which is precisely why so many wells are required. As an example a conventional vertical gas well in an excellent reservoir may produce 10 BCF whereas a multistage fraced horizontal well in a shale might only have a well EUR of 2 BCF. This means that 5 horizontals would have to be drilled from the same pad to gain the 10 BCF equivalent of that vertical well in the conventional reservoir. The difference is that most of the shales have larger distributions areally and hence the ultimate reserves are larger, albeit recoverable at a greater cost. Because the wells are predictable and repeatable it comes down to managing costs and hoping for commodity prices high enough to meet hurdle economics. The press and blog sites have paid far too much attention to Arthur Berman’s views which are based on a very small subset of data which was available to him. As well one of his favorite observations was that his view was average well life would be 7.5 years. At 1 Mmcf/d that ends up being close to 3 BCF EUR which is quite respectable. Not all of the shales are created equal, some frac better due to higher silica contents, some produce at higher initial rates due to over-pressuring, some have better reservoir characteristics due to micro-intergranular porosities in forams etc. That being said there is no reason to expect the type curve analysis to be far off, it has proven to be pretty reliable “on average” and the shale production game is all about statistical means, not outliers. The main uncertainties have to do with reservoir anisotropies which cannot be identified by seismic (even shale reservoirs have changes laterally) and commodity price. You could argue that the only reason producers are still chasing shale gas at all is because they have commitments to maintain acreage and they see higher average returns due to liquid recovery. Gas on it’s own at current prices makes no sense in any of the shale plays.

[pstarr]

It's unreadable. You forgot paragraph breaks. But I will forgive you as your lack of editing, and grammatical expertise does not necessarily mean you don't have a point to make? You probably do, but it is not a point I am interested in.

Rockdoc, you are either a myopic professor or an industry plant? Which?

[rockdoc123]

You probably do, but it is not a point I am interested in.

my point is simply you have no idea what you are talking about regarding this subject. And based on the fact that has never stopped you before from expressing a view I'm not surprised you aren't interested.

[pstarr]

You probably do, but it is not a point I am interested in.

my point is simply you have no idea what you are talking about regarding this subject. And based on the fact that has never stopped you before from expressing a view I'm not surprised you aren't interested.

I am not interested in your tiresome minutiae and patronizing lectures. I respect your knowledge but I have no need for your obfuscation and disassembly. I know enough to argue that Maugeri is a clown, Harvard University is lazy and corrupt, and BP should be shut down and nationalized. I also know damn well that your defense of these SOB's is indefensible.

You may have specialized technical expertise in your chosen field, but you obviously don't understand the ecologic tragedies of human population overshoot, resource depletion (specifically peak oil) and non-point-source pollution (ie. global warming.) You are on the wrong side of a debate and I don't need you expertise anymore. If you were truly wise and expert in being human then you would work to make the adjustments we need, instead of defending BAU.

[pstarr]

There is intial “flush” production, a hyperbolic quick decline but then a levelling out at a lower rate, that rate capable of being maintained for a number of years which is predictable based on type curve EUR. blah blah blah

It has become quite apparent that fracted shale plays do not deplete in a hyperbolic fashion, rather precipitously. Exponentially. Hence Maugeri's shale growth projections are nonsense.

Art Berman analysis of shale plays at the oildrum

The primary difference between our analysis and the typical well profile proposed by operators is that we observe predominantly exponential (weak to moderate hyperbolic) decline in most of the individual well decline trends, rather than steadily flattening hyperbolic decline. For the Barnett and Fayetteville shale plays, we identify a two-stage exponential decline based on decline curve analysis (DCA) of individual wells; for the Haynesville Shale we observe predominantly exponential decline for individual wells.

So you know your assumptions are wrong, as this has been debated ad infinitum here and at the theoildrum, hence you conclusions are baloney, and your defense of Maugeri is nonsense. Yet you lecture me?

[rockdoc123]

So you know your assumptions are wrong, as this has been debated ad infinitum here and at the theoildrum, hence you conclusions are baloney, and your defense of Maugeri is nonsense. Yet you lecture me?

As I said my assumptions are not wrong at all and I'm not defending Maugeri, what I am doing is pointing out your views are absurd at best. Whether you care to check it out or not it is confirmed in several places where you cannot dispute which includes various oil company submissions to the SEC and OSC which include third party audits which by the way are regulated by Sorbanes Oxley regulations. The Oil Drum speaks to Berman who has an extremely limited database, he does not work for an oil company and does not have access to the data that most of us did and still do. In summary he has been proven wrong entirely by the results subsequent to his entreaties. If he was right then no oil company would be still investing in this business. Please show us all the rush from the opportunity that was obviously based on Berman's viewpoint. It hasn't happened and I can tell you why because I was in the inside of this business for a number of years...he is wrong and every oil and gas company that continues to invest in this endeavour is of the same opinon. But apparently they are stupid and will take billions of dollars and invest it where they will see no returns and try to explain this to their shareholders. Jesus wept. If you want to argue this further lets do so. It is pretty simple to direct you to a lot of public domain data which supports my view. Oil companies continue to produce wells to the anticipated EUR regardless of Berman's view that they shouldn't be able to. So yes, I have to lecture you. Please become more informed.

You may have specialized technical expertise in your chosen field, but you obviously don't understand the ecologic tragedies of human population overshoot, resource depletion (specifically peak oil) and non-point-source pollution (ie. global warming.) You are on the wrong side of a debate and I don't need you expertise anymore. If you were truly wise and expert in being human then you would work to make the adjustments we need, instead of defending BAU.

I'm sorry but exactly what does this have to do with my claim you haven't a frigging clue about what you said regarding decline rates in shale gas/liquid plays? You seem to have a view that everything "big oil and gas" is doing is bad and that by that understanding people such as myself, who actually have worked in the industry and understand the technology, must be corrupt. Please give your head a shake.

Point of fact is that you have almost zero understanding of the technology involved in resource exaction. You can argue as much as you want about other aspects such as pollution, global warming, etc. but this is simply a redirection from what you were arguing which had nothing whatsoever to do with those subjects. If you want to discuss about environment or climate change or what color of underpants penguins wear then fine, do so. But what you were trying to do was discuss reservoir depletion which I'm afraid showed a kindergarten level of knowledge but a graduate school level of confidence.

[ralfy]

A recap of the earlier article from Strahan:

"OIL GLUT FORECASTER MAUGERI ADMITS DUFF MATHS"

http://www.davidstrahan.com/blog/?p=1570

[Pops]

And another piles on, this time it's none other than Sadad al-Huseini, formerly VP of E&P at Aramco

Don’t Count on Revolution in Oil Supply

In putting forth this optimistic thesis, Maugeri apparently sets aside a variety of technical realities, including the difference between natural gas liquids (NGLs) and conventional oil, reserves depletion versus capacity declines, and proven reserves as opposed to speculative resources.

[Pops]

Laherrère @ TOD: Jean Maugeri part II

This is part II of a guest post by Jean Laherrère, long term contributor to The Oil Drum. Jean worked 37 years for TOTAL on exploration and production of oil and gas, and since his retirement has worked tirelessly to analyse the world's oil & gas data and developments.

In part I of this article Jean looked into Maugeri's concepts of production capacity and reserve growth. It showed how Maugeri's bottom-up analysis is based on optimistic assumptions regarding Iraq and by taking at face value the data published by OPEC. Furthermore, Jean pointed out that man of Maugeri's oil production forecasts are above any projections by any agency, most notably in the case of the US.

In this second part Jean dissects Maugeri's assumption on reserves growth, on which his optimistic production forecasts relay. It his shown how Maugeri wrongly extrapolates the effects of flawed reserve accounting in the US to the rest of the world. Maugeri's also fails to acknowledge the conflicting reports and reporting practices of the several agencies producing oil data at world level. There are also some important remarks on the Maugeri's concept of conventional oil and other details that bring into doubt the knowledge of this author on the field.

[pstarr]

This thread is great, I love watching pstarr getting his dick handed to him by rockdoc. LOL

Neither you nor Rockdoc have handed me anything other than childish noise (you) and pompous distractions (Rockdoc). Here is a suggestion for both of you; Anti be a big boy, stand out from behind Rockdoc's academic apron and make a useful point . . . all by yourself. Critique Laherrère @ TOD for us. Okay? Rockdoc you there? How about you join the fun over at TOD, as I have suggested repeatedly in the past. Make fools of them. If you can. ha ha ha.