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Decline rate post peak

General discussions of the systemic, societal and civilisational effects of depletion.

Re: How is oil production declining in mature fields?

Unread postby JohnnyOnTheFarm » Wed 12 Nov 2014, 20:18:20

kenberthiaume wrote:I said in another thread, that it seems KSA doesn't believe in peak oil. IF they did, they wouldn't be glutting the market when today's surpluses are only temporary due to declining fields in the future.


It is not possible to deny peak oil, and KSA knows it. But the issue isn't peak oil, but peak cheaper oil, we've got plenty of expensive oil, as American independents have demonstrated in just a few short years. But KSA will remain the king of sunk capital costs and low cost production probably forever. And the results in the USA have certainly give them some pause for thought, right? They can see what the power of higher prices is capable of, how well consumers took it, and aren't happy with marginal supply marginalizing...them!

kenberthiaume wrote:I read another cnbc article that said the US could be a net oil exporter by 2020. That seems strange to me, wouldn't that imply about a 10m bpd increase in production in 6 years?


One of the EIA resource cases might indicate just that.

kenberthiaume wrote:At that point shale would be producing about 15 m bpd or 5 billion barrels a year? There's debate about the size of the shale plays but they'd be gone in a 10-20 years even with optimistic assumptions, I'd think at that pace.


They haven't turned out to be as small as some might expect in the past....permanent pessimism really didn't work very well when it came to these types of resources...one day they are insignificant, the next...some of the highest production rates in the country. Who was it who said that all the big fields had been found, only a few years ago?
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Re: How is oil production declining in mature fields?

Unread postby MonteQuest » Wed 12 Nov 2014, 22:29:08

kenberthiaume wrote: I read another cnbc article that said the US could be a net oil exporter by 2020.


I think you meant net "energy" exporter, didn't you?

Adam Sieminski, head of the U.S. Energy Information Administration wrote:The only big outstanding question is: could the U.S. potentially be a net exporter of crude oil? In the EIA’s Reference case forecast, that doesn’t seem likely. Despite the fact that our production is rising while demand is falling, we’re still importing about five million barrels a day net of of crude oil and products. It doesn’t seem likely that net imports are going to go to zero–at least not given the facts as we currently see them.
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Re: How is oil production declining in mature fields?

Unread postby MonteQuest » Wed 12 Nov 2014, 22:45:53

I have a question for you guys.

As we all know who follow this, the global decline rate is a matter of genuine debate.

CERA says 4.5%, EIA says 6.7%

The decline rates for unconventional fields are off the charts in the absence of Red Queen drilling.

So, given these numbers for a basis, what will happen to decline rates post peak? Will there be an all-out effort to uptick EOR? Or will the economic downturn cause demand to drop so far that price won't be there to even maintain the 4.5 to 6.7% range?

I would think that too low a price would take out a lot of production especially from marginal plays.

Perhaps this downward trend in price with the short-term glut will give us a preview.
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Re: How is oil production declining in mature fields?

Unread postby kenberthiaume » Thu 13 Nov 2014, 01:17:49

I read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.
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Re: How is oil production declining in mature fields?

Unread postby MonteQuest » Thu 13 Nov 2014, 01:58:10

kenberthiaume wrote:I read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.


Conventional oil? Or all liquids?

Conventional C+C oil is on an undulating plateau. The mature fields is where that 4.5 to 6.7% decline rate comes from. Some new conventional projects are coming on line, but it's the light tight oil from shale that is keeping the production basically flat and offsetting the declines of mature fields. At least that is how I understand it.

All liquids includes biofuels, refinery gains, NGL, Syncrude, LTO, Crude and Condensate which is why Total liquids is still rising.

Here's a good link on decline rates http://grandemotte.wordpress.com/oil-and-gas-5-production-decline-rates/

http://grandemotte.wordpress.com/2013/04/15/future-decline-rates-why-they-matter/
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Re: How is oil production declining in mature fields?

Unread postby Subjectivist » Thu 13 Nov 2014, 07:03:36

MonteQuest wrote:
kenberthiaume wrote:I read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.


Conventional oil? Or all liquids?

Conventional C+C oil is on an undulating plateau. The mature fields is where that 4.5 to 6.7% decline rate comes from. Some new conventional projects are coming on line, but it's the light tight oil from shale that is keeping the production basically flat and offsetting the declines of mature fields. At least that is how I understand it.

All liquids includes biofuels, refinery gains, NGL, Syncrude, LTO, Crude and Condensate which is why Total liquids is still rising.

Here's a good link on decline rates http://grandemotte.wordpress.com/oil-and-gas-5-production-decline-rates/

http://grandemotte.wordpress.com/2013/04/15/future-decline-rates-why-they-matter/


Other than the people around here who like to know the details most of humanity does not care what the source name is. They don't ask is it sync rude, or biofuel, all they ask is, will it run my car/truck/atv/boat?

Understanding that each option comes with its own set of problems is beyond their current thought processes because they have adequate supply of something to burn. When they have to cut use from shortages they will have to pay more attention, but until then they ignore it.
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
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Re: How is oil production declining in mature fields?

Unread postby kenberthiaume » Thu 13 Nov 2014, 09:11:46

MonteQuest wrote:
kenberthiaume wrote:I read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.


Conventional oil? Or all liquids?

Conventional C+C oil is on an undulating plateau. The mature fields is where that 4.5 to 6.7% decline rate comes from. Some new conventional projects are coming on line, but it's the light tigmht oil from shale that is keeping the production basically flat and offsetting the declines of mature fields. At least that is how I understand it.

All liquids includes biofuels, refinery gains, NGL, Syncrude, LTO, Crude and Condensate which is why Total liquids is still rising.

Here's a good link on decline rates http://grandemotte.wordpress.com/oil-and-gas-5-production-decline-rates/

http://grandemotte.wordpress.com/2013/04/15/future-decline-rates-why-they-matter/

Maybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.
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Re: How is oil production declining in mature fields?

Unread postby MonteQuest » Thu 13 Nov 2014, 22:27:31

kenberthiaume wrote:Maybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.


For a hot moment. The oil price is going south and capex is falling, soon to be followed by lower production, I think.
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Re: How is oil production declining in mature fields?

Unread postby JohnnyOnTheFarm » Fri 14 Nov 2014, 00:00:19

MonteQuest wrote:
kenberthiaume wrote:Maybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.


For a hot moment. The oil price is going south and capex is falling, soon to be followed by lower production, I think.


Just as it has before though,right? Price and production crash of the early 80's, that one took what, 15 years to work out of the system and the invention of the SUV to soak up all the additional crude oil. Then we had the late-90's price crash, followed soon thereafter by peak oil in 2005, causing increasing prices, followed by yet more oil production, and so on and so forth.

So maybe we enjoy this price drop for a short period of time (like 2008) or a long period of time (like 1986) or an intermediate period of time (like 1998) but the consumer sure won't mind.

And the difference between now and then is that America is just that much better prepared (some might say inoculated?) from pissing their pants and getting all crazy doomerish the next time. Live closer to work, drive less, bring on the bicycles and scooters, and just stop worrying about it already.

There are plenty more things to worry about, like say what the idiots in charge have planned for us during the next two years.

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Re: How is oil production declining in mature fields?

Unread postby rockdoc123 » Fri 14 Nov 2014, 00:04:46

So maybe we enjoy this price drop for a short period of time (like 2008) or a long period of time (like 1986) or an intermediate period of time (like 1998) but the consumer sure won't mind.

And the difference between now and then is that America is just that much better prepared (some might say inoculated?) from pissing their pants and getting all crazy doomerish the next time. Live closer to work, drive less, bring on the bicycles and scooters, and just stop worrying about it already.


not sure what planet you were living on these last months Monte but America is America. They are going to take the low prices as a signal to buy more crap they don't need. After all they live month to month on credit card debt now, just means they can buy more stuff now they have to pay less for oil.

So yes they are not going to fall into the doomerish category but for danged sure they aren't going to bicycle anywhere....most modern carbon fibre bikes couldn't take the weight.

Just my opinion of course.
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Re: How is oil production declining in mature fields?

Unread postby JohnnyOnTheFarm » Fri 14 Nov 2014, 08:17:50

rockdoc123 wrote: After all they live month to month on credit card debt now, just means they can buy more stuff now they have to pay less for oil.


They are already after it. Americans are pretty predictable, and having WAY too much disposable income, will continue doing it. Sounds like the right time to collect an EV or hybrid, as people fade into bigger trucks and SUVs again.


Those extra dollars and cents are giving some financial breathing room to people like Apolinar. And they're adding up to billions in extra cash for drivers across the country that could help stimulate the economy — at least in the short term.

http://www.mysanantonio.com/business/lo ... 865178.php
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Re: How is oil production declining in mature fields?

Unread postby MonteQuest » Sat 15 Nov 2014, 00:11:04

JohnnyOnTheFarm wrote:
MonteQuest wrote:
kenberthiaume wrote:Maybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.


For a hot moment. The oil price is going south and capex is falling, soon to be followed by lower production, I think.


Just as it has before though,right?


Not exactly. In the past, oil companies that spent big, got big results. Not any more. Now high prices just make existing production profitable, but doesn't really add to reserves or new production like it once did. Law of diminishing returns.
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Re: How is oil production declining in mature fields?

Unread postby ROCKMAN » Sat 15 Nov 2014, 01:04:08

Monte - "In the past, oil companies that spent big, got big results." Lets take a look again at the late 70's boom again. At the height we had over 4500 rigs drilling compared to the 1900 we have running today. You have to figure the oil patch was spending a lot of capes back then. But take a look at the results: virtually no increase in US oil production. Compare that to the increase in production during the current boom.
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Re: How is oil production declining in mature fields?

Unread postby shallow sand » Sat 15 Nov 2014, 21:40:29

ROCKMAN. I have read your comparison of 4500 rigs in previous boom to 1900 today. I have a couple of questions about that.

What were CAPEX $$ spent in previous boom compared to current boom?
How does total feet drilled in previous boom compare to current boom?

Probably more relevant is feet drilled in pay zone in previous boom to current boom. Doubt we can find that one. I'm going to try to find answers to above on my own.

I agree the increase in production has taken me by surprise. Just trying to figure out at what oil price it needs/how far it will drive down oil prices. Admit it drove natural gas prices in the toilet. Really need to know that about tar sands too. The billion dollar question that won't be answered till it actually happens, I'm afraid.
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Re: How is oil production declining in mature fields?

Unread postby ROCKMAN » Sat 15 Nov 2014, 22:53:00

Shallow - Here's the best detail I could find:

http://www.ogfj.com/articles/print/volu ... nants.html

In 2004 $'s yearly global E&P capex in the late 70's boom exceeded every year between 1981 and 2005. By 2005 capex finally reached the inflation adjusted level of the 70's boom. Obviously capex has increased over the 2005 level. Regardless the oil patch spent a sh*tload of money in that old boom with virtually no increase in oil production. US oil production peaked in 1971 and after spending hundreds of $billions of the next 10 years we didn't reach that peak again. Compare that to increased oil production in recent years. Folks can argue the oil patch isn't getting the proper bang for its buck today but it's doing much better then it did in the 70's boom when we still had all that "cheap oil" to develop. LOL.

Since I started in the oil patch in 1975 I had a front row seat to the insanity. I've tried to characterize the hype back then to what we have today. And today it's really is low compared to 35 years ago. I worked for one company that spent $550 million to find $60 million in oil/NG. They went under and disappeared forever. I handled one outside operated JV that drilled 18 exploration wells...all dry holes. They went under and were acquired by another pipeline company.

We may get there yet but currently we aren't seeing anything close to the collapse we experienced more then 3 decades ago.
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Re: How is oil production declining in mature fields?

Unread postby shallow sand » Sat 15 Nov 2014, 23:09:42

ROCKMAN. Thanks for the link. I have tried to look for the info, but it seems like everything is 5 years old or so.

A majority of the wells in current operation in our area were drilled between 1977-1985. There was a tremendous drilling boom then. Wells all under 4000'. All cost under $300,000 in today's $$. My point is that although there are a lot less rigs going in this boom than previous, I suspicion the feet drilled and CAPEX spent is greatly in excess. I may be wrong. Surprising I can't easily find updated info.

I agree that there has been little carnage so far. Massive carnage 86-98. In doing my research trying to find updated info in last hour or so, did find a chart on eia website for wells drilled per month going back to 1971 in US. In 1998 reached a low of around 200 per month. I'm just trying to figure out if these shale dudes are capable of driving us back to the previous post-boom carnage.

Also read US has around one million wells in production for oil and gas, Russia has about 110,000 and Saudi Arabia has 2000+/- US still has less than 3% of estimated world wide reserves. Pretty interesting stats there.
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Re: How is oil production declining in mature fields?

Unread postby ROCKMAN » Sun 16 Nov 2014, 14:29:16

Shallow - Don't forget the inflation factor. Yes, a foot of hole cost more to drill today then in 1979. But: the average home sold for $69,000 in 1980. In 2013 - $290,000. The average car in 1980...$7,200. In 2013...$31,000. A gallon of gasoline in 1980...$1.19. In 2013...$3.80. A pound of hamburger meat in 1980...$0.99. In 2013...$4.68.

You feeling as old as I do now? LOL. But look at the link again: adjusted for inflation the world was spending as much developing petroleum in 1980 as we were in 2005. Do you feel we weren't spending very much in 2005? And, again, the point wasn't whether we've been spending much more or less during this boom as we were in the 70's boom. It was about the results of these capex expenditures. The original comment I responded to offered that the oil patch has never pissed away money as badly as we have been the last several years. The FACT that we spent so much money with 4,500+ rigs drilling with no increase in domestic oil production shows that statement to be very wrong.

And that's the problem so many newbies to our energy situation have today: they are typically working within a context of 10 to 20 years. For them they think they see a change from a long standing normal to a new normal. But the reality is that the Peak Oil Dynamic began affecting the oil patch and the world about 4 decades ago. As I've said many times we called it the "reserve placement problem" in 1975 and not "PO". But it was the same animal. I understand you work on the stripper end of this dynamic. You've actually benefited from much of those wasted $'s: had companies not drilled and completed so many poor prospects there wouldn't be as many stripper wells today. For instance can you guess how many wells you've been making a decent living on never returned 100% of the cost to drill them originally? And now guess how many future stripper wells in the Bakken, EFS, etc. that won't payout but will provide a good living for stripper operations.

As has been said: if you're good at what you do you can make chicken salad out of chicken sh*t. But if you don't have the chicken sh*t in the first place you can't do nuthin. Here's hoping for a lot of chicken sh*t in your future. LOL.
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Re: How is oil production declining in mature fields?

Unread postby MonteQuest » Sun 16 Nov 2014, 14:53:14

rockdoc123 wrote: not sure what planet you were living on these last months Monte but America is America.


Wasn't me, that was JohnnyOnTheFarm.
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Re: How is oil production declining in mature fields?

Unread postby shallow sand » Mon 17 Nov 2014, 17:48:06

ROCKMAN: You are absolutely correct about wells that have never paid out being operated profitably now as strippers. Lots of money lost in 1980s bust, price of leases hammered down to nothing, garbage picked up cheap, in 1990s early 2000s, since 2000 has worked out pretty well. Probably same scenario will work out in Bakken if those wells will hang in there at 20-50 per bbl for a long time. Don't know about Eagle Ford, those look like they could go to nothing over the long term.
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Re: How is oil production declining in mature fields?

Unread postby ROCKMAN » Mon 17 Nov 2014, 23:26:03

Shallow - ". Don't know about Eagle Ford, those look like they could go to nothing over the long term." From what I understand about water disposal and pumping costs for the EFS wells I suspect many won't have any "long term".
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