[Tanada]

BBC world news has decided this story has legs.
From http://www.bbc.co.uk/news/science-envir ... #FBM262379

Massive new discoveries in the US have led to a "dramatic" change in global prospects.

The IEA's head of oil markets, Antoine Halff, says forecasts have had to be repeatedly revised upwards in the past two years.

Declining US production has been reversed as oil extracted from shale and other new sources comes on stream.

Mr Halff told BBC News that concerns about an approaching "peak" in oil production have been "moved to the back burner".

"Just a few years ago, everybody thought US production was in permanent decline, that the nation had to face the prospect of continuously rising imports - and now the country is moving towards self-sufficiency," he explained.

"In the last few years, many forecasters have had to revise their forecasts upwards continuously - sometimes the ink was not dry on the previous forecasts before they had to raise their outlooks again."

Developments in major new fields in Texas and North Dakota are behind the change in US oil fortunes, with the so-called Monterey shale beneath California also in prospect.

Everything is apparently peachy keen, A-OK and Super Duper!

[SeaGypsy]

Yep, hence oil is going to $50 a barrel very soon. How stupid are these people? Extraction/ processing is $75+.

[Tanada]

Yep, hence oil is going to $50 a barrel very soon. How stupid are these people? Extraction/ processing is $75+.

I dunno how dumb they are, but I find it very disappointing because BBC is a news system I have a lot more faith in than the American media sources. Now they have drunk the Kool-Aid too.

[John_A]

Yep, hence oil is going to $50 a barrel very soon. How stupid are these people? Extraction/ processing is $75+.

I dunno how dumb they are, but I find it very disappointing because BBC is a news system I have a lot more faith in than the American media sources. Now they have drunk the Kool-Aid too.

It isn't kool-aid when they can show this. It certainly may not be the savior of the world, but this wasn't supposed to even start, let alone reach the kind of levels it has.

Someone just dropped one of the worlds largest producing oil fields into North Dakota, and some people are taking a little longer to notice than others.

[SeaGypsy]

Can anyone else understand what John just said? I can't.

(The topic is Saudi America- a total fantasy.)

[John_A]

Can anyone else understand what John just said? I can't.

(The topic is Saudi America- a total fantasy.)

Those who live by the sword shall die by the sword.

Or, to be more clear, when a particular group specializes in fitting time series data one way, only downward, they do not then have the moral authority to criticize those who note, correctly, that the current trend is not in that direction, and might lead to a different result (Saudi America).

Here is Hubbert predicting US oil production of either 1.1 million barrels a day, or 2.7 million barrels a day with his classic fit.



What do you think Gail wanted people to think when she displayed this one? Certainly it isn't designed to show the resource base from whence the rate is drawn, and it is obvious that there is only one direction!



And then we have what has happened as of late.



Fitting time series data...just pick your time period and whatever 5th order polynomial fit you'd like, it will deliver a low R^2 and presto! But those who use the same technique don't get to honestly deny it of others who are just doing the same.

Saudi America is the pendulum swing to DOOM!

My guess is that the answer is somewhere in between doomer porn and Saudi America. Obviously Hubbert called this year very low, Gail doesn't know anything about how to apply a resource base estimate like Laherrere tries to in his most recent TOD post, and even he is just attaching the same old "always go down, always decline, always scarcity" angle. The IEA says something different, and actually provide a piece of information Laherrere should, but doesn't, which is the cost/supply relationship. Something to be said for those who consider the resource base having a leg up on anyone just fitting time series data.

[Tanada]

If someone with the skills would put up a graph of US oil production lower 48 plus Alaska from say 1946 to present I would find it very interesting. It is great tight oil is making a boom for American production, it is good for our economy to import less oil and good for our fellow Americans to get high paying jobs providing that oil and stimulating other people to satisfy their needs.

I do like the fact that North Dakota and Texas are supplying much more of our oil, but I also am cautious because it might prove to be a flash in the pan, or it might be a long term sustainable resource. I don't know which yet. Either way it is good as long as it lasts.

[John_A]

This chart is deceptive. It is not produced by EIA (as its caption suggests), but rather a tight-shale investment company.

Good thing they used EIA data then. Not liking who the messenger is has nothing to do with the validity of the data. North Dakota has displaced Alaska as the countries second largest producer, has acquired the highest production rate oil field in the western hemisphere in the past couple years, has helped drive America to the fastest growth in oil production in its history, and obviously this cannot go on forever and must at some point stop.

The only question is whether we become Saudi America along the way, or not?

[John_A]

North Dakota has displaced Alaska as the countries second largest producer

That is because the North Slope was America's last great giant field, driven by primary water drive.

I don't care why. All I care about is rate! Peak oil is about rate! People say it all the time, usually immediately before or after they claim peak oil is all about price. I can't say I've figured it out yet myself.

We depended on $1.00-$2.00 gasoline to drive consumer growth, and there is little evidence tight-shale will ever be produced for less than $100/barrel--$4.00 gasoline.

Again, so what? The world, and the US, have become accustomed to higher prices, are adjusting their behavior accordingly (less driving, more efficient cars available to gas hog Americans, etc etc) and according to the industry guys on this very forum, those prices are what allow the US to grow oil production faster than at any time in its history.

Someone has decided that this is good enough to America to become Saudi America. I don't agree with that, but they do have a point, they are projecting upwards the same information others have been perpetually projecting downwards. So we know those always projecting downward have been discredited by the very economic concepts they despise (price=supply! price=supply! price=supply!), and now a different brand of projectionists are taking the fastest growing oil production time frame in the countries history and pretending it continues forever!

Group 1 has been punted out of the serious circle already, Group 2 will be punted out as soon as drilling slows down or they run out of new places to drill, call me part of Group 3, sitting somewhere in the middle.

the highest production rate oil field in the western hemisphere in the past couple years,

easy to say when virtually all oil producers are in decline.

has helped drive America to the fastest growth in oil production in its history

Nonsense. It is a blip. nothing more.

[/quote]

A blip that is larger, as of May/2013, larger than any other oil field in the Western Hemisphere. Quite a blip....biggest blip in the countries history....so when does the biggest blip become just BAU at the higher prices which caused it to happen?

[SeaGypsy]

Someone has decided that this is good enough to America to become Saudi America. I don't agree with that, but they do have a point, they are projecting upwards the same information others have been perpetually projecting downwards.

Oh, good. I thought for a moment you were agreeing with the topic heading...

'Saudi America' would mean having enough abundance not just to quit importing but to export to an extent to drive price. Not gonna happen.

[John_A]

'Saudi America' would mean having enough abundance not just to quit importing but to export to an extent to drive price. Not gonna happen.

I'm not sure 'Saudi America" includes the implication of exporting enough to drive price, but certainly that is a possibility in the concept. In terms of "net energy" use, America actually does better than I ever thought, probably because of coal exports or something.

Anyway, articles like this certainly drive the impression.

http://www.bloomberg.com/news/2012-02-2 ... -2011.html

[ROCKMAN]

I’m always a little surprised when I see so much pseudo-excitement over statements like “Saudi America Will Overtake Saudi Arabia As Top producer”. Does everyone know that US production exceeded that of the KSA for the better part of a year back around 2002? That the US has been doing about 80 - 85% of the KSA rate for the last 4 years or so? That for the majority of the 20th century US production exceeded that of the KSA? I think most understand that the US was the Saudi Arabia of oil exports at one time. Granted a long time ago. That the Texas Rail Road Commission was a much more effective cartel than OPEC every was? LOL.

The US, Russia and the KSA have been sharing the top 3 slots for many years. The only surprising prediction IMHO is that the positions won’t swing back and forth over the next 30 years. And again, back to Chia-T: I don’t care nearly as much about how much oil the KSA is producing in 10 or 15 years. I’m much more interested in how much oil they’ll be exporting and how much will be going to someone else other than China. That should have a much greater impact on the global oil price and availability.

John – I think somewhere I can’t find right now you asked me how I integrate various future estimate of US, KSA, global, et al oil production in my company’s business plan. I don’t. We don’t. None of those projection factor at all in our drilling decisions. Those decisions are driven solely by the prospect specific details. Future prices? We use current prices in our economics whatever they happen to be at the time. We know we can’t predict future prices so we don’t try. Using current prices may end up being optimistic or pessimistic. Won’t know till we get there. But by consistently using current prices we are just that: consistent. We are consistent in knowing what we don’t know. Over the last 38 years I’ve seen many companies use high price expectations to justify their business. With almost no exception they all paid a heavy price. And sometimes they paid a heavy price when they didn’t escalate their price platform and held constant. Life can be cruel even when you aren’t optimistic. LOL.

[Beery1]

...BBC is a news system I have a lot more faith in than the American media sources. Now they have drunk the Kool-Aid too.

Sadly, BBC is nowhere near the same organization it was in the 1970s and '80s. There really aren't any of those quality news organizations left anywhere.

[Vineyard]

German news media are also spreading these news for months now. And NONE of these news papers were mentioning extraction costs.

[wildbourgman]

Guys, it's happening, that's why I'm not saying that we won't reach 1970 production levels again like I said so many times in the last 8 years. Now will we spend alot of energy to extract this oil? Yes we will. Will we need to have a very high rig count in order to chase or even pass up the red queen for a period? Absolutely. Are there more shale plays in the states to tap? Yes! Can we get another 2000 rigs running in the states and do we have unemployed people that can be taught to run them? I think so, in time.

With all that said I'm feeling that we are going to have pricing similar to 2008 where we had severe variations in oil prices. If oil does go below $75 for and extended period, say six months to a year, then the rig count won't stay high enough to keep production up and growing like it is today due to shale well decline rates. If there are massive layoffs in the shale plays, they won't be able to grow a quality energy workforce. It's a catch 22!

[rockdoc123]

It's a catch 22!

and its been like this since I started in the biz some thirty plus years ago. Its a roller coaster ride.....and as is the case with roller coasters your options are to get all upset and up chuck on the fellow in front of you or settle down, realize it is unlikely anyone is going to die in the short term, and ride out the fluctuations.

[Outcast_Searcher]

I do like the fact that North Dakota and Texas are supplying much more of our oil, but I also am cautious because it might prove to be a flash in the pan, or it might be a long term sustainable resource. I don't know which yet. Either way it is good as long as it lasts.

Absolutely right, Tanada. As a moderate, this is an example of the positive kind of thing I expect to see as technology improves. (And like you, I have no idea how long it may last).

BUT, the negative side of BAU growth and the third world demand dwarfing any relatively minor supply improvement we may see OVER TIME, still doesn't change. Whether China grows at 6% or 8%, the big picture is BAU thinking continues apace, and 3+ billion people wanting cars will consume all the oil (and tend to push prices higher) we're likely to see for some time.

Do we have enough time to cross the bridge to the green nirvana the cornies see? (The world covered with Teslas powered by solar, for example). Maybe, but I think this takes a good 30 years, and a lot can happen in the mean time.

[John_A]

Are there more shale plays in the states to tap? Yes! Can we get another 2000 rigs running in the states and do we have unemployed people that can be taught to run them? I think so, in time.

You assume that A) the currently unemployed actually want to work and B) if they do, they actually CAN. Some nowadays would rather stay unemployed than actually "work", and floorhands on a rig WORK. They aren't sitting in front of a computer screen in a cubicle surfing the internet in their off moments, texting with friends, heading out to a local bistro for a lunch break. Make 100% of the unemployed actually do rig work and I'm betting you kill 10% from heart attack, heat stroke, physical trauma (cathead chain might leave a mark! ), 89% don't last the first week due to physical and mental defect (scared, tired, lonely, too out of shape, not enough opportunity to dampen down anxiety attacks by smoking weed for hours on end, pulled muscles, broken bones, etc etc) and the 1% who are left might stick around.

With all that said I'm feeling that we are going to have pricing similar to 2008 where we had severe variations in oil prices. If oil does go below $75 for and extended period, say six months to a year, then the rig count won't stay high enough to keep production up and growing like it is today due to shale well decline rates. If there are massive layoffs in the shale plays, they won't be able to grow a quality energy workforce. It's a catch 22!

Booms and busts are part of the business. It becomes important to be "quality" enough to work in both.