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Shale Oil: Running to Stay In Place

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Shale Oil: Running to Stay In Place

Unread postby Pops » Fri 28 Sep 2012, 07:34:12

Good article at TOD on tight oil decline rates, economics etc...
In this post I present the results from an in-depth time series analysis from wells producing crude oil (and small volumes of natural gas) from the Bakken - Bakken, Sanish, Three Forks and Bakken/Three Forks Pools - formation in North Dakota. The analysis uses actual production data from the North Dakota Industrial Commission as of July 2012 from what was found to be a representative selection of wells from operating companies and areas.


http://www.theoildrum.com/node/9506

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Re: Shale Oil: Running to Stay In Place

Unread postby TheAntiDoomer » Fri 28 Sep 2012, 08:13:41

riiiight Pops, I'm sure the Oil Drum we'll present a fair and balanced look at shale oil...sigh.
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Re: Shale Oil: Running to Stay In Place

Unread postby TheAntiDoomer » Fri 28 Sep 2012, 08:26:51

Shell's Shale Oil Expansion
http://seekingalpha.com/article/891381- ... -expansion

Royal Dutch Shell (RDS.A) is a large oil and gas producer in North America that has been making acquisitions that are sure to increase its yields in the future. Shell is looking to make an impact in shale oil production, an industry that has the potential to change our entire economy in the next five years. Shale oil refers to a rock that releases petroleum like liquids when heated up and are richer in crude, a process that will revolutionize the oil industry. Domestically, it can be found in many different states and could potentially produce between 1.2-1.8 trillion barrels of oil in the future. To put these numbers into context; America consumed an estimate of 7 billion barrels of oil in 2011 according to the U.S. Energy Information Administration. The Royal Dutch Shell have viewed the extreme amounts of shale oil in America as an opportunity to expand and multiple their production in future years.

http://static.cdn-seekingalpha.com/uplo ... _thumb.jpg
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Re: Shale Oil: Running to Stay In Place

Unread postby TheAntiDoomer » Fri 28 Sep 2012, 08:28:52

Technologies Will 'Green' Fracking: Keith Schaefer
http://www.resourceinvestor.com/2012/09 ... fer?ref=hp

As a rule of thumb, the cost of production for most shale plays in North America is $40-45/bbl, which is not that much different from costs using conventional methods. It is above-ground logistics that cause lower prices for fracked oil. We don't have enough pipelines to efficiently transport the fracked oil to the refineries. Consequently, supply backs up at the hubs, creating big discounts. For example, in late June, Canadian oil and Bakken oil were at huge discounts, almost $20/bbl to WTI. Because of pipeline disruptions and refinery downtime, Canadian producers were receiving under $70/bbl for their oil. But only 2½ months later, the logistics are running smoothly and Bakken oil is now selling at only a $3/bbl discount to WTI.
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Re: Shale Oil: Running to Stay In Place

Unread postby SelfGov » Fri 28 Sep 2012, 09:58:03

TheAntiDoomer wrote:Shell's Shale Oil Expansion
http://seekingalpha.com/article/891381- ... -expansion

Royal Dutch Shell (RDS.A) is a large oil and gas producer in North America that has been making acquisitions that are sure to increase its yields in the future. Shell is looking to make an impact in shale oil production, an industry that has the potential to change our entire economy in the next five years. Shale oil refers to a rock that releases petroleum like liquids when heated up and are richer in crude, a process that will revolutionize the oil industry. Domestically, it can be found in many different states and could potentially produce between 1.2-1.8 trillion barrels of oil in the future. To put these numbers into context; America consumed an estimate of 7 billion barrels of oil in 2011 according to the U.S. Energy Information Administration. The Royal Dutch Shell have viewed the extreme amounts of shale oil in America as an opportunity to expand and multiple their production in future years.

http://static.cdn-seekingalpha.com/uplo ... _thumb.jpg


The author of the article you quoted is obviously confused.

There is a difference between shale oil and oil shale.
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Re: Shale Oil: Running to Stay In Place

Unread postby Pops » Fri 28 Sep 2012, 09:58:46

The article at TOD looks at real world conditions as opposed to your investment fluffing PR pieces.

If you have anything to actually critiqe the article with aside from "Investment" salesmen I'd be happy to see it.
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Re: Shale Oil: Running to Stay In Place

Unread postby Plantagenet » Fri 28 Sep 2012, 10:20:01

To be fair, the "running in place" aspect of frakking has some positive benefits.

Frakking is very labor intensive. It generates lots of good-paying jobs. Its been one of the few bright spots in the US economy over the last 4 years.

The rapid decline of frakked wells means new drilling has to go on constantly, creating jobs for folks who work on drilling rigs, truck driving, steel-pipe making, frakking, well-logging, land men, surveyors, with halo effects for hotels, restaurants, laundries, hardware and supply stores, etc. etc.---- the Bakken areas of North Dakota are having an economic boom while the rest of the US staggers along with no growth---- the unemployment rate in much of North Dakota is ca. 2%.
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Re: Shale Oil: Running to Stay In Place

Unread postby Lore » Fri 28 Sep 2012, 11:12:55

Over the last three years, 2009 -2011, its been estimated that the Bakken has produced about 30,000 direct labor jobs with another 7,000 -10,000 jobs per years for the next five years. Every one of these jobs supports two more indirect jobs.

So we're talking at best 80,000 direct jobs if work continues at the present pace. And these jobs may, according to the article by TOD, just be short term employment.

Let's just compare this with the losses over the last few years during the auto industry crisis. Back in 2008 the auto industry parts-suppliers employees and car-dealer employees totaled approximately 1.6 million people. All auto-related industries and after-market service businesses employed approximately 3.1 million people in the United States. It's estimated two million people relied on the industry for health care and 775,000 retirees collect auto-industry pensions.

If we look at the BLS numbers from the auto manufactures alone, the differential from 2008 is down 165,000 workers.

I'm not really feeling the joy here. While there is certainly oil exploration creating jobs in other parts of the country and admittedly any new jobs being created is nothing to sneeze at. I see this as part of the analogy of running faster to just to stay still.
Last edited by Lore on Fri 28 Sep 2012, 11:53:28, edited 1 time in total.
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Re: Shale Oil: Running to Stay In Place

Unread postby AdTheNad » Fri 28 Sep 2012, 11:14:38

Plantagenet wrote:To be fair, the "running in place" aspect of frakking has some positive benefits.

That is good for jobs! We should all go around and start breaking windows to give those unemployed glaziers something to do!
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Re: Shale Oil: Running to Stay In Place

Unread postby dinopello » Fri 28 Sep 2012, 11:21:01

AdTheNad wrote:
Plantagenet wrote:To be fair, the "running in place" aspect of frakking has some positive benefits.

That is good for jobs! We should all go around and start breaking windows to give those unemployed glaziers something to do!


Totally true in our society. As was depicted in 5th Element:

Zorg: Where are the stones?

Priest Vito Cornelius: I don't know. And even if I did know, I wouldn't tell someone like you.

Zorg: Why? What's wrong with me?

Priest Vito Cornelius: I try to serve life. And you seem to want to destroy it.

Zorg: Oh, Father. You're so wrong. Let me explain.
[Puts an empty water glass on his desk]

Zorg: Life, which you so nobly serve, comes from destruction, disorder and chaos. Now take this empty glass. Here it is: peaceful, serene, boring. But if it is destroyed...
[Pushes the glass off the table. It shatter on the floor, and several small machines come out to clean it up]

Zorg: Look at all these little things! So busy now! Notice how each one is useful. A lovely ballet ensues, so full of form and color. Now, think about all those people that created them. Technicians, engineers, hundreds of people, who will be able to feed their children tonight, so those children can grow up big and strong and have little teeny children of their own, and so on and so forth. Thus, adding to the great chain of life. You see, father, by causing a little destruction, I am in fact encouraging life. In reality, you and I are in the same business.


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Re: Shale Oil: Running to Stay In Place

Unread postby Plantagenet » Fri 28 Sep 2012, 11:27:05

"We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade."

--Barack Obama

---------------------------------------------
President Obama says frakking is an important job producer.

Trying to argue that the oil biz doesn't create lots of good jobs is silly. Why not accept the facts? :roll:
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Re: Shale Oil: Running to Stay In Place

Unread postby Pops » Fri 28 Sep 2012, 11:44:40

There was a bit on some ND town last night on the tube and the influx of oil workers. One of the ironic lines in the story was how the previous boom had moved through the area leaving half completed infrastructure and debt in it's wake when the boom petered out.

I don't disagree that if there is going to be money made fro oil I'd just as soon it be here as long as we can be reasonably sure it doesn't do more harm than good ie water pollution/depletion and etc.
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Re: Shale Oil: Running to Stay In Place

Unread postby Lore » Fri 28 Sep 2012, 11:58:16

I'm sure the California gold rush produced lots of jobs at the time and then lots of ghost towns.
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Re: Shale Oil: Running to Stay In Place

Unread postby pstarr » Fri 28 Sep 2012, 12:08:54

Plantagenet wrote:President Obama says frakking is an important job producer.

Trying to argue that the oil biz doesn't create lots of good jobs is silly. Why not accept the facts? :roll:

So does collecting cow pies or sticks for heat. You hate Obama. Wind up, talk down. Same old same old, Plant.
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Re: Shale Oil: Running to Stay In Place

Unread postby Plantagenet » Fri 28 Sep 2012, 12:47:32

pstarr wrote: ....hate Obama. Wind up, talk down. Same old same old


Get a grip on yourself---you are posting nonsense.

Why not face facts? Obama is one of the biggest boosters of the NG biz.
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Re: Shale Oil: Running to Stay In Place

Unread postby Plantagenet » Fri 28 Sep 2012, 12:50:18

Lore wrote:I'm sure the California gold rush produced lots of jobs at the time and then lots of ghost towns.


There are some gold mining ghost towns tourist traps along highway 49. But other Gold Rush towns that boomed in 1849 continue to flourish today. Maybe you've even heard of some of these towns?

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Capitalism often generates booms and busts. Right now there is a boom in frakking in the Bakken Fm and elsewhere in the USA. In this bad economy, the jobs from frakking are a welcome addition.
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Re: Shale Oil: Running to Stay In Place

Unread postby Pops » Fri 28 Sep 2012, 12:55:20

come on, if you don't want to talk about oil, in particular the conclusions of the OP article, go somewhere else.
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Re: Shale Oil: Running to Stay In Place

Unread postby TheAntiDoomer » Fri 28 Sep 2012, 12:58:28

Pops wrote:The article at TOD looks at real world conditions as opposed to your investment fluffing PR pieces.

If you have anything to actually critiqe the article with aside from "Investment" salesmen I'd be happy to see it.


Pops, I have more confidence in those articles than TOD pushing their typical one-sided MO. I'm sure i'll be around with OF2 in a coule years when the US is hitting new production levels with a fresh stick to poke you in the eye with :? :-D :wink: :lol:
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Re: Shale Oil: Running to Stay In Place

Unread postby TheAntiDoomer » Fri 28 Sep 2012, 13:16:31

"The human ability to innovate out of a jam is profound.That’s why Darwin will always be right, and Malthus will always be wrong.” -K.R. Sridhar


Do I make you Corny? :)

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Re: Shale Oil: Running to Stay In Place

Unread postby pstarr » Fri 28 Sep 2012, 14:18:33

TheAntiDoomer wrote:
Pops wrote:The article at TOD looks at real world conditions as opposed to your investment fluffing PR pieces.

If you have anything to actually critiqe the article with aside from "Investment" salesmen I'd be happy to see it.


Pops, I have more confidence in those articles than TOD pushing their typical one-sided MO. I'm sure i'll be around with OF2 in a coule years when the US is hitting new production levels with a fresh stick to poke you in the eye with :? :-D :wink: :lol:
There is nothing "one-sided" about the data, analysis, or Rune Likvern's conclusions. Individual well production numbers come from the North Dakota Industrial Commission. I doubt you have even rudimentary inclination, ambition, or skill to check it out. It seems you'd rather call attention to yourself. Grow up little boy

For those interested, Likvern' simply tracked and plotted (representative samples) individual well production over time. In the following chart the individual colored blocks represent single well production volumes (from the Statoil/Brigham wells in the Alger area of Bakken) tracked monthly, repeated monthly. Subsequent new drilling brings on new blocks (on top of column) each month.

Image

It is quite apparent frantic well-drilling (The single black line with circles represents total producing wells) is necessary to keep the production increasing at all. What is even more worrisome (to the clueless newer investors) is that the newer well are depleting even faster.

Image

His conclusion;

On a long enough timeline, the highs in well productivities for the Sanish area and Statoil/Brigham will melt into a point. To repeat, the wells for the companies/areas subject to these in-depth studies had all a specific well productivity (as expressed by Bbls/day/well) that was above the average for the Bakken formation, see also figure 06. The Sanish area in the Bakken formation is/was considered being one of the best and during a year (from the summer of 2010 to the summer of 2011) the well productivity (as described by total reported production during the 12 first months) declined about 40%. For Statoil/Brigham the well productivity declined about 10% in one year.
To repeat his point. The best of the best of the Bakken regions declined 40% and 10% IN THE FIRST YEAR. Only frantic drilling and bad money on bad money is keeping this scam alive.
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