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The Coming Oil Flood

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

Re: The Coming Oil Flood

Unread postby ROCKMAN » Wed 05 Oct 2016, 15:21:26

"It's an attractive concept during a glut because you can point to all sorts of non-oil issues and say "SEE! Look! Peak oil *!". Actually just the opposite if you pulled your head out of your butt. LOL. It's not peak oil. And more specifically has little to with peak oil. But has everything to do with the entire system that effects the supply and price of oil. And as the last 8 years PROVE CATEGORICALLY the supply and oil price are little dependent on some PO date.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Thu 06 Oct 2016, 16:15:22

Every "flood" has to start somewhere: a company just received approval to drill and frac 4 wells in the new big shale play in the U.K. Now just another 5,000+ wells to go...assuming these first wells have encouraging results. And then watch out...the flood begins!

But might take a while: the UK has about 50 drill rigs compared to the 1,750 we had running during the height of the US shale boom.
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Re: The Coming Oil Flood

Unread postby SumYunGai » Thu 06 Oct 2016, 17:52:32

ROCKMAN wrote:Every "flood" has to start somewhere: a company just received approval to drill and frac 4 wells in the new big shale play in the U.K. Now just another 5,000+ wells to go...assuming these first wells have encouraging results. And then watch out...the flood begins!

Aren't we already having an oil flood? Are we supposed to have another flood on top of the current flood? That would be really bad news for the oil price. Or do we have to wait until the current oil flood recedes before we can have another oil flood? In which case, aren't you guys getting a little ahead of yourselves?
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Re: The Coming Oil Flood

Unread postby rockdoc123 » Thu 06 Oct 2016, 18:44:52

But might take a while: the UK has about 50 drill rigs compared to the 1,750 we had running during the height of the US shale boom.


well under the header...."there is still some giant conventional oil discoveries to be made out there" this recent press release from Caelus Resources.
https://t.e2ma.net/webview/61h5rb/b8a5ef6c056caf78b83d8ade238a1fb1
Caelus confirms large-scale discovery on the North Slope of Alaska
New find could deliver significant oil production, jobs and state revenue

(Anchorage, AK - October 4, 2016) Caelus Energy Alaska, LLC announced Tuesday that its subsidiary, Caelus Energy Alaska Smith Bay LLC, has made a significant light oil discovery on its Smith Bay state leases on the North Slope of Alaska.

Based on two wells drilled in early 2016 as well as 126 square miles of existing 3D seismic, Caelus estimates the oil in place under the current leasehold to be 6 billion barrels. Furthermore, the Smith Bay fan complex may contain upwards of 10 billion barrels of oil in place when the adjoining acreage is included. Due to the favorable fluids contained in the reservoir, Caelus expects to achieve recovery factors in the range of 30-40%. Additional drilling and seismic should improve estimates of oil in place via delineation of undrilled fan lobes and channel complexes imaged on the original 3D seismic.


further in the statement they talk about the two wells drilled and they seem to have made significant thick discoveries in Brookian submarine fan sandstones. Years ago the company I worked for had interests in Alaska and I was involved in looking at the Smith Bay area. It was always intriguing, seismic looked promising it was just a bit expensive to operate. According to the Alaska Oil and Gas Association they will need a price of $40/bbl in order to cover all drilling/development and transportation costs. Caelus said they expect the field could produce up to 200,000 bopd (about half of the current daily production from Alaska).

Of course this is a private company so they aren't under the scrutiny of the SEC but their press release is pretty detailed with respect to what they have found so far. The particular sand sequence they have drilled into certainly has the potential for fields of this size if everything comes together.

Early days but very interesting.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Thu 06 Oct 2016, 19:17:42

Doc - "...significant thick discoveries in Brookian submarine fan sandstones." Mucho thanks. Always interested in hearing about tubidite discoveries. Did my MS thesis on such a fan field in the San Joaquin Basin producing from the Stevens Sand. At Mobil Oil in the mid 70's I saw fanlike morphology on seismic in DW GOM that was in much too deep water at the time to drill. It will be interest to see what facies holds the most oil.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Thu 06 Oct 2016, 19:25:00

SYG - "In which case, aren't you guys getting a little ahead of yourselves?" I probably should be more clear when mocking such optimistic expectations. I've spent 4 decades rejecting such hype about more drilling proposals the I could guess. I was usually nice and told the project did fit our goals. And didn't add that our goal wasn't drilling crappy ideas. LOL.
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Re: The Coming Oil Flood

Unread postby AdamB » Thu 06 Oct 2016, 20:06:33

ennui2 wrote:
radon1 wrote:POD is about depletion, and it is much more focused than an "economics" talk. In addition, it incorporates geology etc., i.e. the things outside the realm of "economics". "Economics" are a only slightly better than etp anyway.


Wrong. POD is just Chris Martenson's Crash Course with another name on it.


Nah. POD is just economics in action. Oil company chasing $$ just like everyone else.
Plant Thu 27 Jul 2023 "Personally I think the IEA is exactly right when they predict peak oil in the 2020s, especially because it matches my own predictions."

Plant Wed 11 Apr 2007 "I think Deffeyes might have nailed it, and we are just past the overall peak in oil production. (Thanksgiving 2005)"
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Re: The Coming Oil Flood

Unread postby tita » Fri 07 Oct 2016, 07:22:52

rockdoc123 wrote:Early days but very interesting.

Early days indeed. From another article (*) about this play, it will begin to produce at best from 2022. They can only drill in winter and have to build a pipeline to connect it to the Trans-Alaska Pipeline. The costs are going to be high, and the development of this play have to be supported with high enough oil prices.

So this reflects what a "mega oil discovery" means currently. Despite being much smaller than the prudhoe discovery in 1968 (1.8 to 2.4 billions bbls for Smith bay vs 13 billions bbls for Prudhoe bay), it is designated as one of the biggest discoveries in Alaska. The production is going to be difficult and costly (fortunately, they don't have to build the trans-alaska pipe). And 200k bbls/d looks big, but is just a shadow of the peak production of 2 mmbbls/d of the north slope in 1989. Nonetheless, this discovery is a big relief for Alaska oil, which is on decline since 27 years, facing lower tax incomes and problems to maintain its Trans-Alaska pipeline.

We'll have to do much better for this "oil flood" to become real.

(*) http://oilprice.com/Energy/Crude-Oil/Ne ... cline.html
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Fri 07 Oct 2016, 08:05:11

tita - "We'll have to do much better for this "oil flood" to become real." And as you point out it won't happen as the result of any one new field discovery. Which should be obvious since individual fields have never been the source of "oil floods". Which is why it's rather silly for someone pointing to a field that will only produce X days of global consumption. It has and always will the cumulative production of hundreds of thousands of individual wells that matters. Even during the great US shale "oil flood" the average well of the 3rd largest oil producing country was less the 20 bopd. Which is why the active rig count is much more meaningful the the size of any newly discovered field. The world doesn't need another N Slope or Deep Water GOM field. It needs TRENDS of new reserves and the economic incentive the drill many tens of thousands of wells over many years to have a significant impact.

Good luck with that, Mr. N Slope and Mr. U.K. LOL
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Re: The Coming Oil Flood

Unread postby hvacman » Fri 07 Oct 2016, 13:09:39

ROCKMAN wrote:tita - The world doesn't need another N Slope or Deep Water GOM field. It needs TRENDS of new reserves and the economic incentive the drill many tens of thousands of wells over many years to have a significant impact.

Good luck with that, Mr. N Slope and Mr. U.K. LOL


Rock - I need clarification on a few oil-patch definitions for otherwise-common words. In the statement above, it appears you use the word "trend" in a very specific oil-related context - not the "normal" lay meaning of trend, as in "to extend in a general direction" - but apparently a geological formation or ??? that can lead to something much bigger (as in more oil reserves) than a single oil "field". And what really defines a "field"?

Thanks!
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Fri 07 Oct 2016, 14:03:07

Hman - "...not the "normal" lay meaning of trend, as in "to extend in a general direction" - but apparently a geological formation or ???". No, that's exactly what "trend" implies. Not that geologists haven't made up words in the past to force others to pay us for an explanation. LOL.

Here's real life example: the Wilcox trend. The Wilcox is a geologic formation (rocks deposited during a specific time interval). The character of the Wilcox rock/reservoir can vary greatly over distance. The Wilcox trend runs "on strike" from interior Mexico (where it has a different name) across Texas, La and Mississippi. It runs in a "dip direction" (which is perpendicular to the strike direction) from a few a couple of hundred miles north of the Texas coast all the way out in the Deep Water play in the GOM. And out there we call it the "Eocene trend" but it's the same age rock as the onshore Wilcox trend.

Clear as mud now, eh? LOL. Actually there are a number of different qualifiers we use with the term trend but that's way to much detail for this site. From a practical matter it's best to use trend to denote production from a similar reservoirs. Usually a collection of "fields" which are geographically unique hydrocarbon accumulations. But can also be production from a formation that isn't confined to individual structural or stratigraphic "traps" with make up "conventional fields". And thus we have the Eagle Ford Shale TREND. And that still isn't easy to follow: as you go east the rocks deposited during EFS time become sandy. And guess what: in that area we call it the Woodbine Sand trend. But guess what: there are still sections that contain shale. Shales some companies have been producing with hz holes. Well, f*ck...what do we call that new " trend" within a trend? Heck, just leave it up to geologists with no imagination...or too much. The commonly used but unofficial name is the Eaglebine trend. One of the first companies trying to turn it into a viable "play" (play: any area someone is trying to make money drilling holes in the ground) is one of the "fathers" of the Eagle Ford Shale play...Petrohawk. But since they sold the company for $12 BILLION (and ran away like a scalded dog) they had to create a new name for the Eaglebine play: Halcon. And where did that name come from? It is a Mexican HAWK. We are a clever bunch of buttholes, ain't we? LOL.

I don't know how much this helps you: there are entire grad school courses focused solely in this subject so impossible to condense it for easy consumption here.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Fri 07 Oct 2016, 14:13:46

Yes: we have hundreds of "code words" we use with each other. Yesterday I used the word "turbidite" with Rocdoc. He not only knows what it means but what it confers to the origin of those rocks and the unique hydraulic nature of how those sediments are transported. It would take thousands of words and many pictures/charts to convey the same info to a non-geologist.

I try to avoid using such code words here but have to at times to avoid making grossly misleading statements.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Fri 07 Oct 2016, 17:07:33

The coming oil flood...or not. From

http://oilpro.com/post/27778/five-major ... icle_2_txt

What have been the 5 major developments in the first half of 2016:

About 2800 wells were brought online, compared with 6000 in the 1st half of 2015, and 6600 in H1 2014.

Total oil production, after peaking March 2015, is now back at levels close to 2 years earlier, in the summer of 2014.

High activity levels in 2015 were able to hold production quite steady, but in 2016, until June, only about 60% of the legacy decline (740 kbo vs 1200 kbo) was replaced with new production. Still, this is a large number, given that completion levels were less than half compared with the year before.

Wells, on average, increasingly deliver more of their eventual returns early on. This can be clearly seen in the “Well quality” tab, by the higher early peaks in recent years, followed by steeper declines. This higher initial productivity is an important factor behind the previous bullet point. For a somewhat fairer comparison, you can exclude the “Appalachia” and “Other” basins, which contain a high proportion of gas wells.

The number of wells are labelled as spud, but not producing, has been reduced since early 2015 by about 25%. You can see this in the “Well status” tab, if you select the status “2. DUC”. This excludes Texas, for which I don’t have this data.
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Re: The Coming Oil Flood

Unread postby rockdoc123 » Fri 07 Oct 2016, 20:29:44

The costs are going to be high, and the development of this play have to be supported with high enough oil prices.

As I mentioned earlier the Alaskan Oil and Gas Association have stated they believe the break even price for this play is $40 including transportation.

And as Rockman points out it is the totality of the discoveries as well as the movement of reserve categories (reserve growth). Both are hard numbers to put your finger on but are important given the reserves reported are often P1. In the case of the shales this is significant given the recovery factor currently is much less than 10%....increasing that recovery factor through technological advances can add significant commercial reserves at some point.

It isn't the deux ex machina some would want but it does give some breathing room to sort out renewables in a manner that makes sense along with oil, natural gas and coal.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Fri 07 Oct 2016, 23:32:46

"...but it does give some breathing room to sort out renewables in a manner that makes sense..." Breathing that I have no confidence in that the American consumer will take advantage of.
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Re: The Coming Oil Flood

Unread postby StarvingLion » Fri 07 Oct 2016, 23:55:01

It isn't the deux ex machina some would want but it does give some breathing room to sort out renewables in a manner that makes sense along with oil, natural gas and coal.


This utter desperation masked by gibberish means its only going to get much much worse right now.

Drilling 10's of thousands of shit wells that produce nothing. Why didn't I think of that. I'm going to the bank tomorrow. I know the answer already:

"I'm sorry. We no longer lend to the oil and gas sector"

No wonder the two nobel prizes in physics and chemistry just announced were laced with desperate pipedream hype: topological insulators (quantum computing to simulate molecular machines) and synthesis of molecular machines (free the trapped oil)
Outcast_Searcher is a fraud.
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Re: The Coming Oil Flood

Unread postby tita » Sat 08 Oct 2016, 07:31:43

Rockman - This interactive chart is just a terrific tool to understand how the shale production works and the relationship with rig count. First we can observe how fast inital production fall within a year. Production of the year 2014 was 60% lower a year after. Without any new well addition in 2015, total production (2010-2014) would have fallen by 50% at 2Mbbls/d. But there was around 880 wells addition per month in 2015, which kept production almost steady. But wells addition was not the same through the year. More than 1'000 in the beginning of 2015, less than 700 at the end. Wells addition follow the oil rig count with a 4-6 months lag time. In june 2016, the lowest well addition was recorded since 2010. So, US oil shale prod is due to decrease at least for 6 months as the rig count is still at a level insufficient to replace legacy production depletion. At the end of the year, we can expect US shale oil to produce around 3.3 Mbbls/d which is still not bad.

But to bring back shale oil into the levels of production seen in 2015, we need at least 1'000 wells addition per months and a rig count that can support it. It took 3 years from 2010 to get to that level. And it won't be much faster as all the process has to be rebuild.
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Re: The Coming Oil Flood

Unread postby tita » Sat 08 Oct 2016, 09:04:44

rockdoc123 wrote:It isn't the deux ex machina some would want but it does give some breathing room to sort out renewables in a manner that makes sense along with oil, natural gas and coal.

The same breathing room that was brought by shale production, oil sands, new production capacities in KSA, the full return of Iran in the market, return of Iraq and of course Russia. The last 8 years can be described as an oil flood on the markets, with a whole 10 Mbbls/d addition to the supply, which were due to the thousands addition of various prospects around the world. A remarkable achievement at a time we thought depletion was going to be higher than new production.

We may do it again, but now we have to do even better, with less major discoveries, lower reserve due to low price. OPEC and Russia just raised their production by 1.7 Mbbls/d in a year, but we still are under the peak of 2015. I don't think we can expect another oil flood before another cycle of high prices over years give enough incentive for others TRENDS to develop (and also incentive for renewables).
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Re: The Coming Oil Flood

Unread postby rockdoc123 » Sat 08 Oct 2016, 12:18:51

"...but it does give some breathing room to sort out renewables in a manner that makes sense..." Breathing that I have no confidence in that the American consumer will take advantage of.


well I've said it before the only way you will get something like this to happen is not through carbon taxing which will do nothing more than have adverse affects on the economy but through government incentives that drive R&D for renewables and a North American centric energy policy that looks to balance out various energy sources in various places. It doesn't have to be an either or argument which the idiots in charge up here in Canada have glommed onto. Wind, hydro, geothermal, nuclear, natural gas, clean coal and oil can all be part of the overall equation. You are right the consumer will not do this without some reason to which generally means lower eventual costs.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Sat 08 Oct 2016, 14:28:24

tita - "But to bring back shale oil into the levels of production seen in 2015, we need at least 1'000 wells addition per months and a rig count that can support it." To put a fine point on that metric: a 350% increase in rig count. And another rough measure: an increase in capex spending of at least $10 billion/year.
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