[dcoyne78]

http://belfercenter.ksg.harvard.edu/publication/23191/shale_oil_boom.html

At the Link above is a paper by Leonardo Maugeri called The Shale Oil Boom, he predicts that by Dec 2017 US Crude output will be 10.9 MMb/d with 5 MMb/d from tight oil, primarily the Bakken/Three Forks, Eagle Ford, and Permian Basin, and about 0.4 MMb/d from other US Shale plays. He expects US total liquids to be 15.9 MMb/d at year end 2017 and oil prices will fall to 65 dollars per barrel and remain there long term, see table 5 on page 20 of the paper which can be downloaded at the link at the top.

Other interesting predictions are a fall in well completion costs in the Bakken by 8 % per year. So well completion costs (drilling and fracking) would fall from $9 million to $4.6 million in 8 years. Does that seem realistic to anyone in the industry?

DC

[Beery1]

I'm not in the industry, but just going by historical data, 10.9MMb/d by December 2017? Sure, if they find another couple of Bakkens hiding out somewhere under the US and if they somehow get them producing at full pace within the next two years. If not, I seriously doubt that production will ever reach 10MMb/d.

If oil prices fall to $65/bbl and stay there, say goodbye to shale oil and start getting used to the prospect of global depression.

As for Maugeri, he has long since lost any credibility he ever may have had.

[ralfy]

Discussed here:

coming-oil-production-surge-led-by-us-risks-price-collapse-t65521.html

Also mentioned here:

http://peakoil.com/production/maugeri-p ... n-a-decade

See, also,

http://shalebubble.org/

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

http://www.slate.com/articles/health_an ... dance.html

[dcoyne78]

Ralfy,

The links you posted were to an older paper published in June 2012. This paper was published in June 2013 and focuses on US Shale/Tight Oil. I have not read the June 2012 paper so I am not sure what the differences are. I do know he forecasts 1.8 MMb/d for the Bakken/Three Forks by Dec 2017. It is possible to accomplish this if there is very little decrease in average well productivity between now and Dec 2017. I am not suggesting that there is no decline in well output over time. I am suggesting that the well profile or 10 year cumulative output of new wells brought online need to stay near current levels and the number of new wells added need to increase at about 12 to 20 % per year until 3600 wells per year is reached. The economics also works if well completion costs decrease at 8 % per year as he describes, though I don't think this is realistic beyond 2017 (it may not be feasible at all.) The model assumes Bakken/Three Forks output from North Dakota and Montana, but the early part of the model up to 2014 (including data) is for North Dakota only.

DC

[SeaGypsy]

http://belfercenter.ksg.harvard.edu/publication/23191/shale_oil_boom.html

He expects US total liquids to be 15.9 MMb/d at year end 2017 and oil prices will fall to 65 dollars per barrel and remain there long term,

DC

Plus 1 Beery. What garbage. Cost is well above $70 and shows no sign of any radical abatement, the dollar is eroding not gaining strength. This ridiculous projection will get splashed around with the rest of the 'Saudi America' hype; despite the obvious fact that for it to be true, costs would need to come down at least 15% and the folks selling it be happy with no profit.

[Tanada]

Can anyone give a realistic projection of how many tight oil wells can be drilled in a year? With infinite money and infinite workers and infinite equipment and unlimited space we could have infinite oil, but in the real world where we actually live there are a limited number of skilled workers, a limited number of places suitable for drilling, a limited number of drilling rigs and a limited cash resource to pay for it all.

How much is realistic verses the pie in the sky lets all be happy and sing campfire songs on our endless vacation? I see estimates from optimists saying we will have 7 MMbbl/d in juts a few ore years and others saying we have already peaked out in tight oil production. The answer probably lies in between, but where on that very broad spectrum of possibilities?

[SeaGypsy]

Totally agree that '7 mbpd is at the optimistic end of real possibility 'in a few years'. 15+ at $65 a barrel is ridiculous.

[Pops]

Thanks for that DC, I'll read the paper.

Maugeri was roundly criticized due to bad assumptions in his first "paper" (funded not by Harvard but by BP) that understated decline rates in tight oil production as well as double or triple counting reserve growth, I listed some criticism here:
maugeri-oil-the-next-revolution-t65870.html?hilit=Maugeri

Here is a short article that explains the biggest problem with his assumptions.

--
After a quick glance, looks like he's saying tight oil will increase 1Mbd for the next 5 years because all they need do is simply keep drilling. Maps I've seen (ShaleBubble.org has lots) show the resource is not uniform and there are not unlimited locations available to drill, there are better and less better.

The other thing to remember is drilling rigs make both oil and gas wells. Right now ALL the rigs in the US are making oil wells (80% anyway) and only 20% are making gas wells. The amount of gas in storage is on the low end of the range even after a mild winter and the price is rising. At some point drillers will switch to drilling gas wells and running up the down elevator of tight-oil decline will slow.

If you notice, the chart you posted shows well numbers increasing virtually forever. The fact is the increase is already slowing, it started to slow in May 2012. Here is a plot of the number of rigs working oil vs gas



And here is a chart of Baken wells and production growth to this May, note that they had a bad winter but that growth was not slowed by winter at all in 2011/12 and that growth was already slowing last spring and continued through last summer. So it seems his numbers were wrong even before he released his paper - again.




I'm no expert tho...

.

[SeaGypsy]

Does that seem realistic to anyone in the industry?

DC

According to our industry guys on here, the vast majority of the industry has no clue about such things and would happily go along with the predictions which will permit them to- pay off the mortgage, get the kids through college, set up a nice retirement.

[Ron Patterson]

DC, I just published a comment and charts on this new Maugeri paper over on my blog, http://peakoilbarrel.com/. I posted your chart above on Bakken production. Hope you don't mind. You can reply to my blog with any comments or disagreements.

[ROCKMAN]

A couple of facts that help understand the dynamics. First the cost of all the drilling efforts in all the shales and the Bakken have risen significantly PER WELL. The learning curve had certainly improved efficiency and decreased the cost of drilling on a PER FOOT basis...not total well cost. A big factor has been going from 4 or 5 fracs per hz hole to 20+. In the last year often the cost of frac'ng an Eagle Ford well has exceeded the drilling costs. Many companies are spending twice as much per well today as they were several years ago.

The longer laterals and more frAc stages also explains why more recent well are performing much better than earlier ones. In some cases the cost per bbl recovered has decreased but not always. It's very difficult to get all the parameters needed to do a detailed analysis of this dynamic.

As far as how many such wells can be drilled in the future you have the answer in front of you today IMHO: oil has been bouncing around $100/bbl for a while, millions of acres have been leased, companies in the plays have deep pockets and many of the service companies are hiring relatively unskilled hands to do the less challenging jobs. We'e currently drilling as many well as we want/can. To change that number one or more of those metrics has to be changed significantly. Leasing more acreage won't do it: we already have many thousands of leased locations waiting for a rig. Every experienced hand that wants to work is working now. Takes at least 5 years to develop the needed skills. In fact, thanks to graying we may see a net loss down the road. And somehow I don't think dropping the price of oil 30% will get more rigs turning to the right.

Also good to remember that no matter how prolific any trend may be at some point in time all trends eventually peak regardless of the pice of oil/NG. As the best locations are drilled up only the less economical ones remain. Ever trend ever developed has followed this life cycle. It won't change for the shales.

[ralfy]

Yes, you're right, it's a new report. Sorry about that.

From what Pops has shared, though, it looks like it has the same problems as his earlier one.

[dcoyne78]

Pops
The chart goes all the way to 60,000 wells and then stops.
You may need to change your browser settings to 75 percent to see the whole chart. I reviewed some of my data and the economics only works to about 2019. After that the number of wells added needs to decrease.

DC

[Ron Patterson]

As of May there were 5,730 wells in the Bakken. Most of the drillers are now engaged in what they call "downspacing". That is they have run out of new places to drill so they are drilling in between wells already drilled. They are downspacing the distance between wells... because they must do that if they are going to drill any more wells. And you have them going to 60,000 wells! Man, that is going to be a lot of downspacing. They will be drilling between the wells already drilled then drilling between those wells, then drilling between those wells, then...

[Pops]

Thanks DC I was being facetious, mention of Leo M. puts me in a tizzy, I appoligize.

I'm just wondering how realistic is it to think new wells per yr will double from 1,700 to 3,600 per yr in just 4 years? Is that just continuously improving technique, more rigs or something else?

I'm sure you've noticed that increase in well numbers has been slowing for the last year - at least through may annualized growth has declined from 52%/a to 36%/a

Of course then production growth has fallen too from 66% to 26%
as we speak horizontal rigs going for oil are down 11% from last year
http://www.reuters.com/article/2013/07/ ... 6220130726

Obviously just a snapshot but thought I'd throw it out, whatdda ya thinK?

[Oily Stuff]

We sure spend a lot of time worrying about what 'ol Leo always has to say about our energy future, don't we? Can't we just ignore this guy?

Tanada, this might be exactly the answer you are looking for: http://fuelfix.com/blog/2013/07/26/four ... ord-shale/

I think short of knocking a few days off of drilling time, due mostly to skidding rigs 30 feet from well to well to accommodate the new vogue tight oil term called "downspacing," drilling costs are not going down, they will be going up. What costs go down in life these days? Steel is going up, healthcare is going up, salaries are going up, cement up, sand up, taxes up, fuel up, regulatory compliance up and water up, up, up, where they can get it.

While we are on the subject of costs, my second favorite pet pisser about the tight oil industry, besides the mirage of gas to oil equivalents, is how "well costs" never seem to include lease acquisition costs and curative title, legal fees, etc. On a typical 1000 acre pooled unit in S. Texas, 2.2 million dollars per unit, easy. Infrastructure like pipelines and rail cars don't get thrown in the mix either. These are clever dudes, these shale guys; I love how they always report how costs are going down, down, down.

I heard last week alumni and students at Harvard have directed the managers of its multi-billion dollar endowment fund to divest itself of any shares in any public company that has anything to do with frac'ing. Gasp!

So 'ol Leo might be looking for a vacuum truck driving job out of Dilley next week. Or he can sign on at Dairy Queen in Karnes City and make...fries.

[John_A]

As of May there were 5,730 wells in the Bakken. Most of the drillers are now engaged in what they call "downspacing". That is they have run out of new places to drill so they are drilling in between wells already drilled. They are downspacing the distance between wells... because they must do that if they are going to drill any more wells. And you have them going to 60,000 wells! Man, that is going to be a lot of downspacing. They will be drilling between the wells already drilled then drilling between those wells, then drilling between those wells, then...

The USGS included on the factsheet for their 2013 assessment the numbers necessary to calculate how many wells they determined would be needed in each of the evaluated areas. They have maybe a 400 acre per well spacing concept in their evaluation. It still adds up to many wells.

And it should be noted that your 5730 number probably doesn't include the Three Forks, seems a bit low to have both in that number. Last at the beginning of the year the Three Forks wells totaled almost 1000 all by themselves.

[John_A]

I think short of knocking a few days off of drilling time, due mostly to skidding rigs 30 feet from well to well to accommodate the new vogue tight oil term called "downspacing," drilling costs are not going down, they will be going up.

Think of something like the device which moved the shuttle to the launch pad. Amazing to watch, like a Transformers movie, with all 20,000 feet of drill pipe in the derrick, and the thing MOVES. Horizontal development holes in Alberta back in the early 90's once took 36 hours to skid the rig. I think Chesapeake in the Utica has it down to 4 hours.

To the drilling company, saving a few days of rig time matters. And using one bit to drill the entire 10,000' section of a Bakken well? Priceless!

I'll take a cheaper well, even if the individual prices of the bits and pieces are higher. But you are right, until the price crashes, service companies and everyone else living off the drilling boom is going to charge more with time. It is just the way the business works.

[Ron Patterson]

John A wrote:
And it should be noted that your 5730 number probably doesn't include the Three Forks, seems a bit low to have both in that number. Last at the beginning of the year the Three Forks wells totaled almost 1000 all by themselves.

I am sorry but I am pretty sure that does include the Three Forks area. The Three Forks lies underneath the Bakken area. All Bakken area wells are counted as Bakken wells no matter how deep they are. All North Dakota has 8,646 wells. That means if the Bakken area has 5,730 wells then the rest of North Dakota, outside the Bakken area, there are 2,926 wells.

ND Monthly Bakken* Oil Production Statistics (Bakken Only)*
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
ND Monthly Oil Production Statistics (All North Dakota)***
https://www.dmr.nd.gov/oilgas/stats/historicaloilprodstats.pdf

[ROCKMAN]

And again I'll ask the same question: if the number of wells drilled for the Bakken is to significantly increase then what metrics have to significantly change? First, the number of rigs drilling. They might be saving a little time skidding the rigs but that's already happening...not just in the future. Last stats I saw the rig count was flat to maybe a tad down? And there are still thousands of leased locations waiting for a rig. The companies don't appear to be restricted by a lack of capital.

So simply other than just arbitrarily predicting the well count will increase it would be nice to see what expectations justify that assumption. At least something beyond wishful thinking. I can accept any reasonable explanation but I need to see it offered. It seems that the debate starts after the assumption of an increased well count is accepted .