Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on August 29, 2014

Bookmark and Share

Who’s Got Liquids? plus Further to the Bakken

Who’s Got Liquids? plus Further to the Bakken thumbnail

This is another Guest Post by David Archibald

Who’s Got Liquids?

An article by Canadian consultant Mike Priaro in the 7th July, 2014 edition of Oil andGas Journal, “Grosmont carbonate formation increases Alberta’s bitumen reserves”, included the following tables:

David 1

Mr Priaro’s estimate of Canada’s recoverable bitumen is 818 billion barrels. Almost all of that is in Alberta. Combined with their coal resources, Alberta has the biggest fossil fuel resource on the planet. I have updated my estimate of what some of the major countries have in the way of fossil fuels in this table:

David 2


The highest value fuels are those that can be used as liquids in transport. High quality coal produces 2.2 barrels of liquids through a FT plant. In the following graphic I have used a factor of 2x to convert coal to its oil equivalent. Six thousand cubic feet of gas has the energy equivalent of one barrel of oil. Natural gas can be used directlyin some transport applications. Putting it through an FT plant to make diesel, for example, would lose at least 30% of its initial energy. Natural gas has traditionally traded at the oil price in the US and conceivably might return to close to that level in a tight market. So in the following graph, natural gas in TCF is divided by six to produce its oil equivalent in billions of barrels. This is the graph:

David 3


From there, one can divide each national resource endowment by the country’s population to produce this graph of per capital potential:

David 4

For the United States, the Green River oil shales are not included. Some parts of this formation might be economically recoverable at some point, for example the Mahogany Zone, but the unit as a whole has a total organic carbon content of 6%. Rocks with a carbon content down to 10% will burn in pure oxygen. It may be that only a few percent of the Green River Formation might be worth mining. In the absence of good data, it would be best to exclude it.

China’s coal resources are about the same size of that of the United States but they are burning through them four times faster. The average mining depth is approaching half of the possible ultimate depth. China has plans to increase coal consumption by another 10% to make synthetic natural gas. This process was pioneered by the Carter Administration with a plant based on lignite at Beulah, North Dakota. The Beulah plant burns through 18,000 tonnes per day and exports by-product carbon dioxide for EOR in Canada. Converting coal into syngas is a more efficient use of the contained energy than putting it through a power station. There is a 90% transfer of the inherent energy in gas in domestic cooking for example. Gas is also more storable than electricity. China appears to be on a path to have burnt through half of its initial coal endowment by the mid-2020s. Their cost of production is likely to rise thereafter.

In theory, the Chinese are building power plants that will run out of coal before the power plants wear out. They have one thing up their sleeve that has a good chance of saving the day for them. That is their thorium molten salt reactor project. The team running that project was told recently to get it commercialised in ten years instead of the original twenty years. Molten salt reactors could be added to existing power plants to replace the coal-fired boiler. That technology might come along in time to provide a seamless transition.

The figure for China’s unconventional gas potential is nominal. Results to date have fallen short of expectations and it may be a few more years before clarity is achieved.

Similarly, while the Bazhenov Fm of the West Siberian Basin in Russia has a number of similarities to the Bakken but is many times larger, well productivity for commerciality may be too low at any oil price given the much high drilling costs of this region. This is due to the rock having too high a clay content and not enough silicates so that it deforms plastically rather than fracturing to the required extent.

Further to the Bakken 

In this post I had looked at the contribution of the Bakken and the other three main US tight oil plays. Another look at the data suggests to me that my prediction that the peak is imminent may very well be right. There may only be six and a half years of production data but it is monthly data giving close to 80 data points. As to the evidence, this is a map by Schmidt from 2011 showing 15 month production for the Bakken:

David 6

Only the wells doing 100,000 barrels or more in their first 15 months have a chance to produce 300,000 barrels or more. This is the bottom three orange colours. Four counties provide 87% of Bakken production and the prospective area may be 60% of these counties at best. With respect to the Three Forks, the area that is possibly prospective is smaller again as show by this map by Millard and Dighans from May 2014 of water cut:

David 5


Millard and Dighans make the case that the abrupt transition from high oil saturation to low oil saturation in McKenzie County shown by the dashed black line is due to the overlying Pronhorn Shale blocking downward migration of oil from the Lower Bakken into the Three Forks.

Fractracker provides very good detail on completions to dat in the Bakken including the postion and length of the laterals. Clicking on a well will provide details of its spud date, ownership and drilled depth.

David 7

Some areas are already drilled on a tight spacing. For example, this is an area north of New Town that has been drilled on a 700 foot average spacing:

David 8

And this is an area west of New Town that has been drilled on a 620 foot average spacing:

David 9

It appears that the sweet spots of the Bakken have already been heavily drilled. There may not be that many locations left in areas that are going to provide a good return.

David Archibald, a Visiting Fellow at the Institute of World Politics in Washington, D.C., is the author of Twilight of Abundance: Why Life in the 21st Nasty, Brutish, and Short (Regnery, 2014).

Peak Oil Barrel

6 Comments on "Who’s Got Liquids? plus Further to the Bakken"

  1. paulo1 on Sat, 30th Aug 2014 8:23 am 

    Glad to be Canadian.


  2. shortonoil on Sat, 30th Aug 2014 11:04 am 

    As engineers we often run into those with a lack of understanding of even the most mundane principles. Any student of statistics is soon introduced to the concept of “mutually exclusive events”. Essentially, this principle says that to study one event by itself it must be independent of other events. Studies into the supply of fossil fuels are the epitome of this doctrine.

    Counting the tons of coal, the cubic feet of gas, or number of barrels of oil, without taking into consideration the relationship between them is assuming that they do not have an impact on one another. That is, that oil is not needed to extract coal, or natural gas is not needed to refine petroleum. Simply estimating resources in the ground that could be extracted with present conditions, while ignoring likely future events that could take place with other fossil fuels gives a completely unrealistic appraisal of their disposition.

    The disregard for the interdependence of fossil fuels makes analysis of the energy situation an exercise in the addition of hypothetically derived numbers. It plays into the time honored joke about the economist stranded on a deserted island; “if I had a can opener”. IF – there was enough petroleum to power the world’s economy there would be X amount of coal, X amount of NG, and X amount of shale oil. IF, is the magic word that justifies claims of future energy independence.

    In our report “Depletion: A determination for the world’s petroleum reserve” we derive the theoretical thermodynamic limits encompassing oil production. What it tells us is that petroleum’s ability to power the economy is declining. In order to keep mining the ultra deep coal, extracting the concrete encased shale deposits, and NG it is necessary to convert the embedded energy in the societies fixed assets into mining, and extraction operations. That is done through the formation, and accumulation of debt. Debt that can never be re-payed! Once the assets are consumed they can not be replaced.

    Fossil fuels are not independent of one another. Continuing to ignoring that simple fact will bring about the leviathan of a “mutually exclusive event”!

  3. rockman on Sat, 30th Aug 2014 12:04 pm 

    Shorty – Well said IMHO. I hope folks take the time to fully absorb your comments and the article. Your post reminds me of my first statistics Prof. He always asked the same question each first day of class: if he tossed a coin 19 times and it showed heads every time what are the odds the 20th toss would be heads? Obviously all us young smarties knew the answer: 50%. He would then laugh and explained we knew nothing about the most important tenant of statically analysis: understand the population your analyzing. He would explain that regardless of what the stat tables say it’s nearly impossible that any of us would ever see a coin flip heads 20 times in a row. An honest coin that is. It’s much more likely that the 20th toss would be heads since it’s very likely a two headed coin. We all incorrectly assumed we were dealing with an honest coin. We assumed incorrectly.

    Thus the analogy: assuming all wells drilled in every trend are picked randomly and thus the last half of the wells eventually drilled will be as productive as the first half. IOW we would be analyzing drilling stats with an “honest coin” population. Obviously that has never been the case with oil/NG exploration.

    The best example I’ve seen in the Bakken was a well drilled about two years ago. Someone might have estimated statistically that well would ultimately recover X bbls of oil. Turns out it wouldn’t: not only was it not productive in the Bakken, the formation didn’t even exist in that area.

    Rarely does Mother Earth use an honest coin. She also likes to deal off the bottom from time to time. LOL.

  4. shortonoil on Sat, 30th Aug 2014 12:41 pm 

    “Rarely does Mother Earth use an honest coin. She also likes to deal off the bottom from time to time. LOL.”

    Sometimes she does down right cheat. May years ago I was running a structural stone operation in New England. We had a big order come in for purple. I sunk $400,000 in developing a vein of stone in a line of quarries that had been operating since the mid 1800’s. Almost 5 miles of of them, and they were all purple. We drilled a set of 240 foot holes to fire the formation. The quarry foreman came up one day, and poured a handful of dust on my desk. “That’s green, he said”. “You must be drilling through a hog back”, I replied. A few day later we fired that pillar. The purple went down about 40 feet, and turned into green on a big head.

    I constantly read these arm chair experts, and think, “Mother Earth has one big surprise coming your way bud”.

  5. Nony on Sat, 30th Aug 2014 8:35 pm 

    Rock: So far, the Bakken has amazingly kept the production quality/new well for the last 6 years. [Probably a combination of offsetting factors.] The Marcellus has dramatically increased for the last several years in a row. Of course, eventually this will change. But so far, those two shales have done better than the negative predictions from the peakers.

  6. Nony on Sat, 30th Aug 2014 8:37 pm 

    I would love to see an Enno analysis of this area.

    Something like density versus sweetness. Not sure how to plot it properly, but something that takes a look at it as a cake-eating problem and then extrapolates how much room is left in the sweetspots for downspacing.

Leave a Reply

Your email address will not be published. Required fields are marked *