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Awash in Misinformation: America’s Domestic Tight Oil ‘Bump’


On March 4, David Frum, a former special assistant to President George W. Bush, published an article on titled “Peak Oil doomsayers proved wrong” in which he not only claimed there was no danger of a shortage of oil, but also that “our oil problem is that we’re producing so much of the stuff that we are changing the planet’s climate.” Mr. Frum is only the most recent contributor to a growing list of luminaries to declare that we need not worry about any future shortage of crude oil. The only problem with these reassuring proclamations is that the physical evidence does not support them, and does in point of fact, warn of a looming imbalance between supply and demand with troubling implications for the U.S. economy.

Last month, the standard-bearer for those arguing the U.S. will soon be awash in domestically produced oil testified before the House Energy and Commerce Committee. Daniel Yergin, Chairman of Cambridge Energy Research Associates, told Members of Congress in his prepared remarks, “Owing to the scale and impact of shale gas and tight oil, it is appropriate to describe their development as the most important energy innovation so far of the 21st century” and “the unconventional oil and gas revolution has already had major impact in multiple dimensions. Its significance will continue to grow as it continues to unfold.”

Yet the Energy Information Administration (EIA) and independent analysis confirm that far from the “energy revolution” of the century, the increase in domestic oil production represents a temporary bump in production that will be short-lived. If we recognize the probability the impressive increases we’ve seen in shale gas and “tight oil” production are of limited volume and duration and set policies accordingly, we can reap great benefit; pretend these increases herald a new and ever-increasing permanent condition and we risk setting ourselves up for an avoidable economic contraction when the expected drop in production occurs. Geologist David Hughes, a 32-year veteran of the Geological Survey of Canada, recently conducted a detailed examination of the years-long performance of 65,000 shale gas and tight oil wells. The results were telling.

In the February 21 issue of Nature Magazine, Mr. Hughes reported that “much of the oil and gas produced [in shale formations] comes from relatively small sweet spots within the fields. Overall well quality will decline as sweet spots become saturated with wells, requiring and ever-increasing number of wells to sustain production.” More ominously, he notes, “high-productivity shale plays are not ubiquitous, as some would have us believe. Six out of 30 plays account for 88% of shale-gas production, and two out of 21 plays account for 81% of tight-oil production.” Even the typically optimistic EIA echoed the concerns about sweet spots and the likelihood high levels of production cannot be sustained.

In a little-noted press release last December, the EIA projected there would be a considerable increase in tight oil production in the next few years, but then conceded, “The growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations. After about 2020, production begins declining…” But as Mr. Hughes points out, evidence is growing that the production is not likely to rise as high as hoped, and his analysis indicates the drop in production could begin by 2017.

In late February, the EIA reported that “Saudi Aramco’s CEO Khalid al-Falih warned that rising domestic energy consumption could result in the loss of 3 million barrels per day (bbl/d) of crude oil exports by the end of the decade if no changes were made to current trends.” The New York Times reported that Chinese consumption by 2020 could be almost two-thirds greater than it was in 2011, resulting in a 6 million barrels per day (mbd) increase. Thus, viewed in context evidence indicates that U.S. domestic oil production could max out as early as 2017 and then begin a slow decline — just as Saudi Arabia could be exporting 3 mbd less and China could be needing 6 mbd more. The consequences to the U.S. economy of such a confluence could be drastic.

The idea of oil “independence” understandably appeals to Americans. It is likewise understandable that individuals and groups who have a financial interest in the American oil industry would argue and lobby for the investment in the means of producing energy for the U.S. that would most benefit them. But at some point America’s leaders must recognize the physical evidence indicates the alleged “energy revolution” is likely to be merely a relatively short-term bump. If we fail to acknowledge the likely realities, we may be setting the stage for an energy crisis in the near term that might have been minimized. The consequences of such a failure are difficult to predict, but given the already weakened health of the U.S. economy, they would likely be severe and long-lasting.


11 Comments on "Awash in Misinformation: America’s Domestic Tight Oil ‘Bump’"

  1. BillT on Sun, 24th Mar 2013 2:33 am 

    The American Dream is over people. If it ever existed at all, it only pertained to a few people and not the general public. The 1%.

    The fraking bubbles will ALL be popped before 2020. We will be well on the way to energy rationing by then. How will it be rationed? By the contents of your wallet or the small numbers in your electronic bank account.

    The above article only points out the obvious to those of us who follow world events and can still think. The Saudi wells are drying up. The Saudi people will use more and more oil. Ditto ALL of the other exporting countries. And the US STILL imports over half of our oil. Think about it.

  2. SilentRunning on Sun, 24th Mar 2013 3:08 am 

    If only we could figure out how to harvest energy from the the likes of Oil Industry shills like Frum – our energy worries would be over! 🙂

    Seriously, we need to move the debate from whether peak-oil is happening to what to do about it.

  3. Plantagenet on Sun, 24th Mar 2013 5:44 am 

    Obama shills for the Oil Industry every time he claims the US will soon be energy independent—- somebody needs to sit him down and explain the facts about peak oil!

  4. BillT on Sun, 24th Mar 2013 6:16 am 

    I think he knows but he reads from a script laid down by his owners … corporate America. His intelligence is not being challenged. His position depends on supporting the banksters agenda. That was the condition for his role as President. And it is a role, not an office in today’s world. He was ‘elected’ by the 1%, not the 99%.

  5. Cloud9 on Sun, 24th Mar 2013 11:41 am 

    Since a piece like this has appeared in Huffington Post does that mean that some of the liberals with higher level thinking skills are coming to realize that there is simply not enough? Once they come to that conclusion, how are they going to deal with the reality that some will be pushed away from the table?

  6. Arthur on Sun, 24th Mar 2013 12:04 pm 

    “The American Dream is over people. If it ever existed at all, it only pertained to a few people and not the general public. The 1%.”

    It did exist, at least in the eyes of the rest of the world, including Europe.
    “The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work.”

    The ‘American Dream’ did not promis free handouts, but merely the creation of conditions that IF you worked hard, you could keep the fruits to a large extent to yourself. And indeed, for decades Americans worked hard and enjoyed the highest standards of living in the world.

    But… there were two unmentioned conditions, that greatly contributed to this state of affairs:
    – the racial makeup of the US (a very tricky subject… “racism!!!”.lol)
    – reserve currency status of the dollar as a result of the outcome of WW2 and the subsequent imposition of the Bretton Woods scheme on the rest of the world, resulting in a gigantic advantage, read free lunch, for the US economy (“you give me oil, I give you printed paper”).

    These conditions are now over.
    – The US population is morphing into third world composition (new borns more than 50% non-white), which is good news for the rap music industry, but that is about it with the good news. Expect the usual internal ethnic tensions to rise, like everywhere else in the world with mixed populations (Iraq, Yugoslavia, Syria)
    – The rest of the world is becoming all too aware of the comparative advantage of owning a reserve currency… and unsurprisingly is conspiring against it. The ideal of US global hegemony is supported only in Washington and nowhere else.

  7. J-Gav on Sun, 24th Mar 2013 1:37 pm 

    You’re not actually supposed to drink oil – which is what we’ve been doing. Gonna be one nasty hangover.

  8. Billc on Sun, 24th Mar 2013 5:31 pm 

    Now that this was published in the Huff Post maybe some of my liberal “friends” will listen to me.
    But they are a really hard headed bunch.

  9. PrestonSturges on Sun, 24th Mar 2013 7:51 pm 

    “…..Since a piece like this has appeared in Huffington Post does that mean that some of the liberals with higher level thinking skills are coming to realize that there is simply not enough?”

    Well that would bump them to the front of the class wouldn’t it? While cornucopian abiotic oil “young earth creationist” conservatives ride the short yellow bus.

    To be energy independent, America would need to discover a new North Slope oil field every two years, forever.

    Remember, LA used to have lakes of oil on the surface. The La Brea Tar Pits was only one of several. They were well known because tar was a basic building material since the Middle Ages, but hard to find just lying about.

    Speculative plans to strip mine kerogen in the Rockies would probably only be practical in another world war situation.

  10. BillT on Mon, 25th Mar 2013 1:16 am 

    Preston, I’m afraid that your prediction is going to come true. The world is losing the ability to fight really big wars other than nuclear as it take lots of oil energy to move the pieces around the board and that oil energy is shrinking quickly. Cut the Us off from imports and half the country would have to shut down just to keep the military operational. THAT is exactly why I see one more big world wide war in the near future. Before 2020. I hope I am wrong.

  11. rollin on Mon, 25th Mar 2013 11:28 am 

    Congress and the presidents have been given the evidence for peak oil time and time again. Their advisors, think tank people and the military have warned them. If they choose to believe a blip, well then it might be a case of “irrational exuberance”. This blip in oil and gas production gives us more time to shift our energy stance and our sustainbility. If this time is used poorly then the results are very obvious and very serious. This period of relative peace and prosperity is a second chance to move in a better direction.

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