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Peak Oil in a Fact-Free World: the New “Oil Bonanza” in West Texas

Peak Oil in a Fact-Free World: the New “Oil Bonanza” in West Texas thumbnail

Sometimes, I have the feeling of living in a fact-free universe where the laws of physics hold only if you believe in them. (image)

So, the USGS comes out with a press release that the media immediately diffuse in terms of a great discovery: 20 billion barrels, somewhere in Texas in a place called “Wolfcamp”.  Bloomberg multiplies the number by the current oil price and comes up with a title that reads: “A $900 billion Oil Treasure,” for a piece that tells of “bonanza” and of “the gift that keeps on giving”. USA today speaks of “The Largest Oil Deposit Ever Found in the US“. And how about the comments? Just a few examples.

As our new President will do – DRILL BABY DRILL!!! Energy independence – that sure has a nice ring to it. Middle finger to Middle East arabs.

I remember in the late 70’s when scientists said we would be running out of oil by the late 90’s. I wonder where those scientists are working now? Climate change?

They are constantly finding more reserves. President Trump will open up more land and ocean for safe drilling. Something the Obama administration had no clue how to do..

 …

but of course the Radical Left, determined to return all of western civilization to the hunter-gatherer society of 10,000 years ago will do all it can to prevent this once great nation from becoming energy dependent and permanently kicking the barbarian raghead arab oil nations out of this country.

Great fun, and all fact-free! But let’s suppose, for once, that facts mattered. What should we say about the “Largest Oil Deposit Ever Found in the US”? One point is that nothing new was “found;” the Wolfcamp formation was well known and already being exploited. The USGS just made a new estimate; probably valid within the assumptions made; but it is just that: an estimate. It doesn’t mean that these resources have been discovered (note that the USGS explicitly says “undiscovered.”) So, what all this means is that, statistically, these resources should be there, but nobody can be completely sure and it wouldn’t be the first time that these estimates turn out to be optimistic. (in this case, the round number “20” is more than a little suspicious).

But never mind that; let’s assume that these 20 billion barrels are there for real. How does this amount stack up in comparison with the world’s oil situation? Here are some data, taken from Bloomberg (not exactly a den of Cassandras).

Let’s compare these data with the world’s oil consumption that, according to “Index Mundi,” is today a little more than 33 billion barrels per year. So, you see from the figure that, during the past decade at least, we have been consistently burning more oil than we could discover. Now, if there had been other major discoveries this year, they would have been trumpeted enough that we would know of them. So, adding the 20 billion barrels of the Wolfcamp formation to the meager total of 2016, probably, we still don’t reach a total of 33 billion. In the end, all that we can say is that, for this year, oil discoveries were just a little less, rather than much less, than what the world has consumed. These would be the news, if facts mattered.

But, that’s not even the point: the essence of depletion is not how much of it there is, it is how much it costs to extract it. Here, Arthur Berman notes that Bloomberg had calculated the value of this “treasure” at $900 billion as if “if the oil magically leaped out of the ground without the cost of drilling and completing wells; if there were no operating costs to produce it; if there were no taxes and no royalties.” Then, Berman calculates how much it would cost to extract all this “bonanza” of oil and concludes that, at the current prices, it would result in a net loss of some $500 billion. 

So, aren’t you happy to live in a fact-free world? You can keep thinking that it is enough to poke a few holes in the ground to see it gush out in never ending abundance because, as everyone knows, it is really “abiotic.” Sure, and you can also walk on thin air, as Wile E. Coyote can do as long as he doesn’t realize he does.

Cassandra’s Legacy



24 Comments on "Peak Oil in a Fact-Free World: the New “Oil Bonanza” in West Texas"

  1. penury on Mon, 28th Nov 2016 12:10 pm 

    to echo a movie “you want the truth? You cannot handle the truth,” hyperbole but sadly true of the majority of the population. Without the unicorns of hope and change, reality sets in and everyone needs to run to their safe spaces screaming “NOT MY OIL SUPPLY>”

  2. Apneaman on Mon, 28th Nov 2016 12:44 pm 

    Of course it’s a fact free world. It’s a fact free species. One of the humans unique evolutionary advantages, optimism bias, is leading them to civilizational ruin and self extinction.

    The evolutionary power of Denial

    “Ajit Varki believes that to really understand how we reached the top of the evolutionary ladder you have to be in denial. He shares his theories on how Denial, Self-Deception and False Beliefs allowed humans to surpass other species, to survive and think.”

    http://www.cbc.ca/player/play/2392357743

  3. shortonoil on Mon, 28th Nov 2016 1:46 pm 

    The Wolfcamp is another Shale play!

    The Shale industry has to date invested more that $1 trillion to produce an industry with $362 billion in gross sales. If it returned a 10% profit margin on its gross sales (which it hasn’t), and paid no interest on the money, it would take 27 years to return the investment.

    Anadarko Petroleum is just such a large shale operator with:

    [i]Eagle Ford – 346,000 gross acres and over 1,300 producing wells
    Marcellus Shale – 625,000 gross acres[/i]

    Looking at its 2015 fnancials we find:

    Operating Profit Margin….. Anadarko Petroleum….( -92.86%)
    Net Profit Margin…………… Anadarko Petroleum….(-70.55%)
    ROA (return on assets)…..Andadarko Petroleum….(-14.42%)

    We have repeatedly stated for several years (along with a lot of other people) that the Shale industry is a Ponzi scheme. It is designed to separate windows, orphans, and pension funds funds from their money. It is operated at a net energy loss, but pretends to be part of the energy industry. The media has been 100% complicit in promoting this piece of socialital highway robbery. As a society we have far more important things to do with our capital than to be pouring it down some Shale operators rat hole to pay Shell CEOs their millions per year.

    http://www.thehillsgroup.org/

  4. Elmer on Mon, 28th Nov 2016 2:07 pm 

    Mission accomplished! News of a big new oil “discovery” means everyone can continue business as usual and that means buy, buy, buy, grow, grow, grow. Nothing to worry about, don’t think twice about it, ignore all those naysayers. Buy stock, shop til you drop. Don’t waste your time looking any deeper than your news alert headline– you’ve got your money-making paper-pushing job you need to do and more stuff you need to go buy.

    People are growing more and more distracted from the realities of the human growth cancer that is our civilization. No brains, no headaches. Too much TV, too much fundamentalist religion (the Money God + Rapture Fervor), too much electronic fantasy world, too much hate mongering, too many power-hungry Fantasy Pushers. The more these forces grow, the harder it is to peel away all those layers of crap those consumer brains have accumulated. We have not got here by accident. $$$$ are our masters.

  5. Boat on Mon, 28th Nov 2016 2:18 pm 

    OTOH the US drilling rig count continues to grow. In 5 out of the last 6 weeks production went up. Time will tell but forecasts of the demise of shale production were apparently overblown. Those widows and orphans apparently have deep pockets.

  6. Elmer on Mon, 28th Nov 2016 3:09 pm 

    Those widows and orphans inherited money that was then dumped into the securities and investment swamp and that’s what’s feeding the fracking industry. they may get stiffed but it keeps the fossil fuels coming and people in the investment world aren’t going to lose any sleep (ZERO!) about the people on the short end of the stick. You can’t get any return on your money elsewhere and the higher yields associated with riskier investments looks attractive to many people. But it is a ponzi scheme just waiting for that Wiley E. Coyote over-the-cliff moment when it all goes to crap. If you don’t care about anyone or any animal or any plant that comes after you, then I can see why you like partying like there’s no tomorrow. The Debt Explosion is the only thing keeping this party going past daybreak. If you bother to look, the signs of rational thinking collapse are all around, as is empathy collapse.

  7. Boat on Mon, 28th Nov 2016 3:26 pm 

    Elmer,

    Republicans went from a conservative supposedly fiscal concerned party to cheering Trump for adding spending. So yes we will drive debt till we can’t. We are also spending more than double than China and Russia on their militaries yet more spending is coming to rebuild it. Buy your military stocks now. Widows and orphans have a lot of stock options.

  8. Apneaman on Mon, 28th Nov 2016 3:30 pm 

    Elmer, debt does not exist in boat’s fact free world. Same as for all the little cancer cheerleaders. The crash of 2008 and subsequent bailouts to keep the cancer system alive are never mentioned either. It’s like it never happened.

  9. Apneaman on Mon, 28th Nov 2016 3:31 pm 

    On Religion and Denial

    Let’s pretend an alien came to earth to study the evolution and behavior of humans. What would it observe and conclude?

    https://undenial.wordpress.com/2016/11/14/on-religion-and-denial/

  10. bug on Mon, 28th Nov 2016 4:38 pm 

    Great article and good posts. But then someone says “widows and orphans apparently have deep pockets”, and I chuckle. So pockets never bottom out?

  11. Rockman on Mon, 28th Nov 2016 6:05 pm 

    What’s most interesting is despite the author’s negative tone I didn’t notice any comment about “reserves” . Just X billions bbls here and there but never describing how the USGS defines those “20 billion bbls”: resources or reserves? If reserves then in place? Proven in place? Technically recoverable? Commercial recoverable ?

    I’ve already given such details elsewhere. Not mine but those directly from the mouth of the USGS. Anyone notice?

  12. Go Speed Racer on Mon, 28th Nov 2016 6:40 pm 

    Now that Trump is president, we don’t need facts anymore.

  13. Apneaman on Mon, 28th Nov 2016 11:08 pm 

    Gatlinburg, Tennessee evacuated due to wildfire
    Smoke, ash from Smokies fire fills area

    http://www.nbc26.com/news/national/gatlinburg-tourists-dealing-with-ash-smoke-from-large-fire-in-great-smoky-mountains

  14. makati1 on Tue, 29th Nov 2016 12:08 am 

    Debt? What is that?

    “60% Of New Yorkers Are One Paycheck Away From Homelessness”

    “http://www.zerohedge.com/news/2016-11-27/60-new-yorkers-are-one-paycheck-away-homelessness

  15. makati1 on Tue, 29th Nov 2016 12:20 am 

    BTW: Metropolitan New York is the largest in the US and is twice the people (~24M) and area as Manila (~12M). New York City is about 8.6 million people alone. 60% of 8.6 million is about 5 million people one month from being homeless. Looks like those soup lines will be growing when the SHTF.

    This is just one of hundreds of cities in the U$. And they claim the U$ is NOT collapsing. LMAO

  16. Hubert on Tue, 29th Nov 2016 12:47 am 

    Can Salt Water save us? Salt Water into Feul:

    https://www.youtube.com/watch?v=aGg0ATfoBgo

  17. Davy on Tue, 29th Nov 2016 4:27 am 

    Pretty sloppy facts makati. Here is the accurate version with references. BTW who’s the slumlord?

    Greater Manila has a population of 21.4MIL covering 1877 sq/mi with a GDP of 291BIL compared to New York metro area with 20.2MIL covering 13,318 sq/mi with a GDP of 1.6T.

    https://en.wikipedia.org/wiki/Greater_Manila_Area
    http://www.tradingeconomics.com/philippines/gdp
    https://en.wikipedia.org/wiki/New_York_metropolitan_area
    https://www.statista.com/statistics/183815/gdp-of-the-new-york-metro-area/

  18. Dredd on Tue, 29th Nov 2016 9:23 am 

    Fact free elections (Will Elections Cure The Disease? – 2).

  19. Rockman on Tue, 29th Nov 2016 9:50 am 

    So did anyone bother to check out the USGS report and learn how many of those “20 billion bbls contained in” the Wolfcamp Shale the Survey classifies as producible commercial oil RESERVES? After all that is the subject of this thread, not wildfires, debt or the population of Bumfuckville. LOL.

  20. Apneaman on Tue, 29th Nov 2016 12:19 pm 

    Record coral kill-off on Great Barrier Reef
    November 29, 2016

    “A mass bleaching event on the Great Barrier Reef this year killed more corals than ever before, scientists said Tuesday, sounding the alarm over the delicate ecosystem.
    The 2,300-kilometre (1,400-mile) long reef—the world’s biggest—suffered its most severe bleaching in recorded history, due to warming sea temperatures during March and April, with the northern third bearing the brunt.

    Read more at: http://phys.org/news/2016-11-coral-kill-off-great-barrier-reef.html#jCp

    http://phys.org/news/2016-11-coral-kill-off-great-barrier-reef.html

    Scratch that one off the cancer tourist bucketlist.

  21. Apneaman on Tue, 29th Nov 2016 12:28 pm 

    Bullshit Du Jour (Russia Did It)

    “I’m throwing you a softball today in the hopes you can hit a home run. Ask yourself this simple question—

    For those who lost the recent election, why would the Russia hacking story be plausible and appealing?

    Keywords or phrases to keep in mind — blaming, filtering (denial, avoidance, etc.), imaginary human agents (bad actors), rationalizing, tribalism.

    This unsubstantiated “Russia did it” bullshit could not be easier to understand psychologically. Basically we’re dealing with a near-total inability to deal with reality.”

    http://www.declineoftheempire.com/2016/11/bullshit-du-jour-russia-did-it.html

    Same thing goes for the other tribes and most humans when it comes to the destruction of the biosphere that gives them life and will be soon taking it away.

    “Keywords or phrases to keep in mind — blaming, filtering (denial, avoidance, etc.), imaginary human agents (bad actors), rationalizing, tribalism.”

  22. Apneaman on Tue, 29th Nov 2016 12:31 pm 

    How the summer heatwave led to 1661 deaths in a day

    http://www.salemstatelog.com/how-the-summer-heatwave-led-to-1661-deaths-in-a-day/

  23. Apneaman on Tue, 29th Nov 2016 1:16 pm 

    Peak carbon sinks

    Trees and plants reached ‘peak carbon’ 10 years ago

    More atmospheric carbon dioxide in the 1960s meant greenery flourished – but our photosynthesising friends have long had their fill.

    “Trees and plants have had enough. For the past few decades they’ve obliged us by guzzling ever-greater amounts of atmospheric carbon dioxide every year – but now they’ve gone on a diet.

    New data shows ‘peak carbon’, when vegetation consumed its largest carbon dioxide feast, occurred in 2006, and since then appetite has been decreasing.

    “It’s the first evidence that we are tipping over the edge potentially towards runaway or irreversible climate change,” says James Curran, former chief executive of the Scottish Environment Protection Agency and co-author of the study published in the journal Weather.”

    https://cosmosmagazine.com/climate/trees-and-plants-reached-peak-carbon-10-years-ago

  24. Apneaman on Tue, 29th Nov 2016 1:20 pm 

    How climate change is creating ecological, social and political crises. The Californian Drought and the fate of the American forests

    “Regardless of the urban spaces and the technotopes we live in, if the forests go, we go too.”

    http://www.flassbeck-economics.com/how-climate-change-is-creating-ecological-social-and-political-crises-the-californian-drought-and-the-fate-of-the-american-forests/

    United States Drought Monitor

    http://droughtmonitor.unl.edu/

    U.S. Drought Monitor
    California

    http://droughtmonitor.unl.edu/Home/StateDroughtMonitor.aspx?CA

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