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Page added on February 3, 2018

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Richard Zeits On Ten Million BOPD And What It Means For The US, Saudi Arabia

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I have a fairly long post with updates regarding all the hand-wringing about “decreased conventional discoveries” and how that will lead to a scarcity of oil in the “near future.” Some refer to this as “peak oil.”

Richard Zeits has an incredibly good column today over at SeekingAlpha further suggesting that “peak oil” will be pushed further to the right. Archived.

It’s one thing to read “ten million bopd” but when one sees the graphic, it’s absolutely stunning.

It should be noted that the US is producing way below its potential. The Bakken has about 2,000 wells that are either DUCs or completed/shut in for operational reasons. I don’t think 2,000 wells have ever been drilled in one year in North Dakota, even at the peak of the boom. In addition, there are less than 60 active rigs in North Dakota; at the peak of the boom, more than 200. Everyday more and more infrastructure is being put in place in North Dakota. Unfettered, North Dakota will produce 2.2 million bopd.

By the way, this is the third or fourth article by Richard Zeits regarding ultra-lights. Others have referred to ‘ultra-lights” as “light ends” and that’s how I’ve tagged articles on “ultra-lights.” I may start using both tags (“light ends”; and, “ultra-lights”).

And then there’s the Permian. Oasis just moved into the Permian this past year. And Exxon, too, just moved in this past year. Exxon may not be in a panic, but investors are not happy; something tells me Exxon will hit the Permian, “full speed ahead, damn the torpedoes.”

Much could be written but it’s easier to just go to the linked article by Zeits.

By the way, the “peak oil” folks are now talking about the end of Tier 1 drilling locations. “Peak oilers” never quit.

themilliondollarway.blogspot.com



16 Comments on "Richard Zeits On Ten Million BOPD And What It Means For The US, Saudi Arabia"

  1. Sissyfuss on Sat, 3rd Feb 2018 9:40 am 

    “Peak oilers never quit.” Entropy never quits.

  2. Boat on Sat, 3rd Feb 2018 11:58 am 

    Tier #1 drilling areas in the US are today’s story. If and only if oil remains over $60 along with an expectation of price stability will tier #2 locations become economic.

    I think that scenario is now here. Look for the other oil plays not named the Permian to attract more rigs.

    Tier #3 oil plays need $70 for yet another wave of potential drilling.

  3. Harquebus on Sat, 3rd Feb 2018 3:25 pm 

    “In other words, all of the fancy new technology and drilling techniques seems to only have accelerated the initial rate at which oil comes out of the ground, not the total amount!”
    https://www.peakprosperity.com/blog/113557/great-oil-swindle

  4. rockman on Sat, 3rd Feb 2018 3:51 pm 

    Not that boat is completely off base. But no “play” is economic to drill at $X/bbl. There are Eagle Ford Shale prospects that are viable at $40/bbl and others that couldn’t reach economic justification at $100/bbl. Has always been true for every trend (conventional and unconventional) ever developed. One can try to characterize an “average” economic price but why bother: the companies actually making drilling decisions don’t use such an average: each prospect is analyzed for its unique recovery potential and, just as important, the probability of finding those target reserves.

    “Tiers” are OK but they don’t move stepwise: $50, $60, $70, etc. They are continuous: $50, $51, $52, etc. And, as pointed out, there’s no fixed “tier” that works for any trend.

    But if boat or anyone else here wants to use those tiers for a trend that’s OK. Just remember the companies actually drilling don’t view the world as such.

  5. rockman on Sat, 3rd Feb 2018 4:19 pm 

    H – “…only have accelerated the initial rate at which oil comes out of the ground, not the total amount…” I get the point you’re trying to make. But that’s not the accurate. Consider two Eagle Ford Shale wells that would each recover 300,000 bbl. But the vertical well takes 12 years and the horizontal well takes 6 years. But more important: the vert well takes 5 years to recover 100% of the initial cost and the hz well takes 2 years.

    The vert well would not likely be drilled. Even if it generated an 7% ROR: companies tend to be very focused n the payout period. This is why hz wells have been so popular even though they don’t typically a very good ROR: they might payout in 6 to 18 months. This returns capex quickly so it can be used to drill another well to make up for the very high decline rate exhibited by most shale wells.

    Without the accelerated production rate due to frac’d hz wells the ultimate recovery from the unconventional plays would not come close to what will actually be produced. And for a simple reason: regardless of high oil prices might reach very few vertical unconventional wells would be drilled. Even though vert wells cost much less then hz wells their slow production rates kill their economics.

    IOW as long as oil prices are high enough the frac’d hz wells will recover many times more oil then vert wells would for a simple reason: many more hz wells will be drilled the vert wells even at high oil prices.

  6. Harquebus on Sat, 3rd Feb 2018 4:53 pm 

    Rockman
    Thanks for that. That article that I posted concerns itself with some fudged figures for shale production. Faster initial flow rates, stated, results in faster depletion rates, not stated.
    Cheers.

  7. kanon on Sat, 3rd Feb 2018 11:49 pm 

    This article is really a plug for stock in fracking companies. Got to keep the optimistic buzz going on Wall Street. I would like to see articles explaining why the blood sucking banking cartel money masters have done such a piss poor job of offering investments in renewable energy.

  8. Mad Kat on Sun, 4th Feb 2018 12:47 am 

    Kanon, yep! Just more bullshit to keep the greedy investors on the sinking ship USS Frak.

  9. Anonymous on Sun, 4th Feb 2018 12:13 pm 

    US production has doubled in 10 years. The Oil Drum and ASPO are defunct. Peak oil searches on the Internet have crashed. Bottom line: peak oil got held down and boot stomped by events.

    There is nothing wrong with having an idea, being wrong, and then recognizing it. But peakers instead have run off, denied, etc. VERY, very few have internalized the new results. And even those have suddenly lost their avid interest in amateur analysis (this despite the field being very interesting).

  10. Davy on Sun, 4th Feb 2018 12:36 pm 

    Nony, peak oil is alive and well. The critical point is the systematic issues of oil and the economy. I would like to see you boot stomp that. The traditional peak oil story is dead. Immature people deride peak oil. Mature people understand the deeper issues. Go ahead and crow about it. You deserve a moment of fame. I remember when you disappeared in shame around the time oil prices were tanking and the whole shale patch was toast. LMFAO. You were a whining pussy back then but today you are standing tall. Good work.

  11. Anonymous on Sun, 4th Feb 2018 12:49 pm 

    I want oil prices to be low. Consider below in terms of my priorities:

    1. World price low, US grows.

    2. World price low, US shrinks.

    3. World price high, US grows.

    4. World price high, US shrinks.

    In 2015, we moved from 3 to 2. I loved it.

    I didn’t post since I got a job and a gf. Since I am posting, now, you can do the math… 😉

  12. MASTERMIND on Sun, 4th Feb 2018 2:55 pm 

    Anonymous

    As M. King Hubbert (1956) shows, peak oil is about discovering less oil, and eventually producing less oil due to lack of discovery.
    https://imgur.com/a/6dEDt

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Aramco CEO sees oil shortage coming as investments, oil discoveries drop
    https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR

    Peak Oil Vindicated by the IEA and Saudi Arabia

  13. MASTERMIND on Sun, 4th Feb 2018 2:56 pm 

    Anonymous

    Existing oil reserves are scheduled to begin a catastrophic crash within 1 to 3 years. When it hits the economic and social damage will be catastrophic. The end of Western Civilization, from China to Europe, to the US, will not occur when oil runs out. The economic and social chaos will occur when supplies are merely reduced sufficiently….

    https://imgur.com/a/6dEDt
    http://www.nature.com/nature/journal/v481/n7382/full/481433a.html
    http://www.sciencedirect.com/science/article/pii/S0301421509001281
    http://www.sciencedirect.com/science/article/pii/S030142151300342X
    http://www.sciencedirect.com/science/article/pii/S0016236114010254
    http://www.geo.cornell.edu/eas/energy/the_challenges/peak_oil.html
    http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf
    http://www.scribd.com/document/367688629/HSBC-Peak-Oil-Report-2017

  14. MASTERMIND on Sun, 4th Feb 2018 2:57 pm 

    Anyoumous

    The End of the Oil Age is Imminent

    Recently, the HSBC oil report stated that 80% of conventional oil fields were declining at a rate of 5-7% per year. This means that there will be an oil shortage of ~30 million barrels per day by 2030 and ~40 million barrels per day by 2040.
    http://www.scribd.com/document/367688629/HSBC-Peak-Oil-Report-2017

    What is mentioned far less often is that annual oil discoveries have lagged annual production since the 1980s.
    https://imgur.com/a/6dEDt

    Now, this problem has nothing to do with the recent decline in the oil price, which started in 2014. This has been an on-going problem for the past 30 years. Now, the IEA is predicting oil shortages by ~2020 due to declining exploration.
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Here, the IEA blames this problem on the low oil price. But, this problem started in the 1980s. The problem is geological: we are running out of conventional cheap oil. Shale and tar sands are not the answer, either. Those resources are far too expensive, compared to conventional oil, because the global economy is based on cheap conventional oil. Expensive oil is not a replacement for cheap oil.

    Based upon the HSBC report and the IEA, the End of Oil Age will start around ~2020: there will be a dramatic economic depression due to exhaustion of cheap oil. This will cause a global economic collapse.

  15. MASTERMIND on Sun, 4th Feb 2018 2:59 pm 

    Anyoumous

    Cornell University: Energy Studies in the College of Engineering. The Challenges of Peak Oil
    http://www.geo.cornell.edu/eas/energy/the_challenges/peak_oil.html

    The End of Peak Oil? Why this topic is still relevant despite recent denials (Chapman, 2014)
    http://www.sciencedirect.com/science/article/pii/S030142151300342X

    Projection of World Fossil Fuels by Country (Mohr, 2015)
    http://www.sciencedirect.com/science/article/pii/S0016236114010254

    2020s To Be A Decade of Disorder For Oil
    https://oilprice.com/Energy/Energy-General/2020s-To-Be-A-Decade-of-Disorder-For-Oil.html

    Chevron CEO warns US shale oil alone cannot meet the world’s growing demand for crude
    https://www.cnbc.com/2017/05/01/us-shale-cannot-meet-the-worlds-growing-oil-demand-chevron-ceo-warns.html

    Energy watchdog warns oil and electricity shortages could develop as investment falls
    https://www.cnbc.com/2017/07/10/watchdog-warns-of-oil-and-electricity-shortages-as-investment-falls.html

    Citigroup CEO Ed Morse warns of oil shortages coming as soon as 2018
    https://www.bloomberg.com/news/articles/2017-09-25/citi-says-get-ready-for-an-oil-squeeze-than-an-opec-supply-surge

  16. MASTERMIND on Sun, 4th Feb 2018 3:01 pm 

    Anyoumous

    The US Shale Business is “not profitable” and can’t fund itself whether oil is at 100 or 50 dollars a barrel
    https://imgur.com/a/t7ulB

    MIT Technology Review: Shale Oil Will Boost U.S. Production, But It Won’t Bring Energy Independence
    https://www.technologyreview.com/s/507446/shale-oil-will-boost-us-production-but-it-wont-bring-energy-independence/

    The world’s largest oil trader Vitol says US oil production will peak in 2018
    https://www.reuters.com/article/us-commodities-summit-vitol/u-s-oil-output-may-be-set-for-last-spike-in-2018-vitol-idUSKBN1CF1MZ?rpc=401&

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