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Page added on May 14, 2018

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Skeptic Geologist Warns: Permian’s Best Years Are Behind Us

Production

Geologist Arthur Berman, who has been skeptical about the shale boom, warned on Thursday that the Permian’s best years are gone and that the most productive U.S. shale play has just seven years of proven oil reserves left.

“The best years are behind us,” Bloomberg quoted Berman as saying at the Texas Energy Council’s annual gathering in Dallas.

The Eagle Ford is not looking good, either, according to Berman, who is now working as an industry consultant, and whose pessimistic outlook is based on analyses of data about reserves and production from more than a dozen prominent U.S. shale companies.

“The growth is done,” he said at the gathering.

Those who think that the U.S. shale production could add significant crude oil supply to the global market are in for a disappointment, according to Berman.

“The reserves are respectable but they ain’t great and ain’t going to save the world,” Bloomberg quoted Berman as saying.

Yet, Berman has not sold the EOG Resources stock that he has inherited from his father “because they’re a pretty good company.”

The short-term drilling productivity outlook by the EIA estimates that the Permian’s oil production hit 3.110 million bpd in April, and will rise by 73,000 bpd to 3.183 million bpd in May.

Earlier this week, the EIA raised its forecast for total U.S. production this year and next. In the latest Short-Term Energy Outlook (STEO), the EIA said that it expects U.S. crude oil production to average 10.7 million bpd in 2018, up from 9.4 million bpd in 2017, and to average 11.9 million bpd in 2019, which is 400,000 bpd higher than forecast in the April STEO. In the current outlook, the EIA forecasts U.S. crude oil production will end 2019 at more than 12 million bpd.

Yet, production is starting to outpace takeaway capacity in the Permian, creating bottlenecks that could slow down the growth pace.

Drillers may soon start to test the Permian region’s geological limits, Wood Mackenzie has warned. And if E&P companies can’t overcome the geological constraints with tech breakthroughs, WoodMac has warned that Permian production could peak in 2021, putting more than 1.5 million bpd of future production in question, and potentially significantly influencing oil prices.

The takeaway bottlenecks have hit WTI crude oil priced in Midland, Texas, which declined sharply compared with Brent in April, the EIA said in the May STEO.

“As production grows beyond the capacity of existing pipeline infrastructure, producers must use more expensive forms of transportation, including rail and trucks. As a result, WTI Midland price spreads widened to the largest discount to Brent since 2014. The WTI Midland differential to Brent settled at -$17.69/b on May 3, which represents a widening of $9.76/b since April 2,” the EIA said.

By Tsvetana Paraskova for Oilprice.com



15 Comments on "Skeptic Geologist Warns: Permian’s Best Years Are Behind Us"

  1. MASTERMIND on Mon, 14th May 2018 7:50 pm 

    Shale has put all of its eggs in one rickety basket in the Permian..Not wise..This is why they always say ‘diversify, diversify”.. Shale has lost around one quarter of a trillion dollars. And is in debt by around 400 billion.. Berman has nailed it from the start..

  2. twocats on Mon, 14th May 2018 8:14 pm 

    I’m pretty doomy – but the Permian doesn’t look to be “done” as far as growth, and initial well quality improved throughout 2017.

    the only potential sour note for the permian is cumulative oil production appears to be maxing out for 2nd quarter of 2016 – meaning every set of wells produced after that might have lower ultimate recovery.

    as far as the money goes – meh – that would only matter if money meant anything anymore. Its all playdoh. Its all the notion of someone’s retirement twenty or thirty years from now. None of that is ever ever going to happen so why keep pretending on some 401k paper statement.

  3. Duncan Idaho on Mon, 14th May 2018 8:31 pm 

    Lucky profit s no longer a issue—
    The down side, you just can’t stop.

  4. MASTERMIND on Mon, 14th May 2018 8:39 pm 

    wood mac think in line with Berman.

    Is Peak Permian Only 3 Years Away?
    https://oilprice.com/Energy/Crude-Oil/Is-Peak-Permian-Only-3-Years-Away.html

  5. Anonymous on Mon, 14th May 2018 9:09 pm 

    Art, Art, Art. You have been so wrong over the years. My favorite is in 2010 when you said the “Marcellus will disappoint”. And it grew way faster than even the cornies projected.

  6. Anonymous on Mon, 14th May 2018 9:13 pm 

    The state of Texas is producing over 4 MM bopd on its own. That is a record amount (one more Hubbert peak production for the dumpster). It’s actually more oil than the countries of China, Canada, or Iran produce. And Iraq (at 4.5 MM bopd) is in the gunsights. Could pass it this year.

    The Permian on its own (which includes most NM production but excludes Texas EF and other areas) is doing over 3.2 MM bopd. And it is growing at 0.8 MM bopd per year. The Permian is already beating Kuwait, Norway, UAE, Venezuela, etc. It’s actually possible that within a year, the Permian just as a basin passes China, Iran, and Canada as producers.

  7. Go Speed Racer on Tue, 15th May 2018 3:13 am 

    In a situation like this, we need
    the honorable Mr. Rockman, to tell us
    what’s really going on, and whether
    its gonna be boom or bust.

  8. Free Speech Forum on Tue, 15th May 2018 4:28 am 

    Americans either don’t know or want to know that the US is collapsing or think that nothing can be done to save the USA. Any plans or ideas to slow or escape the decay are quickly shot down as unworkable.

    Instead of demanding that minimum wages be repealed or checkpoints be ended, Americans would rather beg for their chains by asking for more laws.

    Insanity.

  9. Makati1 on Tue, 15th May 2018 4:42 am 

    Free Speech, Right on!

  10. Makati1 on Tue, 15th May 2018 4:44 am 

    Anon, the Permian has peaked. Only more debt can continue to produce oil out of those wells. ALL of the Us oil fields are contracting. Do you believe the Us propaganda?

  11. Davy on Tue, 15th May 2018 5:51 am 

    3rd world, Nony has made you chew your cud so many times with oil issues maybe you should just shut up and stick to what you know. Let me see what might that be? Yea, anti-American agenda issues and Philippine tourism info. That is about all you show expertise on.

  12. rockman on Tue, 15th May 2018 10:25 am 

    Racer – “…the most productive U.S. shale play has just seven year of proven oil reserves left.” Not only an absurd statement (if he actually said it) but very easily proven to be complete BS. First, the PB is currently producing more oil then every before in history: previous peak was in 1973. Second, showing the foolishness of that seven year time frame, the PB was producing about 70 million bbls per year with very little decline from 2000 to the beginning of the shale boom. The shales have added about 180 million bbls per year. If no new shale wells were drilled from this day forward it would be physically impossible for the existing wells to completely deplete in just 7 years. That statement also implies that no matter how high the oil prives reaches there will be no shale wells left to drill in the PB. Folks should also understand that much of very slowing declining 70 million bbls per year was being produced from many old vertical shale wells.

    Every trend eventually comes to an end. But a province such as the PB? There are a number of negative aspects to the PB shale play. But no proven reserves left after 7 years? Just f*cking stupid.

  13. rockman on Tue, 15th May 2018 2:30 pm 

    Just a picky technical point. I’m sure most here interpret “Permian” as Permian Basin. Nice to use short hand but “PB” would be better than “Permian” IMHO. There are other places in the world that produce oil/NG from the “Permian” besides the PB: The Permian is a geologic PERIOD and system which spans 47 million years from the end of the Carboniferous Period 299 million years ago to the beginning of the Triassic period 252 million years ago.

  14. Cloggie on Tue, 15th May 2018 2:57 pm 

    French company Alstom produces hydrogen trains in Germany:

    http://www.alstom.com/press-centre/2018/05/alstoms-hydrogen-fuel-cell-train-wins-2018-greentec-mobility-award/

  15. MASTERMIND on Tue, 15th May 2018 3:50 pm 

    Clog

    Maybe they can have nano bots drive that train? LOL you are like a little child..so easily impressed by anything and doesn’t understand logic.

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