[AdamB]

Yes, the US will be interesting to watch as prices increase, however, the US still accounts for less than 15% of global oil production. The capex cuts are global and have taken quite a few millions of barrels a day off of future production since those cuts affect projects with multi-year startups.

Might be only 15%, but it is within the top 3 oil producers, and nearly as large as the other 2 big ones, and was the fastest growing in 2015. Beat out Iraq, and Saudi Arabia. We are in a pretty exclusive club, and have much better free market mechanisms working for us.

https://www.eia.gov/todayinenergy/detail.cfm?id=25152

[JimBof]

Yes, the US will be interesting to watch as prices increase, however, the US still accounts for less than 15% of global oil production. The capex cuts are global and have taken quite a few millions of barrels a day off of future production since those cuts affect projects with multi-year startups.

Might be only 15%, but it is within the top 3 oil producers, and nearly as large as the other 2 big ones, and was the fastest growing in 2015. Beat out Iraq, and Saudi Arabia. We are in a pretty exclusive club, and have much better free market mechanisms working for us.

https://www.eia.gov/todayinenergy/detail.cfm?id=25152

Do not bet on the free market conditions being a plus, they can be a negative.
Free market, not using it send it to scrap for a few dollars. Cash is king.
Totalitarian state, just leave it lying there, wait twelve months, oh s**t we need that again start er up Fred.
There are advantages and disadvantages in both systems, nobody is perfect.

[ROCKMAN]

Adam - The Rockman will come back??? Ain't gonna happen, buddy. LOL. Long before prices increase significantly Rockman's MS will finish of his remaining brain cells it hasn't already gobbled up. All the Rockman can do until then is keep pushing the EOR projects he's working on. In fact have a meeting next Thursday with a company regarding their proposed steam flood idea.

Eventually it will be up to the young farts. Dog help you. LOL.

[AdamB]

Adam - The Rockman will come back??? Ain't gonna happen, buddy. LOL. Long before prices increase significantly Rockman's MS will finish of his remaining brain cells it hasn't already gobbled up. All the Rockman can do until then is keep pushing the EOR projects he's working on. In fact have a meeting next Thursday with a company regarding their proposed steam flood idea.

I was referring to your post mid-80's return BJ, not the current downturn. I've got a friend who sold windows for a decade after that bust, before coming back. I believe you have referenced a grocery store at some point in the past?

[GoghGoner]

When I stacked up the countries that could increase production in 2016 against the countries that may have a decrease in production, it seemed probable that the world production would decrease this year. Well, the odds are working in that direction.

Oil Leaks and Disruptions Doing the Job That Producers Won't

Outages from Iraq and Nigeria have disrupted more than 800,000 barrels a day of supply and tightened the Brent market, according to Citigroup Inc.

[ROCKMAN]

Adam - Now I get your reference. LOL. I didn't have much of a choice about coming back in the 80's: geologists are much use at doing anything else. LOL. But even that was a fluke: the Rockman discovered a seismic tech that had been missed by onshore players and using it was able to generate good profits even when NG was selling for $0.90/mcf. And was then able to soldier on in the early 90's thanks to the continued slowdown of the US oil patch: redeveloped offshore GOM fields bought from Big Oil which was continuing its retreat from the US.

The problem this time around is that there's very little potential left to chase on those old fields as there was more than 20 years ago. This time the distressed properties are mostly undrilled shale leases which hold little value until oil prices increase significantly. A company might own 300 producing Eagle Ford wells but there's virtually no upside to acquiring those producing leases. At whatever price paid for them it will be at market value based on today's prices. So they’ll be produced until they become uneconomic (which won’ take very long if oil prices stay where they are) and then plugged and abandoned. As mentioned before the Rockman's owner has budgeted $250 million for production acquisition and we won't even look at the Eagle Ford wells despite the fact that every big oil patch bankers is begging us to take over for their EFS debtors. As said there's no value to undrilled shale leases until prices recover. And the Rockman and other privcos (the companies that are still doing OK since few of them borrowed themselves into a hole) didn't drill shale wells when oil was $100/bbl so there's no reason to expect us to do so when/if prices get that high again. That will be up to the next batch of pubcos and their bankers/investors.

Which gets back to the main point I was trying to make: the experienced gray hairs will be gone in a few years leaving just the kids (under 50 yo) behind at a time when it will take more skill/experience to develop the remain reserves than ever before. IOW a lot more than geology to battle with in the future: a lack of seasoned veterans who managed to survive that last bust.

[hvacman]

Which gets back to the main point I was trying to make: the experienced gray hairs will be gone in a few years leaving just the kids (under 50 yo) behind at a time when it will take more skill/experience to develop the remain reserves than ever before. IOW a lot more than geology to battle with in the future: a lack of seasoned veterans who managed to survive that last bust.

RM - The lost technical skills of the "Dead Men" who really understood the original steam boiler technology that heated most buildings in the late 1800's and early 1900's was a theme in Dan Holohan's classic book (at least classic in the HVAC world)

"The Lost Art of Steam Heating".

More than just a technical manual, it is a tome honoring the "Dead Men" who's technical creativity and problem-solving skills brought reliable, comfortable, and efficient central steam heat in an era not far-removed from the time that one's only heating choices were wood fireplaces or shivering.

http://store.heatinghelp.com/The-Lost-A ... -p/101.htm

Somewhere, there will be a younger geologist or two in the future who, by interest or necessity, will dig (literally and figuratively) and re-discover many of the "lost" secrets known by the successful geologists and petroleum engineers of a by-gone era and write "The Lost Art of Petroleum Well Development".

[ROCKMAN]

Hman – You make some good points. But: “…will dig (literally and figuratively) and re-discover many of the "lost" secrets known by the successful geologists and petroleum engineers…” Something most outside the oil patch don’t know: as a general rule we don’t share sh*t with no body. LOL. Really. Lots of examples but I’ll share one I’m actually dealing with right now. In fact I have a meeting with a head researcher at a Texas university tomorrow to discuss the situation. It has to do with an ERO process simply called a “fireflood”…injecting air into a “depleted” oil reservoir. Too much to explain but this method was heavily tested back in the early 60’s. It does have applications today but it’s difficult to quantify which reservoirs to apply it to and exactly how to do it. I’ve been searching literature for 15 years and have found very little published. It’s even difficult to find which fields it’s been done let alone details. And all the geologist and engineers involved in the projects are dead or retired. I joke with my cohorts that I’m probably one of the top “experts” in this process in Houston because almost no one understands anything about the technique. In fact many never even heard of it.

Consider that the Rockman’s company was the first to drill a commercially successful horizontal oil well in an unconsolidated sandstone reservoir in onshore Texas. And that was just 3 years ago. And while the production data is public info no one will ever find out exactly how I did it because that info is proprietary: my owner has no interest in sharing with the oil patch because first, they are our competitions and second, he paid for the pilot test the Rockman needed to prove a concept he developed over 10 years ago. A concept that was repeated rejected by dozens of companies over the years. Thanks to my owner love of new tech ideas AND $100/bbl oil I was finally able to get my wells drilled. I have two new wells in a 70 year old field capable of doing a total of 300 bopd. Prior to our efforts this field, which had produced almost 30 million bbls of oil, was producing a total of 12 bopd from 5 wells.

And no one will ever see a paper published about the effort because we all signed a CA…Confidentiality Agreement. Of course some new smart ones will come along that will be just as capable (and some probably more so) then the Rockman. But they’ll still need the support of management to chase their ideas. But that’s going to require multiple factors coming together at just the right time. The eagle ford is a good example: the oil there had been known for more than 50 years. Frac’ng…another 50 year old learning curve. And the horizontal drilling technology for fractured reservoirs was well developed 10 years prior to the shale boom. But without the 300% increase in oil prices we wouldn’t have all that new production today.

And if that weren’t enough of a problem consider this: even if conditions repeat themselves many tens of thousands of those shale wells have already been drilled. Even if oil prices had not collapsed we would still run out of viable location. And even when oil was $100+/bbl no other significant oil production was established except for the Bakken and EFS which account for more than 80% of all shale production. No technology or high oil prices are going to create reserves where they don’t physically exist.

A long winded explanation. The short version: future petroleum geologists are f*cked. LOL. Which is why the Rockman is steering his 16 yo daughter towards engineering...preferably chemical eng.

[hvacman]

I hadn't thought about the "hidden" aspect of petroleum technology. For most mechanical equipment or systems, competitors, etc., can buy the equipment or tear down the walls, etc. to exam the systems and can pretty easily examine the nitty-gritty, reverse-engineering what's going on. Detailed maintenance manuals also are clues. Only really obsolete systems where the manufacturers, manuals, etc are long-gone require sleuthing out the "Dead men". GM and most other big car manufacturers have huge garages where they systematically test then tear down their competitor's products bit by bit to sort out exactly what they've done. Lot's of patent research to learn what ideas are and are not protected. But what you do underground - that's a lot harder to access, much less to reverse-engineer. Unless you find documentation, yup, another "lost" technique leaving future generations scratching their heads. Kinda like pyramid-building.

[rockdoc123]

I hadn't thought about the "hidden" aspect of petroleum technology. For most mechanical equipment or systems, competitors, etc., can buy the equipment or tear down the walls, etc. to exam the systems and can pretty easily examine the nitty-gritty, reverse-engineering what's going on. Detailed maintenance manuals also are clues

My view on this after 30+ years of observation is it really isn't about the existing technology....noone really has an upper hand in that area on a grand scale simply because much of the innovation over the past couple of decades has been accomplished by the big service companies. Even the "proprietary" fracking technology that companies like CHK have relied on has been largely replicated and to some extent improved.

What is missing is people experience. Back in the "good ole days" when many of us old farts were coming out of undergraduate degrees the majority of good jobs available were at the majors. And those majors believed in the adage that you learned some good background science as an undergrad but that wasn't enough. As a consequence they had their own training programs. When I started young geologists were expected to spend their first 2 - 3 years on the rigs doing sample and core work (as well as often help on the derrick and in the mud tanks) and take a number of specialized courses that the company offered (taught by their own research group). Geophysicists spent an equal amount of time in the field acquiring data and then at least 3 years in the companies data centre processing seismic before they were ever allowed to put a coloured pencil to paper. We were encouraged to go back after initial training and obtain a MSc as they saw value in adding a bit more science background and independent study to the practical studies they taught in house. There was also an amazing informal mentoring program comprised of a bunch of fellows who actually helped invent the seismic technique when they came back from WWII.

As time went on things changed due to market pressures. The old savants were largely retired in the eighties. The large companies gradually got rid of their own research departments and farmed that work out to consulting firms. In the nineties many of the larger entities broke up into smaller independants which put the onus of training on said companies dependant on their budgets. Some were better than others but my observation was students coming into the patch in the nineties were not receiving the kind of training they needed. Mentoring fell onto the backs of a few of us more senior folks but generally because the companies were lean there wasn't a lot of time for it. The one god send was, at least from my observation, that students coming into the patch in the nineties were keen to learn, they always wanted to pick your brain, they wanted to get on good technical courses and they were keenly interested in being better at the science.

Fast forward a few years. From about 2000 onwards my observation (and that of a number of my colleagues) was that the majority of students entering the patch were less interested in what they could learn than what the size of their pay cheque was and how soon they could become a manager. Of course thats an over simplification and there were always a few who were interested in understanding the science but the contrast in goals was pretty remarkable.

As a consequence I really don't believe the young geoscientists and engineers today are in the right space to be innovative (which is going to be the main requisite going forward). There will be the odd one of course, there always is but years ago it was the norm not the exception. This was driven home to me prior to my retirement from one of the larger independents. I was responsible for reviewing all of the unconventional plays prior to final budget approval. It was quite clear there was a paint by numbers approach to problem solving and by digging a bit that was largely because the individuals involved in all of those projects did not have the science background or the curiosity to solve problems effectively.

So I think Rockman is sort of correct ....the industry is what is f&^ked and that is because the future geologists haven't received the training and mentoring required. The saving grace might be the service companies such as Schlumberger and Halliburton who spend a considerable amount of money on research and development. Exxon and Shell still play a role albeit much smaller than they did. BP would probably play a role if they couldn't help getting tripped up in their unwarranted arrogance. The issue of course is the greatest technology in the world isn't much help if you have chimpanzees trying to deploy it.

[ROCKMAN]

Guys - A freaking amazing coincidence. Yesterday I reviewed a new (and patented) equipment to employ a decades old EOR technique. They did the pilot test in a very old field on some heavy oil. Now get this: the inventor knew nothing about the oil biz: just knew about the input energy and knew from a completely different industry.

So I did a quick net search on the field looking for any background. Son of a bitch: second reference I pulled up a report written by a Big Oil that had applied the same EOR method in the same field 46 YEARS AGO and found a unique way to do it. And the inventor had no idea about their effort. And apparently no one from the oil patch he consulted with discovered the report. Essentially he did a tertiary effort after the secondary effort and had no idea.

There are similar fields in the trend. Here's the really freaky part: his equipment will get the job much better then Big Oil's. But Big Oil discovered a much better way to apply the method then how the new guy used his equipment. So believe it or not but the Rockman may be one of the few (maybe the only one) that knows all 3 angles: new equipment and the 46 year old better application and knows a trend that no one but the mom & pop stripper operators are aware of. And the best part: the Big Oil geologist/engineer that wrote the report (and everyone they worked with) ARE DEAD. LOL.

The Rockman is as happy as a puppy with 2 peters. But still need to work on the details of the economic model to determine if this really is a golden goose. But the best lead the Rockman has stumbled into in 3 years. A strange repeat of history: the Rockman survived the 80's bust by applying a common offshore geophysical method that the onshore Little Oil's knew nothing about. And Big Oil had zero interest in shallow onshore NG.

So it follows my earlier point: there are EOR methods well know in one state and little known in another. And more important almost no geologists in Texas today have any first hand experience with this method. And again the ines that did ARE DEAD. And the ones elseweherer that might have no knowledge this Texas oil trernd exists.

I know Doc gets it: a truly freaky coincidence of the knowledge of the technology, application and geology in the hands of very few. And (preliminarily) it looks like It just might work OK at $30/bbl. And yes: the Rockman held back a lot of specifics...you never know how's listerning. LOL. And no: I haven't told the new equipment inventor about it. If the project becomes viable my owner would write him a big check, take control and no one in the oil patch will ever read about our future and hopefully very economic efforts. We aren't a pubco so don't have stock to promote. We just make money and don't talk about it publicly.

[rockdoc123]

I know Doc gets it: a truly freaky coincidence of the knowledge of the technology, application and geology in the hands of very few. And (preliminarily) it looks like It just might work OK at $30/bbl. And yes: the Rockman held back a lot of specifics...you never know how's listerning. LOL. And no: I haven't told the new equipment inventor about it. If the project becomes viable my owner would write him a big check, take control and no one in the oil patch will ever read about our future and hopefully very economic efforts. We aren't a pubco so don't have stock to promote. We just make money and don't talk about it publicly.

this is where the "old farts" will make a difference going forward. I don't know how many times I have heard about a field that is performing badly and low and behold...back pressure issues. The problem being they are looking at each well and not understanding how it all works in terms of the gathering system. This is basically low hanging fruit for "the old farts" who have been out there rubbing the grease off the gauges and shaking our heads all these years.

And Rockman....if whatever you have works someone is going to steal it really quickly....that is the nature of our business unfortunately. BTW there are a few opportunities out there for A&D that work below $30 (before tax), just difficult to raise money to do them.

[ROCKMAN]

Doc - I wouldn't say steal but discover the application . But two advantages: the patent on the equipment and once we confirm the process we can quickly aquire the fields in the trend: need $40 million to pick up those old fields...no problamo...write that check easy. Plus we don't need to get it all: if we can grab 30 million bbls of residual oil we'll just have to be satisfied with just $1 BILLION in revenue. LOL.

And as you know all too well we "old farts" truly are a dying breed. LOL.

[JimBof]

The difference is Roc you know how to do research, you know how the system works and you spread your search wide. I have done this sort of thing with paper files. Look through 5 years of paper work, find the essential details, sort it all out and give the boss the correct answer. I may not have been as good at the day today processes but I am a problem solver. Usually they wanted the answer I gave them. Sometimes it was embarrassing for them. Generalists are a rare breed but we link disparate details that no specialist can.

[ROCKMAN]

Jim - Well said. And one of the easiest ways to solve a problem: do some research and find if perhaps someone has already done that. Which is exactly what the Rockman discovered. I’m sitting here at 0700 on my office on a Sunday morning point a power Point presentation together to pitch this EOR idea to my owner. And I’m getting the guts of it by cutting and pasting illustrations and maps from A REPORT WRITTEN 43 YEARS AGO. LOL.

Perhaps you’ve seen the same in your field: folks are convinced that there are new ways and better tech to solve a problem then was available decades ago. And in some areas of the oil patch, like seismic data, that might be true to a large extent. But that’s not a universal reality. The report was done by a Big Oil back when they did RESEARCH PROJECTS in the US. But Big Oil gave that up decades ago and left it to the service companies to develop new tech. And those companies don’t tend to have the depth of geologic knowledge the Rockman et al have nor are they good at connecting the dots between the rocks and their word which is dominated by machinery.

[AdamB]

Jim - Well said. And one of the easiest ways to solve a problem: do some research and find if perhaps someone has already done that. Which is exactly what the Rockman discovered. I’m sitting here at 0700 on my office on a Sunday morning point a power Point presentation together to pitch this EOR idea to my owner. And I’m getting the guts of it by cutting and pasting illustrations and maps from A REPORT WRITTEN 43 YEARS AGO. LOL.

Perhaps you’ve seen the same in your field: folks are convinced that there are new ways and better tech to solve a problem then was available decades ago. And in some areas of the oil patch, like seismic data, that might be true to a large extent. But that’s not a universal reality. The report was done by a Big Oil back when they did RESEARCH PROJECTS in the US. But Big Oil gave that up decades ago and left it to the service companies to develop new tech. And those companies don’t tend to have the depth of geologic knowledge the Rockman et al have nor are they good at connecting the dots between the rocks and their word which is dominated by machinery.

Keep up the good work Rockman. With the ability you and your colleagues have displayed to turn resource scarcity into global glut, we need more people in this world who can deliver these kinds of decisive problem solving skills. Tell your boss that every consumer on this forum thinks you deserve a raise for your involvement in improving our standards of living.

[ROCKMAN]

Thanks Adam but the Rockman and his coworkers get no credit for the production increase. We never have and never will drill shales because we aren't concerned about the consumers. We're in it strictly for the profit from PRODUCING oil/NG and not from hyping stock since we aren't a pubco.

It's not personal...just business. LOL

[AdamB]

Thanks Adam but the Rockman and his coworkers get no credit for the production increase. We never have and never will drill shales because we aren't concerned about the consumers.

Oh, I understand that your billionaire owner is only interested in fleecing the consumers as best he can, really, he didn't become a billionaire by winning at poker in Vegas, right? And then giving it all away. But it is the likes of your philosophy of finding the old, making it new again, and in the process drowning the country in the resulting liquids.

We're in it strictly for the profit from PRODUCING oil/NG and not from hyping stock since we aren't a pubco.

It's not personal...just business. LOL

Absolutely. And you deserve credit for your business being more free market than most, and not even knowing when to quit...and thereby creating the current glut which DOES benefit the consumer. So just by being in the industry that doesn't know when to quit while they are ahead, you get credit!

[tita]

Absolutely. And you deserve credit for your business being more free market than most, and not even knowing when to quit...and thereby creating the current glut which DOES benefit the consumer. So just by being in the industry that doesn't know when to quit while they are ahead, you get credit!

You don't understand that he's got not much to do with the current glut. The glut is there because of the rise of shale oil, which was developped by pubcos. And the money invested was spent... with no return for those who invested it. These pubcos failed to make viable economic projects and are just struggling against bankruptcies.

Quicksilver Resources, a Texas-based gas producer, went into Chapter 11 bankruptcy protection last year with about $2.4bn of debt. This year it announced sales of its US assets for just $245m, and some of its Canadian assets for $79m. Its creditors are on course for losses of about $2bn.
source: https://next.ft.com/content/d48b1922-ea ... 03682345c8

If all the oil patch was playing the way his owner is playing, we would not have any glut at all. Nobody would have thrown so much money in shale, and we would have 92 mb/d of global production actually.

This is not a "Well Done", this is a "Thank You" to the guys who are losing their capital for the sake of oil prod.

[ROCKMAN]

Adam - Actually the Rockman doesn't get the credit/blame for the new oil production. That goes to the public companies playing the shales. The Rockman's owner avoided those like the plague which is why we're not drowning in debt like those fools. LOL

Also good to remember that in addition to filling his bank account he's also contributed his share to the many tens of $BILLIONS paid to the various govt agencies and private landowners. Of course there is the dark side: his company has provided fossil fuels to the US consumers who then directly converted them into the GHG that's driving climate change. Oh, did I mention he's given away hundreds of $million to charities...mostly medical such as fighting childhood cancer.

I personally like successful rich people since the Rockman has never gotten a paycheck from a poor man. LOL