[Oily Stuff]

Like Mr. Rockman I have been in the oil and gas business a very long time and I too have seen estimates and predictions of individual well and reservoir performance that were so grossly incorrect entire companies were obliterated because of it, political regimes in small countries were changed because of it, peoples hopes and dreams were destroyed forever because of it. The oil and gas industry is notorious for misleading the public, some of it intentional lying and deception, some of it stretching the truth, some of it simply having unrealistic expectations of mother nature. I think basically it is no more possible to predict production capacity in the world 10 years from now than it is to predict what your IRA will look like 10 years from now. There are simply too many unknowns that will affect the ultimate outcome.

The internet and the "world of information" we now live in seems to guarantee that everyone should know everything about everything, immediately and forever. If the EIA, or the USGS, or public companies under the watchful eye of the ever protective SEC, says its so, it must be so. There is no lying on the internet. As Mr. Argamante implies, however, these entities get paid for making predictions. There guesses about the future are a means of self preservation and pleasant, happy guesses, as we know, are always better received than gloomy guesses. I don't think very many people in the world trust the oil and gas business and I can just about guarantee that not too many people like or appreciate oil companies. But now, all of a sudden, when it comes to the tight oil, energy independence, lets party hardy propaganda campaign the industry has undertaken, the world trusts the oil and gas business. We're good guys again...lets have another round of SUV's, thanks very much. Go figure.

I would say Mr. John A that most people in the world already know what they need to know about our energy future, or they should know by now. If you buy gasoline, and lots of folks do, something is not right, is it? I don't believe people will deal with the energy future until 9 dollar gasoline is upon them like a hungry bear. If demanding accurate, reliable predictions for future supply is necessary so that Americans can know how much time there is left, how many more BTU's they can piss off before getting eaten by the bear, my advise to people is to forget about supply and start conserving, now. Yesterday. At least lets do it for our kids.

[Tanada]

That's a non sequitur, of course every forecast ever made about anything is conditional, even if that isn't stated when the forecast is made. All sorts of assumptions go into every forecast, some assume no future growth, some assume a decline, others assume growth.

Forecasting that the USA will get to the point where we produce more oil than we consume is an assumption that oil production growth will exceed consumption growth by a large margin if the time frame is short. Personally the only way I see it happening in my lifetime is if demand is replaced by some other source or eliminated completely through economic collapse.

[John_A]

I think basically it is no more possible to predict production capacity in the world 10 years from now than it is to predict what your IRA will look like 10 years from now. There are simply too many unknowns that will affect the ultimate outcome.

You are correct in that 10 years from now, who knows? But here is the rub, as long as oil is valuable, everyone with an interest will TRY. Governments, ASPO, market folks, all of them. So sure, those groups all know they will be wrong (well, governments and market folks anyway ) but they MUST GUESS.

So, how to BEST guess is the question? That is what the folks are trying to do who say the US will produce more than Saudi Arabia, what Hubbert did, what the EIA and IEA do. HOW do we BEST guess?

The internet and the "world of information" we now live in seems to guarantee that everyone should know everything about everything, immediately and forever. If the EIA, or the USGS, or public companies under the watchful eye of the ever protective SEC, says its so, it must be so. There is no lying on the internet.

This is just a symptom of idiot human behavior. People are gullible, biased towards what they believe prior to fact-finding, and the internet allows everyone to venture an opinion regardless of actual knowledge. They read a book, find a website, and presto, they know TRUTH. I have not the faintest interest in their opinion on a topic they know nothing about, I am interested in at least the well informed, the professionals, like you and Rock.

I put you charge of the EIA tomorrow. Your job is to count the beans (information gathering) and the projections of how the beans will look in the future (analysis).

Oily is hereby King Administrator of EIA!

What is the first thing you do to make estimates of what is going to happen 10 years from now...better?

I would say Mr. John A that most people in the world already know what they need to know about our energy future, or they should know by now. If you buy gasoline, and lots of folks do, something is not right, is it?

Only if you define "something is not right" as "different than it was yesterday". Price spikes are not new, and neither is the hollering and bitching which comes with it. Price spikes to $0.36/gal, people panic! Sound familiar?

I don't believe people will deal with the energy future until 9 dollar gasoline is upon them like a hungry bear. If demanding accurate, reliable predictions for future supply is necessary so that Americans can know how much time there is left, how many more BTU's they can piss off before getting eaten by the bear, my advise to people is to forget about supply and start conserving, now. Yesterday. At least lets do it for our kids.

I think you are right. Conserve now, limit damage to our personal budgets committed by Big Oil and their lackeys, and move on to more important things.

[John_A]

That's a non sequitur, of course every forecast ever made about anything is conditional, even if that isn't stated when the forecast is made. All sorts of assumptions go into every forecast, some assume no future growth, some assume a decline, others assume growth.

Absolutely true, all forecasts can be considered conditional.

I hereby appoint you Grand Poobah of EIA. What would you recommend to make better forecasts?

[Oily Stuff]

Darn, I always wanted to be a Phoobah.

What is the first thing you do to make estimates of what is going to happen 10 years from now...better?

A very important and thought provoking question that I have few answers for or that could actually be implemented. Internationally I would embrace Matt Simmons' plea for transparency in reserve reporting between producing countries in the world. It is absurd that an ME country can from one day to the next double it's reserve estimates, as Mr. Agramente suggests, without so much as making a bit trip. An international regulatory body to help govern reserve accounting? Never happen. Oil is power in the world we are about to face and nobody wants to pull its pants down around its knees to show how much, or little power they have. And we don't want to scare anybody into any rash decisions about alternative fuel sources, so sireeee.

Hell, I am not sure the US can do the right thing with regards to truth in energy advertising either. We can keep Cramer off the air waves, tell Papa Papa to tone the rhetoric down, duct tape Maugeri's mouth closed, not allow anybody but SPE accredited petroleum engineers make press releases or do audits. We could set more consistent standards (definitions) for proven and proven, undeveloped reserves (not the same parameters in tight oil plays), then let Rockman write the book Annual Financial Reports by Tight Oil Companies for Dummies that even I could understand; we could eliminate gas to oil equivalent calculations based on BTU dribble, clarify write downs by public companies and complicated before/after and in between tax computations that, IMO tend to scew (screw?) the financial picture of companies working in tight oil plays. We could perhaps require far more stringent government regulations for lending to public oil companies based only on net income flow and not discounted present value of reserves. None of that will happen, so I don't know what the answer is. Maybe there is no answer. Maybe we just get eaten by the big 'ol oil bear one day when we least expect it. I'll try and be ready, and get my kids prepared, the rest of the world I can't help; let it continue to swim in imaginary oil until there is no oil, I guess.

I herewith resign as King of the EIA, Mr. John. My reign was short and unproductive, sorry.

[John_A]

Darn, I always wanted to be a Phoobah.

What is the first thing you do to make estimates of what is going to happen 10 years from now...better?

A very important and thought provoking question that I have few answers for or that could actually be implemented. Internationally I would embrace Matt Simmons' plea for transparency in reserve reporting between producing countries in the world.

Pleas are nice. But in the arena of state secrets, it is very unlikely.

It is absurd that an ME country can from one day to the next double it's reserve estimates, as Mr. Agramente suggests, without so much as making a bit trip.

It is not absurd. It is reality. How would you recommend doing an estimate of the appropriate information without their cooperation?

Hell, I am not sure the US can do the right thing with regards to truth in energy advertising either. We can keep Cramer off the air waves, tell Papa Papa to tone the rhetoric down, duct tape Maugeri's mouth closed, not allow anybody but SPE accredited petroleum engineers make press releases or do audits.

No one can fix stupid and uninformed, not even the King or Grand Poobah. Journalists will continue to confuse resources and reserves, people will never understand that estimates are given as density functions for a reason, and as long as the internet is alive, someone will claim that the Bakken has 500 billion barrels and will free us from oil dependency...except of course the actual scientists say different, but we pick the number we like for all sorts of reasons, and not understanding is what many Americans specialize in.

We could set more consistent standards (definitions) for proven and proven, undeveloped reserves (not the same parameters in tight oil plays), then let Rockman write the book Annual Financial Reports by Tight Oil Companies for Dummies that even I could understand; we could eliminate gas to oil equivalent calculations based on BTU dribble, clarify write downs by public companies and complicated before/after and in between tax computations that, IMO tend to scew (screw?) the financial picture of companies working in tight oil plays.

SPE will be holding a meeting this fall to address exactly some of these issues. Richard Nehring is involved, and it should be quite the confab. Until then, SPEE Monograph 3, "Guidelines For The Practical Evaluation of Undeveloped Reserves in Resource Plays" will have to do. First printing December 2010.

We could perhaps require far more stringent government regulations for lending to public oil companies based only on net income flow and not discounted present value of reserves. None of that will happen, so I don't know what the answer is. Maybe there is no answer. Maybe we just get eaten by the big 'ol oil bear one day when we least expect it. I'll try and be ready, and get my kids prepared, the rest of the world I can't help; let it continue to swim in imaginary oil until there is no oil, I guess.

I herewith resign as King of the EIA, Mr. John. My reign was short and unproductive, sorry.

Hey, these are the kinds of questions and discussions I think peak oil websites should be having. We don't like how people forecast, fine, how would WE do it. I am of the opinion that the government agencies have a damn tough job, sorting through what is good and bad, hype and invisible molecules hidden miles underground. If oil production is important, and I believe it is, these kinds of questions should be worked on by everyone from the amateurs to guys like you, people who have been around the block and seen this stuff in action.

[ralfy]

Related:

"The Myth of 'Saudi America'"

http://www.slate.com/articles/health_an ... dance.html

[agramante]

John_A:

M. King Hubbert, "Nuclear Energy and the Fossil Fuels", page 9: "The production rate will be zero when the reference time is zero, and the rate will again be zero when the resource is exhausted; that is to say, in the production of any resource of fixed magnitude, the production rate must begin at zero, and after passing through one or several maxima, it must decline again to zero."

It's a good paper. I suggest you read it.

In a data series with several maxima, the question is which of the maxima is global, and which others are local. You can look at crude oil production data (Source EIA):

US Crude Production.jpg

as well as rig count data:

Oil Rig Count.gif

and see a pretty clear linear relationship between the current production spike and rig count. For the US to surpass Saudi Arabia that count will have to climb much higher, and of course geology and pricing will have to cooperate. (I think pricing, in general, will.) And since the drillers are going for the sweet spots first, it's hard to guarantee that future wells will produce even as well as the ones drilled already. Our current production maximum still isn't all that close to the 1970 maximum. In 1970 production was roughly 10 million barrels a day; in 2008 it was roughly 5 million; now it's 7.5 million. So we need to double this performance to pass Saudi Arabia (assuming, of course, that their production remains consistent, which it might not). A few promotional estimates don't convince me that we will.

[Oily Stuff]

Mr. Aragament is of course correct in a very big way. At the moment Texas has 48% of the domestic rig fleet running flat out, over 30% of that in the Eagle Ford shale. I do not believe that available iron, qualified labor, qualified supervision, service company support, etc. exists whereby the rig fleet can increase too much more in the the EF, or anywhere else in America for that matter. We could have 150 rigs built and ready to work down here in Texas, which we do not, but we do not have the qualified labor to run those rigs. Its hard, hot, dangerous work and clearly young men and women today still believe that degrees in political science and film history are the ticket to success. Lots of attorneys can't make what a floor hand for Nabors makes but who wants to really work these days?

http://eaglefordshale.com/drilling-rig- ... #more-3229
http://www.rrc.state.tx.us/eagleford/Ea ... uction.pdf
http://www.rrc.state.tx.us/eagleford/Ea ... uction.pdf
http://www.rrc.state.tx.us/eagleford/im ... -large.jpg

C+C production from the EF thru April of 2013 was 644,000 BPD. There are currently 4900 EF wells producing in the EF and for the most part I think everyone is pretty much caught up on frac'ing delays. If you drive thru S. Texas there is a lot of frac pumps parked in service yards and frac tanks are stacked up like cord wood.

So, after 5 years of huevos to the wall drilling in the EF in S. Texas the average well is making 131 BOPD. Forty percent of the wells drilled next year in the EF will be needed to simply replace the decline from existing wells. In my hood lots of EF wells are on rod lift making 50-60 BOPD and bucoos of water and all of a sudden there are no rig lights to be seen in the evening sky. Some re-fracs (after only 3 years of production life!) being done by the biggest company in the entire play, at 3 million dollars a pop, are not doing so well, I am told by production hands.

Saudi America my hinie.

[Ron Patterson]

John A wrote:

This is a conditional forecast. Of course if production stops growing it will be a sign...that production has stopped growing. The people doing this for a living, like the EIA and whatnot, are trying to figure that out based on economics and resource sizes TODAY, they need to know now when production will stall out to even refute the claim of others.

Well I will make an unconditional forecast. US production will stop growing and we will not overtake Saudi Arabia or Russia, even though oil production in both these countries will soon go into decline.

Shale oil, or tight oil, whichever term you choose to use, will soon peak and go into decline along with all of US production. The Bakken is already in the first stages of topping out. From July 2011 until October 2012 oil production in the Bakken increased an average of 22,714 barrels per day. But in the six months since then, Bakken production has increased by only an average of 7,215 bp/d. That is a drop of 68 percent per month.

Fewer drilling permits, 150, were issued in June than in any month since the surge began in July of 2011. Drilling permits for the previous 17 months have averaged 213 per month.

Wake up and smell the coffee. Tight oil is nothing but a flash in the pan. That fact will be obvious by the end of this year and all those folks who say the US is the new Saudi Arabia will be spitting out feathers from all that crow they have to eat.

[Ron Patterson]

pstarr wrote
Ron, when is the next update on those production permit numbers?

The number of drilling permits issued each day is quoted about 6PM Central Time each working day. http://www.bakkenblog.com/bakken/HOME.html

The weekly drilling permit totals are quoted each Friday and the monthly totals are quoted the last working day of each month. http://www.bakkenblog.com/bakken/Permit ... 24-28.html

[John_A]

John_A:

M. King Hubbert, "Nuclear Energy and the Fossil Fuels", page 9: "The production rate will be zero when the reference time is zero, and the rate will again be zero when the resource is exhausted; that is to say, in the production of any resource of fixed magnitude, the production rate must begin at zero, and after passing through one or several maxima, it must decline again to zero."

It's a good paper. I suggest you read it.

I have. And anyone who does also knows that it wasn't about peak oil, but the primacy of a nuclear fueled future. Hence (LOVE that word!) the title.

And Hubbert did a projection the world still marvels at. I am curious whether or not it can be repeated to substantiate, or refute, the concept of America becoming a top oil producer again. Even if it disproves the minor thesis of Marion's 1956 paper.

and see a pretty clear linear relationship between the current production spike and rig count. For the US to surpass Saudi Arabia that count will have to climb much higher, and of course geology and pricing will have to cooperate. (I think pricing, in general, will.) And since the drillers are going for the sweet spots first, it's hard to guarantee that future wells will produce even as well as the ones drilled already. Our current production maximum still isn't all that close to the 1970 maximum. In 1970 production was roughly 10 million barrels a day; in 2008 it was roughly 5 million; now it's 7.5 million. So we need to double this performance to pass Saudi Arabia (assuming, of course, that their production remains consistent, which it might not). A few promotional estimates don't convince me that we will.

Do you have any suggestions as to how to make a better prediction of the future? Certainly the EIA uses working rig counts in their Short Term Energy Outlook to project forward, and they don't see America repeaking again.

[John_A]

So, after 5 years of huevos to the wall drilling in the EF in S. Texas the average well is making 131 BOPD. Forty percent of the wells drilled next year in the EF will be needed to simply replace the decline from existing wells. In my hood lots of EF wells are on rod lift making 50-60 BOPD and bucoos of water and all of a sudden there are no rig lights to be seen in the evening sky. Some re-fracs (after only 3 years of production life!) being done by the biggest company in the entire play, at 3 million dollars a pop, are not doing so well, I am told by production hands.

Saudi America my hinie.

Unfortunate that the Eagleford really isn't an oil play. People often lump it in with the Bakken for some reason, but the Bakken GORs scream oilfield across the board. The Eagleford does not. Even in the thermal window where the oil might be expected, it sure looks like a decent heavy lease condensate play to me.

[John_A]

Wake up and smell the coffee. Tight oil is nothing but a flash in the pan. That fact will be obvious by the end of this year and all those folks who say the US is the new Saudi Arabia will be spitting out feathers from all that crow they have to eat.

Just like those who say that terminal decline post peak is terminal? A flash in the pan causing the oldest producing province on the planet to grow oil production faster than at any point in its history is one heck of a flash in the pan, but I think your estimate of it topping out and rolling over soon is quite reasonable. My fear is that those who missed this flash in the pan in the first place will also miss the next one, and that is the true goal of guessing a forecast, to see it before it happens, rather than just proclaim all decline, all the time.

When crap rock with nothing but a little help from a frack job can cough up oil production larger than Prudhoe Bay and Cantarell COMBINED (largest conventional oil fields in the Western hemisphere for those unfamiliar with them) it just doesn't seem fair to think of what is going on as flash in the pan. Sure, if it was only..say..East Texas field in size, we could all laugh and joke. But for the size they are now, people are certainly allowed to wonder.

The "upheaval" isn't usually the way some might describe "flash in the pan".

http://money.cnn.com/2013/05/14/news/wo ... index.html

[Ron Patterson]

John A wrote:
When crap rock with nothing but a little help from a frack job can cough up oil production larger than Prudhoe Bay and Cantarell COMBINED (largest conventional oil fields in the Western hemisphere for those unfamiliar with them) it just doesn't seem fair to think of what is going on as flash in the pan.

Errrr.... Both Prudhoe Bay peaked at 1.7 million barrels per day and Cantarell peaked at 2.1 million barrels per day. The Bakken is currently producing .73 mb/d and is slowing down considerably. I doubt very seriously that the Bakken will ever make it to even one million barrels per day.

Prudhoe bay has produced almost 12.5 billion barrels of oil so far. It is extremely doubtful that the Bakken will ever make it to 2 billion. Bakken cumulative production to date is less than 700 million barrels.

The Bakken is not even in the same league with Cantarell or Prudhoe Bay. Not even close.

Let me repeat: The Bakken is nothing more than a flash in the pan. It will fade just as fast as it rose.

[TheAntiDoomer]

Suuuuure Ron whatever you say. Hey still expect 2016 we will be in total doomer collapse as you have been preaching on TOD for years?

[Ron Patterson]

Antidoomer said: Suuuuure Ron whatever you say.

Hey, I simply quoted the actual numbers, real data. The data speaks for itself. The real data is what it is all about. Those who can't handle the actual numbers seem to get sarcastic. Well I guess when all else fails....

Antidoomer said: Hey still expect 2016 we will be in total doomer collapse as you have been preaching on TOD for years?

And of course I have never made any such prediction. It must really be bad when you have to just make up crap in an attempt to discredit someone.