[dissident]

Why is anyone placing any faith in tight oil to resurrect US oil production? The Bakken and some other locations are small reservoirs. It's the nonsensical convolution of "shale oil" with an essentially conventional reservoir like the Bakken (the oil is in a dolomite layer and not in the shale) that produces the trillions of barrels of untapped oil hype. Nobody, anywhere, is extracting kerogens from shale deposits and making oil out of them. The Enron style antics by Chesapeake are not an indicator of the true reserves in the Bakken. The drilling permits and production are the only objective indicators of the performance of the Bakken.

[SeaGypsy]

Why? Because they want to believe. The same Americans who 5 years ago were telling me about the evil oil company conspiracy to lock up oil are the last year or so spouting this garbage "Saudi America". They were so keen to believe there is plenty, it took very little to convince them.

[dissident]

Why? Because they want to believe. The same Americans who 5 years ago were telling me about the evil oil company conspiracy to lock up oil are the last year or so spouting this garbage "Saudi America". They were so keen to believe there is plenty, it took very little to convince them.

So we are living in dangerous times. When the public is desperate to believe fairy tales it becomes open to manipulation that most of the time results in blood being spilled.

[John_A]

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.

The Bakken wasn't supposed to be able to pull an entire country out of terminal decline either. Now it probably won't make a million barrels a day? How the times have changed! And I wasn't talking about peak production for Cantarell or Prudhoe, I was talking about current production rates. What will be really interesting is when the tight oil does begin a decline, what will that look like compared to the two giants.

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.

Which is why I was using that good old metric, "the flow" as a measure rather than ultimate size. Prudhoe and Cantarell are both certainly larger in ultimate recovery than what the scientific estimates of Bakken size are.

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.

The Bakken and Eagleford are making more oil, right now, than both. And what matters to the students of peak? FLOW RATES. Critical information, and as far as flow rates, the Bakken and Eagleford are on the move! And producing more than those two fields COMBINED.

The Bakken formation has been producing since the 1950's, are you implying that it will be gone by 2060 or so?

[John_A]

Why is anyone placing any faith in tight oil to resurrect US oil production?

Because in the space of 2 or 3 years...they have?

The Bakken and some other locations are small reservoirs.

The Bakken formation encompasses a size of some 200,000 mi^2. Which means it is larger than California. You must think really BIG for that to be considered a small anything.

It's the nonsensical convolution of "shale oil" with an essentially conventional reservoir like the Bakken (the oil is in a dolomite layer and not in the shale) that produces the trillions of barrels of untapped oil hype. Nobody, anywhere, is extracting kerogens from shale deposits and making oil out of them.

The oil in the Bakken is in both the shale and surrounding rocks, both above and below. It has also migrated into formations like the Madison. The only people to have made oil out of kerogen would be the Colony project back in the 80's and some experiments by these guys:

http://www.pyrophase.com/

They haven't made much, a different process but probably no different in volumes then the Shell tests. Which also produced oil out of kerogen. One day nobody knows about it, the next day....Bakken oil explodes across the country and causes international furor over the market rearrangement.

The ripples of it have reached Asia already.

http://gulfnews.com/business/opinion/us ... -1.1201565

The Enron style antics by Chesapeake are not an indicator of the true reserves in the Bakken. The drilling permits and production are the only objective indicators of the performance of the Bakken.

So the objective indicators say that the Bakken and Eagleford are currently producing more than the remnants of the two largest oil fields in the Western hemisphere. And the EIA is projecting production from them to stabilize relatively soon and continue at a reduced rate thereafter, which is good, they are becoming more pessimistic. Perhaps it has been those talks with ASPO and PCI?

[ROCKMAN]

John - Good to get folks back on the rate dynamics and away from counting bbls in the ground. And there's one big difference between a shale reservoir with 10 billion bbl of oil in it and a conventional field that had 10 billion bbls of oil in it originally: to bring those 10 billion bbls of shale oil to market requires the continuous drilling of expensive wells. The old conventional fields, once developed, required only rather low production costs to keep that oil coming to the market. Even when the KSA was selling Ghawar oil for $10/bbl in 1986 they were making a profit. I don’t think many shale wells will be drilled at such low prices and thus much of those 10 billion bbls will never be produced. And if they are developed it won’t be done at such low prices.

[John_A]

John - Good to get folks back on the rate dynamics and away from counting bbls in the ground. And there's one big difference between a shale reservoir with 10 billion bbl of oil in it and a conventional field that had 10 billion bbls of oil in it originally: to bring those 10 billion bbls of shale oil to market requires the continuous drilling of expensive wells.

POD in action. Works for me. Certainly at $10/bbl there wasn't much interest in those expensive wells, but the instant it hits $100 we are talking about opening up the resource pyramid, and the world, it is off to the races. Japanese and the hydrates, here we come!

The old conventional fields, once developed, required only rather low production costs to keep that oil coming to the market. Even when the KSA was selling Ghawar oil for $10/bbl in 1986 they were making a profit. I don’t think many shale wells will be drilled at such low prices and thus much of those 10 billion bbls will never be produced. And if they are developed it won’t be done at such low prices.

So we kiss low prices goodbye to keep the marginal barrel alive. Sounds like POD to me.

Given any thought at all to how you would do a projection of future US oil supply, 10 years out? I hereby appoint you Rock, Grand Poobah of the EIA in direct succession behind The Oily One with a mandate to improve projections into the future! What would you do to make these things better?

[agramante]

John_A-

And Hubbert's supposition of a nuclear future hasn't come to pass, for a variety of reasons. Now the future belongs to renewables, according to some anyway.

Were I in the business of predicting energy markets, I could probably find a better way than taking a ruler, selecting a portion of the historical trend, and drawing a straight line out from that. The IEA's "unconventional undiscovered" is basically that: drawing a flat line out from the present day, neatly making up for all decline in conventional oil fields. That approach strikes me more as wishful thinking than any realistic estimate. Boosters in any industry, be it real estate, finance, energy, or anything else, like to predict future success.

[Ron Patterson]

John A wrote: The Bakken formation has been producing since the 1950's, are you implying that it will be gone by 2060 or so?

You are not up on your Bakken history are you. All the early Bakken production was from traditional wells drilled in the Nesson and Antilope anticlines. The first horizontal well was drilled in 1987 but the fracking did not start until the 90s. But not many wells were either drilled or fracked in the 90s.

As late as 2004 the Bakken was producing about 1,500 barrels per day and the average well was producing only 8 barrels per day.

The surge in Bakken production began in July 2011 when the number of additional wells went form 60 in June to 159 in July. Bakken production has more than doubled in the two years since.

I have no idea how long the Bakken will be producing like it did in those early years or even like it did in the early part of this century when production was so low it was negligible. Heck it might be producing 1,000 barrels per day by mid century. But production by that time will be so low it will not matter.

Those early days, in the 60s, when production on a few occasions crept above 3,000 bp/d, production was from conventional wells. Those wells have long since played out or have been reduced to stripper wells.

Production in the Bakken will start to decline within the next one to three years. After that the Bakken will be adding to the decline in world oil production instead of adding to the increase in world oil production.

[SeaGypsy]

Obama will be praying these hard plays can keep up for the duration of his term. Whoever is in government when the reality bites is going to be in a world of trouble.

[ROCKMAN]

John – You know that old saying about “Allowing folks to just suspect you’re a fool by saying nothing is better than opening your mouth and proving them correct?”

I’ve got that tattooed on my ass. Thankfully I have a big ass. LOL. I’ll make you a deal though. Provide me with a fairly accurate price forecast for oil, NG and coal for the next 30 years along with a ball park figure for the economic growth of the world’s major economies for the next 30 years and I take a shot as to how much oil, NG and coal we’ll be producing every year for the next 30 years. I’ll have to guess at the geologic component but for just the next 30 years that won’t be too difficult. Probably won’t be too accurate given other potential factors I’m not taking into account but might be as good as anyone else’s dumb guess.

As Ron points out the Bakken development today is not the Bakken of 50 years ago or even 10 years ago. OTOH if 10 years ago you had asked folks who were experts in the Bakken and had a good understanding of horizontal drilling and frac’ng (which had already led to the boom in the Austin Chalk carbonate shale play in the 90’s) what the Bakken would be producing today IF oil were selling for $30/bbl as it was in 2000 I doubt many would predict the current production rate. OTOH if you told them oil would start bouncing around $100 they probably would have been much more optimistic.

I didn’t pick 2000 arbitrarily. I was drilling horizontal wells in a tite conventional field in WY at that time. My directional drillers were hands who had been doing some of the hz work in the Bakken at that time. They had the technique down pretty good by that point. Frac’ng hz wells then wasn’t new either. Obviously what changed the game, and any projection of production rates, was the increase in oil prices. Not predicting it will happen but if one assumes oil drops and holds at $40/bbl in a year what do folks think the rig count will be in the Bakken the following year?

[agramante]

Carter was the only President who was honest about our energy situation. Between that honesty and his zero charisma (and some very ugly shenanigans involving Iranians and Contras), you can see what it got him. Let's hear it for sunny obliviousness!

"The Bakken and Eagleford are making more oil, right now, than both. And what matters to the students of peak? FLOW RATES. Critical information, and as far as flow rates, the Bakken and Eagleford are on the move! And producing more than those two fields COMBINED."

Some real sophistry there. The fields producing about 1.7% of the world total is supposed to alleviate the problem of peak oil, when their ultimately recoverable reserves aren't even close to other faded giants like Prudhoe Bay or Cantarell? (To say nothing of the really big boys in the mideast.) Of course, when the URR is so much less than the conventional fields, then more shale plays just like them must be found and developed, and at ever-increasing rates, to make up for their loss, as well as the ongoing decline elsewhere in the world.

[John_A]

John_A-

And Hubbert's supposition of a nuclear future hasn't come to pass, for a variety of reasons. Now the future belongs to renewables, according to some anyway.

Lots of things Hubbert said haven't come to pass. Like smooth declines after a single peak, or the amount of oil in the world, or amount of natural gas produced in the US. Nature of the beast. Lots of things predicted by Malthus haven't come to pass either. Or Ehrlich. Or Harold Camping. Big deal, everyone gets a pass trying to get the future right, each of them might be right, but usually not.

Were I in the business of predicting energy markets, I could probably find a better way than taking a ruler, selecting a portion of the historical trend, and drawing a straight line out from that.

You've just discounted the entire peak oil method of predicting future oil production, with a single sentence. Certainly the IEA and EIA no more use a straight line than Hubbert did, but attaching random forecasts to time series data is the game, and everyone plays it. Which is why I've been puzzling around, how to do it better, and what some of the ideas might be here locally.

The IEA's "unconventional undiscovered" is basically that: drawing a flat line out from the present day, neatly making up for all decline in conventional oil fields.

There is a method to their madness, and if you go back to their World Energy Outlook report in 2008, Chapter 9, Page 205, and read the first paragraph on that page, you will see why. The question after that is just related to how. Straight line, curved line, something I suppose. But you always need the why.

That approach strikes me more as wishful thinking than any realistic estimate. Boosters in any industry, be it real estate, finance, energy, or anything else, like to predict future success.

So what would your recommendations for a method to predict future oil production be?

[John_A]

John A wrote: The Bakken formation has been producing since the 1950's, are you implying that it will be gone by 2060 or so?

You are not up on your Bakken history are you. All the early Bakken production was from traditional wells drilled in the Nesson and Antilope anticlines. The first horizontal well was drilled in 1987 but the fracking did not start until the 90s. But not many wells were either drilled or fracked in the 90s.

Perhaps you didn't quite read what I wrote. I said nothing about fracking techniques, or horizontal versus vertical, only that the Bakken has been producing since the 50's. The lognormal distribution of rock productivity allows sweet spots to produce without what has become Bakken standard drilling and completion techniques, and that was certainly happening long before the Bakken was "discovered" by Findley.

As late as 2004 the Bakken was producing about 1,500 barrels per day and the average well was producing only 8 barrels per day.

And had produced more than 3 million barrels already and had 23 field designations assigned. I am familiar with the Bakken, as anyone who knows it began producing in the 50's should be.

Those early days, in the 60s, when production on a few occasions crept above 3,000 bp/d, production was from conventional wells. Those wells have long since played out or have been reduced to stripper wells.

Conventional wells have been drilled with air, foam, oil, polymer, or mud (bentonite) fluid systems for more than a century now. Whatever do you mean "unconventional wells"?

Production in the Bakken will start to decline within the next one to three years. After that the Bakken will be adding to the decline in world oil production instead of adding to the increase in world oil production.

The EIA agrees with you, with perhaps more of a plateau than your estimate. Good to know the people who do this for a living are on top of these things!

[John_A]

As Ron points out the Bakken development today is not the Bakken of 50 years ago or even 10 years ago.

No one said it was. I was just emphasizing that in the rush to talk about NEW and DIFFERENT people seem to forget that petroleum geologists like you have been finding, and producing, oil from source rock as reservoir rock prior to your birth, and mine. The oil industry isn't the same as it was 10 years ago, you aren't the same as you were 10 years ago, but that rock has been producing since the 50's.

I didn’t pick 2000 arbitrarily. I was drilling horizontal wells in a tite conventional field in WY at that time. My directional drillers were hands who had been doing some of the hz work in the Bakken at that time. They had the technique down pretty good by that point. Frac’ng hz wells then wasn’t new either. Obviously what changed the game, and any projection of production rates, was the increase in oil prices. Not predicting it will happen but if one assumes oil drops and holds at $40/bbl in a year what do folks think the rig count will be in the Bakken the following year?

Ask Ron what his data says about what was going on in the Bakken in North Dakota and Montana in the spring and summer of 2009. Same thing would happen in the future I imagine.

[agramante]

You've just discounted the entire peak oil method of predicting future oil production, with a single sentence.

No, I've discounted lazy sales pitches. The Hubbert linearization has been found to be unreliable too--by the time it becomes very accurate, you're so far past peak it almost isn't useful any more. With reference to the shales, any prediction should probably include analysis of how many more rigs are available, since production is strongly correlated to rig count, as well as the quality of the reservoir rock. My understanding is that they're drilling all of the best spots first, so production per well could drop (or is dropping), and expense per well could rise. (To say nothing of market price--and that can't be ignored.) But if you're looking for investors, then draw that line pointing up! Mitigating factors be damned. I've noticed production forecasts of this sort tend not to have error bars like, say, IPCC predictions of temperature, CO2 concentration, or sea level rise.

[ROCKMAN]

A – “I've noticed production forecasts of this sort tend not to have error bars like…” There’s an even worse flaw IMHO in just about every forecast I’ve seen: No pricing model. I’m sure I’m starting to irritate some folks by repeating but many discussion ignore the obvious: price has greater control over future production rates that any other parameter. There is no technology or clever geologist that could have created production levels we see today in the Bakken or any of the shales if oil prices had not risen to current levels.

Which means no forecast has any supportive validity if it doesn’t include a price platform. Granted predicting prices years down the road is difficult but without making such assumption how can one predict future production from any play 20 to 30 years out without basing it on pricing? Not too difficult to predict Bakken or EFS drilling activity for the next 12 months or so. Just like it wasn’t too difficult to predict east Texas shale drilling activity back in the summer of ’08. That’s why Devon signed long term contracts for 18 rigs. Well, perhaps not that easy given that less than a year later Devon broke the contracts on 14 of those rigs and paid a $40 million penalty. That straight line of NG prices rising from $7 to $12 per mcf and beyond looked too good to be true. And it wasn’t.

All plans work and all straight lines continue indefinitely. Until they don’t. I would begin to guess what oil will be selling for in 5 years. But if my activity forecast assumed $40/bbl it would contain very little activity in the shales. OTOH if I assumed $110/bbl a very different forecast would develop. Which is exactly why many early forecast for the shales proved pessimistic. And for the most part that had little to do with not understanding the geology or technology. They were based upon prices staying about where they were. Just as many of the current optimistic prediction are assuming today.

[SeaGypsy]

Spot on again Rock.

The geopolitical ramifications are just huge. Way beyond the breadth of the silly topic heading. Even those of us with a few over average IQ (or many) get brain hurt when it comes to grokking the complexity of issues around our topic; we tend to specialize and hold onto our basic predilections- looking at peak oil is like looking at the sun- without breaking gaze or filtering (will send you either blind, mad or both).

http://sciencebasedlife.wordpress.com/2 ... n-purpose/

[John_A]

But if you're looking for investors, then draw that line pointing up! Mitigating factors be damned.

Fortunately we have the EIA, government servants without concern for what investors want, basing their information on resource amounts and a reasonable development schedule including the kind of rig information we are all happier with, saying that it peters out in few years. My opinion increases for their information daily, based on what I am hearing around this forum.

They appear to be doing exactly what is being requested. Base your information in fact and resources, develop them with the rigs available, consider the best economic prospects before the cruddier ones, do all the well declines and whatnot at the well level, these guys just keep sounding like they are doing it exactly the way people would want.

I've noticed production forecasts of this sort tend not to have error bars like, say, IPCC predictions of temperature, CO2 concentration, or sea level rise.

The EIA does scenarios, which is sort of a poor mans error bars. But they do the well level work with error bars, I think I've seen it for Barnett wells and whatnot. Makes me wonder if their high end scenarios (a high error bar if you will) says anything about the US overtaking Saudi Arabia? I think I have to run off and find out now.

[John_A]

A – “I've noticed production forecasts of this sort tend not to have error bars like…” There’s an even worse flaw IMHO in just about every forecast I’ve seen: No pricing model.

The EIA has this too!! This is amazing!

Rock, you have to tell us, now that we know the EIA uses pricing models, well level declines and whatnot, provides high and low scenarios to try and scope out error bars, resource limits on their production, what in the world would any of us do different if we were Grand EIA PooBah?