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The Shocking Outlook For US Oil Production

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The Shocking Outlook For US Oil Production

Unread postby AdamB » Tue 21 Nov 2017, 15:53:40


Last week the International Energy Agency (IEA) released its World Energy Outlook 2017. The report identified four large-scale shifts underway in the global energy system: The rapid deployment and falling costs of clean energy technologies The growing electrification of energy The shift to a more services-oriented economy and a cleaner energy mix in China The resilience of shale gas and tight oil in the United States All of these shifts have implications for investors, but it was the projections on the U.S. shale boom that garnered most of the headlines. A New Oil Superpower? The report projected that the U.S. would be a net exporter of oil within a decade, and is set to become the world’s dominant oil and gas production leader for decades. The IEA further projected that the U.S. will be responsible for 80% of the world’s new oil production


The Shocking Outlook For US Oil Production
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Re: The Shocking Outlook For US Oil Production

Unread postby Outcast_Searcher » Tue 21 Nov 2017, 16:35:35

AdamB wrote:

Last week the International Energy Agency (IEA) released its World Energy Outlook 2017. The report identified four large-scale shifts underway in the global energy system: The rapid deployment and falling costs of clean energy technologies The growing electrification of energy The shift to a more services-oriented economy and a cleaner energy mix in China The resilience of shale gas and tight oil in the United States All of these shifts have implications for investors, but it was the projections on the U.S. shale boom that garnered most of the headlines. A New Oil Superpower? The report projected that the U.S. would be a net exporter of oil within a decade, and is set to become the world’s dominant oil and gas production leader for decades. The IEA further projected that the U.S. will be responsible for 80% of the world’s new oil production


The Shocking Outlook For US Oil Production

Either there are "shocking" amounts of oil to come from US shale formations in the next decade, or there aren't.

Either way, supply and demand will continue to work, prices (although possibly volatile) will adjust as the situation warrants. Barring nuclear war in the Middle East or a giant meteor hitting the earth, etc, chances are excellent that oil will be priced in a way that lets most prudently use its products, and production to extract what is needed at a price to allow marginal profitability over time (despite all the conspiracy claims to the contrary).

i.e. the system will keep working, imperfect as it is. Not that I would expect doomers to admit that, despite all the lessons history should eventually teach them about things like conservation, efficiency, adaptability, advances in technology, etc. (i.e. the system's built in doom resistance).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Shocking Outlook For US Oil Production

Unread postby Plantagenet » Tue 21 Nov 2017, 16:37:24

AdamB wrote:

Last week the International Energy Agency (IEA)...projected that the U.S. would be a net exporter of oil within a decade, and is set to become the world’s dominant oil and gas production leader for decades. The IEA further projected that the U.S. will be responsible for 80% of the world’s new oil production


The IEA is assuming that oil production in tight oil shale can continue to grow dramatically over the next 10 years.

This conflicts with the reality on the ground, where some analysts are predicting that oil production from tight oil shale in the US will peak in the next few years. For instance, a recent report from Wood MacKenzie Consultants expressed concern that oil production from tight oil shale in the Permian Basin may peak in a few more years.

US-Shales-Most-Productive-Play-May-Peak-By-2021

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Re: The Shocking Outlook For US Oil Production

Unread postby ROCKMAN » Tue 21 Nov 2017, 23:38:40

P - As explained before the long term prediction of future drilling is dependent upon acuurately predicting the long term price of oil. A feat no one has yet been able to do consistently. So what are they predicting for the oil prices that will support their production prediction?
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Re: The Shocking Outlook For US Oil Production

Unread postby Outcast_Searcher » Wed 22 Nov 2017, 12:58:06

Plantagenet wrote:
AdamB wrote:

Last week the International Energy Agency (IEA)...projected that the U.S. would be a net exporter of oil within a decade, and is set to become the world’s dominant oil and gas production leader for decades. The IEA further projected that the U.S. will be responsible for 80% of the world’s new oil production


The IEA is assuming that oil production in tight oil shale can continue to grow dramatically over the next 10 years.

This conflicts with the reality on the ground, where some analysts are predicting that oil production from tight oil shale in the US will peak in the next few years. For instance, a recent report from Wood MacKenzie Consultants expressed concern that oil production from tight oil shale in the Permian Basin may peak in a few more years.

US-Shales-Most-Productive-Play-May-Peak-By-2021

Cheers!

One thing I wonder about is that the possibility of opening other formations, with technology continuing to evolve and improve, seems to be ignored.

Surely as more innovations and options come about, more US shale plays will be worth exploiting (at a sufficient oil price) even if production peaks in one or a few of the top formations. (Examples, stacked, lateral, a combination of both, improving software and analysis of the formations, etc. -- and I know nothing of the industry aside from a little reading).

The truth is probably, as usual, somewhere between cornucopiastan and doomstan. But to me, pointing to the potential peaking of production of one or a few formations shouldn't imply that fracking shale for oil is basically done.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Shocking Outlook For US Oil Production

Unread postby onlooker » Sun 10 Dec 2017, 08:58:29

How about this for shocking or at least realistic
https://www.thestar.com/business/2017/1 ... gests.html

U.S. vastly overstates oil output forecasts, MIT study suggests
The culprit, they say, lies in the Energy Information Administration’s premise that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract.
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Re: The Shocking Outlook For US Oil Production

Unread postby Plantagenet » Sun 10 Dec 2017, 11:14:22

ROCKMAN wrote:... the long term prediction of future drilling is dependent upon acuurately predicting the long term price of oil. A feat no one has yet been able to do consistently.


Thats partly true. Certainly an increase in the price of oil triggers off an increase in drilling.

But the world is very close to running out of untapped giant conventional oil to find. Drill all you want, but it isn't there.

And the projections for ever-increasing oil from TOS in the US are just nonsense. Bakken has peaked, the Eagle Ford has peaked, and the Permian is on track to peak over the next few years. Drill all you want in the lower 48 of the US, but it isn't there.

Cheers!
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Re: The Shocking Outlook For US Oil Production

Unread postby Outcast_Searcher » Sun 10 Dec 2017, 13:43:30

Plantagenet wrote:
And the projections for ever-increasing oil from TOS in the US are just nonsense. Bakken has peaked, the Eagle Ford has peaked, and the Permian is on track to peak over the next few years. Drill all you want in the lower 48 of the US, but it isn't there.

Cheers!

And you know this for a fact of course. And you can say this for the entire world of course. :roll:

Have you learned NOTHING from the history of such predictions?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Shocking Outlook For US Oil Production

Unread postby coffeeguyzz » Sun 10 Dec 2017, 14:04:56

OS
Apparently not.

For those of us who follow much of the goings on in the hydrocarbon world, particularly LTO/LTG (Gas), and the somewhat related electricity generation market on a global scale, two trends should be kept in mind.

The above referenced MIT report grossly under represents the technological advances these past 5 years in unconventional development. So much so that one wonders if a deliberate spin was attempted or the authors were spectacularly ignorant of the recent - and ongoing - advances.

Whatever.

The speed and precision that operators can now employ in unconventional plays around the US (and, eventually, other countries) will manifest as WTI rises, perhaps in the $70/$75 range.
Trends such as the TMS, Uinta, Rogersville and others are awaiting better economics for their development.

(The Austin Chalk is receiving virtually no publicity. That will change as EOG's results are replicated by other companies).
Productive areas of existing plays will greatly expand as they will be much cheaper to develop than 4 years ago.

The big enchilada waiting in the wings is natgas.
On a semi macro level, the developments in LNG handling is already expanding its potential use on a global scale for power generation.
A whole new cohort of hardware catering to micro grids will compliment the ready supply of fuel.

Long term operations of horizontal wells greatly favor gas versus oil due to simple physics.

As the continuing disasters unfold in Australia (and, soon, in New England) due to embracing renewables for large scale electricity generation, the public backlash will be severe.

Count on it.
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Re: The Shocking Outlook For US Oil Production

Unread postby ROCKMAN » Sun 10 Dec 2017, 14:08:11

Outcast - Nothing has been ignored. Hundreds of different shale formations in dozens of US petroleum basins have been studied. Many have had multiple well tests. But you wouldn't read about them unless you were an insider like the Rockman that reads such trade journals. And unless they BOOM! (which most haven't) they wouldn't show up in the MSM.

In fact you may know nothing of the Mississippian Lime and it has actually had some very modest success. The Mississippian Lime (ML), a carbonate shale formation that primarily produces oil, underlies a large portion of Northern Oklahoma and Southern Kansas. The formation has been drilled vertically since the 1940s, with its first horizontal well drilled in 2007.

But: "As drilling activity plunged in 2015, the "Miss Lime," as it is often called, experienced one of the sharpest declines in rig counts of all tight oil plays. Baker Hughes Inc. reported as of early October 2015 the ML rig count had fallen to 13 versus 79 a year earlier -- a dropoff of 84%."

It was a pretty hot land play initially. Do you recall reading much about it? And you certainly didn't here about the many formations that had no success to speak of.
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Re: The Shocking Outlook For US Oil Production

Unread postby Plantagenet » Sun 10 Dec 2017, 18:46:25

Outcast_Searcher wrote:
Plantagenet wrote:
And the projections for ever-increasing oil from TOS in the US are just nonsense. Bakken has peaked, the Eagle Ford has peaked, and the Permian is on track to peak over the next few years. Drill all you want in the lower 48 of the US, but it isn't there.

Cheers!


....and you can say this for the entire world of course.

Have you learned NOTHING from the history of such predictions?


You will learn NOTHING if you can't even understand what are you reading.

I didn't make a prediction for the "entire world."

This thread is about the outlook for US Oil Prediction, and thats what I was commenting on. My post doesn't even mention TOS deposits of the "entire world". My post refers very clearly only to "TO in the US" and then I in the very next sentence I repeat that I am referring to TOS only in the "lower 48 of the US" in case there is anyone whose reading comprehension skills are so poor they didn't understand the first sentence.

Would it help you understand it if I wrote the same thing three times?

Cheers!
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Re: The Shocking Outlook For US Oil Production

Unread postby Plantagenet » Sun 10 Dec 2017, 19:15:27

ROCKMAN wrote:Outcast - Nothing has been ignored. Hundreds of different shale formations in dozens of US petroleum basins have been studied. Many have had multiple well tests.


And thats exactly why they aren't seeing intensive drilling right now. They aren't as productive as the Bakken, Eagle Ford and Permian basin TOS plays.

No doubt these other TOS deposits will see more activity if/when the price oil heads back up to ca. $100 bbl again, but they aren't going to be as large or productive as the top tier TOS plays that have already been developed.

Cheers!
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Re: The Shocking Outlook For US Oil Production

Unread postby onlooker » Sun 10 Dec 2017, 19:32:34

This seems to be the dynamic that is playing out:
High U.S. Shale Oil Production Growth Rates Are Not Sustainable


The implications are significant, indicating that many shale producers are being forced to produce from less prolific wells to maintain volumetric oil production growth. To capture higher volumes at higher prices they must extend production to less productive areas. Drilling into less productive acreage would lead to slower production growth rates at lower margins, as more rigs are employed driving up costs to capture greater production volumes.


https://seekingalpha.com/article/408350 ... ustainable
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Re: The Shocking Outlook For US Oil Production

Unread postby Outcast_Searcher » Mon 11 Dec 2017, 16:22:33

Plantagenet wrote:
Outcast_Searcher wrote:
Plantagenet wrote:
And the projections for ever-increasing oil from TOS in the US are just nonsense. Bakken has peaked, the Eagle Ford has peaked, and the Permian is on track to peak over the next few years. Drill all you want in the lower 48 of the US, but it isn't there.

Cheers!


....and you can say this for the entire world of course.

Have you learned NOTHING from the history of such predictions?


You will learn NOTHING if you can't even understand what are you reading.

I didn't make a prediction for the "entire world."

This thread is about the outlook for US Oil Prediction, and thats what I was commenting on. My post doesn't even mention TOS deposits of the "entire world". My post refers very clearly only to "TO in the US" and then I in the very next sentence I repeat that I am referring to TOS only in the "lower 48 of the US" in case there is anyone whose reading comprehension skills are so poor they didn't understand the first sentence.

Would it help you understand it if I wrote the same thing three times?

Cheers!

If you have nothing meaningful to say, be sure and use empty distraction tactics.

When there is a serious oil shortage and booming prices, well over $100 (where there is an actual theat of being unaffordable), be sure and get back to us.

In the mean time, as usual with you, it's empty lip flapping.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Shocking Outlook For US Oil Production

Unread postby onlooker » Mon 11 Dec 2017, 16:38:51

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Re: The Shocking Outlook For US Oil Production

Unread postby kublikhan » Mon 11 Dec 2017, 17:33:41

onlooker wrote:Is Oil About To Collapse?

https://oilprice.com/Energy/Crude-Oil/I ... 15951.html
This article is predicing the oil price falling to the $40s in the short term because of growing oil production from shale. However long term the oil price is going up. Also, it is arguing oil prices are driven by that apocryphal supply and demand that you despise. And it is talking about continued positive economic growth. This does not seem to be a very onlooker friendly article. Perhaps you only read the headline again?

There are, as I have noted in the past, reasons to believe that the long-term path of oil is still upward, but more immediately there is one dominant factor that keeps adding downward pressure, large and still growing supply from North American shale producers.

The fact is though, that as the EIA chart below shows, after dropping off as price declined at earlier this year, U.S. crude production is growing again and will be higher this year than last and is expected to be higher again in 2018.

The second chart, directly above, indicates why American producers are pumping at a growing rate. WTI has been recovering ever since the low of $26.05, and is now at levels not seen since June of 2015. There are reasons for that recovery, most notably the production cuts agreed by OPEC countries and others including Russia and improving global growth, but those bullish factors are now fully priced in and the effect of that is to encourage U.S. E&P companies to, to borrow a phrase, drill, baby, drill!

There are, as I said, some bullish factors, and there is always the chance of a major unforeseen event disrupting supply, but all else being equal the next big move in oil will be caused by the most basic driver of price for any commodity; the balance between supply and demand. As it stands, every increase in demand and attempts at reduction in supply outside the U.S. is being more than compensated for by increases in domestic production, and eventually the price must reflect that, despite a continued positive outlook for economic growth.
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Re: The Shocking Outlook For US Oil Production

Unread postby onlooker » Mon 11 Dec 2017, 17:41:41

Just because I agree with one or a few of the points of an article, does not mean I will or need to agree with all of it
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Re: The Shocking Outlook For US Oil Production

Unread postby kublikhan » Mon 11 Dec 2017, 17:52:14

Can you point to which points of the article you agree with then? Seems to me you would disagree with pretty much everything it says. Other than the headline of course.

1. Article: Shale production is going to keep growing
Onlooker: shale production will fall

2. Article: Oil prices are going up long term
Onlooker: Oil prices are going down long term

3. Article: Oil prices are driven by supply and demand
Onlooker: Supply and demand is BS that only trolls, or worse, economists believe

4. Article: The economy is going to continue to grow
Onlooker: The economy is going to crash

5. Article: Putting sensationalist words like “collapse”, “crash”, etc in the title & article is usually nothing more than clickbait to drive views.
Onlooker: Those are the only articles worth reading
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Re: The Shocking Outlook For US Oil Production

Unread postby Cog » Mon 11 Dec 2017, 18:00:56

Onlooker has been infected with the ETP bug and it has affected him badly. An injection of supply/demand is the only thing that can save the poor lad.
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