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“Biggest Oil Discovery In 50 Years” Debunked

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I like to listen to voices outside of the mainstream, but I don’t buy everything I hear. I bumped into this one from Joseph Farrell (click here) who I like for his geopolitical insights into what the Banksters are up to. He links to this piece:


You’d think a discovery equivalent to Saudi Arabia would have been pretty big news, but I hadn’t heard about it. Let’s spend about 5 minutes and dig into this. The announce was in January. The current company market capitalization is roughly 900M$. CONCLUSION: This isn’t a very big deal.

Here’s Linc Energy’s June Corporate Presentation (click here). Here’s what I see straight out of the chute from this presentation:

  • First reference to this in the company presentation is page 4 and more than half-way down the page. CONCLUSION: Its not that important, otherwise the company would be leading with this.
  • Its shale oil (pg 4) which is a lot more expensive and harder to get especially out in the boonies with little infrastructure.
  • First discussion of this is on page 17 of the company presentation (again its not that important).
  • The money page is page 19 where the “Estimated Recoverable Resource” is about 1/3 the size of one USA shale-oil field (Texas Eagleford) at 3.5B BBL. This is enough to supply the world for four months.

CONCLUSION: This discovery doesn’t significantly impact the Peak Oil thesis, although it (and discoveries like the North American Shale Oil discoveries) could prolong the period prior to a significant decline in oil production.

This is a pretty quick evaluation. Let me know where I’m wrong. I’d be really happy if the Peak Oil thesis ended up being wrong (insignificant as far as the global living standard is concerned) although I don’t see any evidence for that outcome, yet. Instead I see the global economy slowing down everytime the price of oil goes over $100 and little or no global growth in liquid fuels consumption. It seems to my that “Peak Oil” is one of the main factors limiting the world “going back to normal” economic growth after the $145/BBL oil triggered global financial crisis.


13 Comments on "“Biggest Oil Discovery In 50 Years” Debunked"

  1. mo on Sun, 28th Jul 2013 1:06 pm 

    I thought the world uses a Villon barrels every 12 days?

  2. Arthur on Sun, 28th Jul 2013 1:12 pm 

    First of all, it would not be very surprising if Linc Energy would blow up projections beyond all proportions, just to acquire capital. Having said that, the location of that fossil in the Australian desert would qualify for exploitation without too much environmental dammage, unlike the territories in the US like Pensylvania and Upstate NY, see Gasland 2 documentary.

    Although we should abandon oil before it abandons us, nobody denies that we are going to need a lot of fossil to achieve any transition worth mentioning.

    The four bullit point with which the author tries to ‘debunk’ the story, do not make much sense. He is using a Linc Energy report to debunk Linc Energy?!

    Here is an Australian newspaper article that was one of the first to refer to two reports from Linc Energy:

    Linc does not claim that there is for sure for 20 trillion $ worth of shale, it merely gives a extremely broad range of possibilities.

    As things stand now, it is way too early to arrive at final conclusions.

  3. Beery on Sun, 28th Jul 2013 2:43 pm 

    So 7 years’ worth of oil, IF the most optimistic guess is correct.

    We’re saved! For (maybe up to) 7 whole years.


  4. Beery on Sun, 28th Jul 2013 2:53 pm 

    And let’s not forget that this is not ‘oil’. It’s oil shale, AKA kerogen. It cannot be economically extracted unless oil reaches a cost of around $150/bbl. Even then, the flow rate is slooooooow.

    This kerogen find is not going to make any difference. I doubt it will ever be extracted.

  5. Arthur on Sun, 28th Jul 2013 2:59 pm 

    “We’re saved! For (maybe up to) 7 whole years.”

    Seven years extra transition time is a lot of time!

  6. Beery on Sun, 28th Jul 2013 3:38 pm 

    You’re forgetting the “maybe up to” part. And the fact that this is kerogen, not oil.

    This “oil” find cannot be extracted at current prices and even if prices do get high enough to extract it (which I doubt – we’ll likely go into recession if they ever do, and then prices come back down), the quality of the oil and the flow rate will make it all but useless.

  7. Beery on Sun, 28th Jul 2013 3:41 pm 

    It would probably be cheaper to create genetically modified whale farms and harvest whale oil than to extract and refine oil from this kerogen deposit.

  8. GregT on Sun, 28th Jul 2013 4:03 pm 

    Transition time to what? As oil becomes more expensive, less of it will be used to build alternate energy infrastructure.

    Unless someone figures out how to build solar cells, wind turbines, and computer tablets with hand tools, out of common materials like rocks, and wood. As goes the oil, so goes the techie dream of a computerized, work from home, Facebooking utopia.

    Egypt is a fine example of what happens when an economy can no longer afford oil. You don’t see Egyptians frantically building alternate energy infrastructure, do you? They are too busy overthrowing governments, trying to feed themselves, and killing each other.

    We have all seen the results of high oil prices, and as time goes on we will see much more of the same, and worse.

  9. eugene on Sun, 28th Jul 2013 4:29 pm 

    It’s not reserves, it’s production rates and at what cost. I figure we’re in for a lot of “we’re saved” announcements. I assume there was a lot of this type of talk as the Titanic sank.

  10. rollin on Sun, 28th Jul 2013 5:12 pm 

    Not sure why Beery called it kerogen, every reference I have seen has called it shale oil and it is available through fracking. The lack of infrastructure and lack of water are the biggest problems facing this region as far as oil development. Roads, bridges, pipelines are non-existent through much of the region.
    Even if they can get across these hurdles, it will be 10 to 20 years before the region can be exploited fully. That is IF it is even worth the effort. A lot more investigation and well drilling will have to be done before any certainty of reserves is obtained.

  11. bobinget on Sun, 28th Jul 2013 8:21 pm 

    Agreed RollOn,
    To avoid confusion, let’s call it what it is; ‘tight oil’.
    Such shale deposits also exist in Argentina. Chevron has committed to drilling 100 ‘test’ wells along with YPF, the recently nationalized, now government controlled oil company. The last contracts were signed last week. Many observers noted, the Argentinian shale potential may be AMONG world’s biggest. With Only 10,000 B p/d coming out of this region today and production ramping up 2017 expected to be ten times that.
    Still small potatoes compared to ME production.
    Argentina may never become a significant exporter.
    Tight oil is as real as Ultra Deep water crude, but there are no comparisons in yields.

    YPF obviously has ‘known’ about their ‘tight oil’ for decades but with no technical ability to fully exploit, it didn’t make headlines.

    When stock scammers promote a little known oil company, essentially a ‘penny’ stock, you can be almost certain they are doing it without permission
    of the small oil company itself. We’ve seen this same stunt over and over.

    All I’m saying: buyer beware!

    I do have one stock ‘tip’ for longer term investors.
    GE has been slowly converting part of its vast business into a profitable oil and gas service company. Last month they announced the opening, next year, of a Utah based lab to study fracking (or tracing). If and when GE comes up with better technology they will license it to oil & gas companies worldwide. GE committed two billion for this lab.

    (I do own GE shares)

  12. BillT on Mon, 29th Jul 2013 1:13 am 

    bobinge, most people with a retirement fund owns some of GE so don’t beat yourself up about it. GE is one of those ‘too big to fail’ corporations … until it is not.

  13. MrEnergyCzar on Mon, 29th Jul 2013 2:33 am 

    There’s much more on Titan, we just can’t afford to burn it….

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