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Post Carbon Institute’s LTO Reality Check

Post Carbon Institute’s LTO Reality Check thumbnail

The Post Carbon Institute has just released a critique of the EIA’s Light Tight Oil projections. It is titled DRILLING DEEPER. The report is highly critical of the EIA’s projections and should be read by everyone interested in Peak Oil.

All data on all charts is in million barrels per day unless otherwise specified.

EIA Oil Projection

First a look at the EIA oil projections for US production from all sources. They expect offshore to increase to 2 million barrels per day by 2016, an increase of almost 600,000 bpd from current production. Also note that the EIA has US almost peaking in 2016 and increasing only slightly until the peak in 2019.

EIA LTO Hi Lo Projection

The EIA has several projections, covering all bases. However the reference, or most likely, will be the only one covered in this post.

EIA LTO Projection

Here is where all the Light Tight Oil will be coming from. They have the Bakken peaking in 2016 at 1.1 million bpd and Eagle Ford peaking at about the same time at 1.5 to 1.6 million bpd.

While they have the Bakken and Eagle Ford peaking in 2016 all the rest continues to increase and peaks much later. And they have the rest declining faster than the Bakken and Eagle Ford.


They have all other tight oil plays peaking in 2028 at about 2.65 million bpd with the Austin Chalk and “Other” growing the most.


62% of all Shale oil is currently coming from the Bakken and Eagle Ford. But by 2028 the EIA says that will be reversed with over 60% coming from outside those two plays.

Bakken Decline Rate

We now have a much better handle on the decline rate. It is far worse than we thought, declining 72% the first year.

The Post Carbon Institute’s take on things are a little different. They have the initial production a little higher than the EIA but dropping off much faster.

PCI Realistic Case

The Post Carbon Institute produced three cases, a Low Well Density Case, and Optimistic Case and a Realistic Case. And all three cases have three rates. In all cases the higher the initial production rate the faster the decline rate. I have posted here the Realistic Case.

EIA PCI Compare

Here we can see the difference in what the EIA predits and what the PCI predicts. The EIA has production still going relatively strong by 2040 while PCI has both the Bakken and Eagle Ford petering out.

EIA PCI Compare 2

That difference is made more clear in this chart.

Bakken Conclusions

1. High well- and field-decline rates mean a continued high rate of drilling is required to maintain, let alone increase, production. The observed 45% per year field decline rate requires the drilling of 1,470 wells per year just to maintain current production levels.

2. The production profile is most dependent on drilling rate and to a lesser extent the number of drilling locations (i.e., greatly increasing the number of drilling locations would not change the production profile nearly as much as changing the drilling rate). Drilling rate is determined by capital input, which currently is about $16 billion per year to drill 2,000 wells, not including leasing and other ancillary costs.

3. Peak production is highly likely to occur in the 2015 to 2017 timeframe and will occur at between 1.15 and 1.77 MMbbl/d. The most likely peak is between 1.15 and 1.22 MMbbl/d in the 2015 to 2016 timeframe.
4. Increased drilling rates will raise the level of peak production and move it forward a few months but do not appreciably increase cumulative oil recovery through 2040. Increased drilling rates effectively recover the oil sooner, making the supply situation worse later.

5. The projected recovery of 6.8 billion barrels by 2040 in the “Most Likely Rate” scenario (2,000 wells/year declining to 1,000 wells/year) of the “Realistic” case (80% of play drillable, at 3 wells per square mile), agrees fairly well with the mean estimate of latest USGS assessment of the Bakken (including the Three Forks) of 7.4 billion barrels.

6. These projections are optimistic in that they assume the capital will be available for the drilling “treadmill” that must be maintained (roughly $188 billion is needed to drill more than 23,500 wells, exclusive of leasing and ancillary costs). This is not a sure thing as drilling in the poorer-quality parts of the play will require much higher oil prices to be economic. Failure to maintain drilling rates will result in a steeper drop-off in production.

7. Nearly four times the current number of wells will be required to recover 6.8 billion barrels by 2040 in the “Realistic” case.

8. Projections that the Bakken will continue to grow and then maintain a plateau followed by a gentle decline for the foreseeable future51 are unlikely to be realized.

I have to add this. Five-Year Outlook: North Dakota Oil Production to Grow Steadily

On average, North Dakota oil production, which surged past the 1 million b/d mark earlier this year, will continue to grow steadily at a rate of about 18,000 b/d each month through 2019, according to a study completed in September for the state legislature.

Commissioned last year by state lawmakers, Bismarck-based engineering/planning firm Kadrmas, Lee & Jackson (KLJ) completed the work in partnership with North Dakota State University, concluding that daily production could hit the 2 million b/d level during the period.

KLJ and the university used three approaches to forecast the sustainability of oil and gas production: economic analysis of the Bakken/Three Forks shale formation; projections on population, employment and housing needs; and potential for enhanced oil recovery (EOR).

Got that, Bakken production will increase by an average of 18,000 barrels per day for the next 5+ years. 18,000 bpd increase just happens to be almost exactly what the Bakken has been averaging for the last 3 years. Here is what that chart will look like if they are correct.

Bakken KLJ Projection

So how do they plan on keeping production increasing at 18,000 bpd every month? Easy EOR! From that report:

EOR using carbon dioxide (CO2) injections to get extra production out of mature wells has the potential to increase overall production in North Dakota, the study pointed out. “In conjunction with other non-traditional technologies, such as horizontal drilling and hydraulic fracturing, CO2 EOR should be recognized as part of a long-term production strategy for North Dakota oilfields. Modeling and analysis proves there is significant opportunity.”

The primary challenges to EOR during the next five years, the study said, are the need to acquire sufficient volumes of CO2 and the oil/gas companies willingness to invest in EOR.

The study fails to mention that CO2 EOR has never been done on fractured non-porous reservoir rock. Here is how CO2 EOR works.


From an injection well you push CO2 into the reservoir. The pressurized CO2 combines with the oil and water and sweeps through the porous rock toward the well bore. But you can’t do that in a light tight oil reservoir. There are no injection wells in the LTO reservoir. And if there were it still wouldn’t work. The CO2 would hit one of the fractures in the rock and just channel all the CO2 right to the well bore and you would recover nothing but the CO2.

I did a little research and they tell me that the way they hope to do CO2 injection in a LTO field is just to push it down the original oil well bore under a lot of pressure, then let it come right back out. Okay but that sounds like it would be very inefficient. From what I read CO2 injection is already on the verge of being uneconomical.

But… there may be other ways of doing it. If you are in Atlanta from November 16th through the 21st then you can attend a seminar discussing just how it may be done. And you may be lucky. If they are looking for investors you may get in on the ground floor.

Evaluation of the EOR Potential in Shale Oil Reservoirs By CO2 Miscible Displacement Applied in Modified Zipper Fractured Horizontal Wells

peak oil barrel

19 Comments on "Post Carbon Institute’s LTO Reality Check"

  1. Northwest Resident on Tue, 28th Oct 2014 1:11 am 

    “Drilling rate is determined by capital input, which currently is about $16 billion per year to drill 2,000 wells, not including leasing and other ancillary costs.”

    I wonder if this report was written prior to the price drop in oil? Given that recent drop in price, the capital may not be there for ongoing extraction, which would tend to modify the “2015 to 2016 timeframe” for peak oil mentioned in the conclusions section, and not for the better.

  2. Westexasfanclub on Tue, 28th Oct 2014 3:45 am 

    All these analysis related to tight oil I find especially interesting related to the world peak. It seems clear, even with EIA data, that there is a peak of tight oil somewhere around 2016 with at least a strong production slowdown in 2015.

    So how will this affect the world that only grew since 2011 due to US tight oil production? IMO it will basically depend on the political situation in Iran and Irak if the world production plateau can be extended until about 2020 – otherwise the world will peak in 2015 or 2016. It has never been that clear with the actual data.

    And I must add – repeated words, I admit – that the old peak oil predictions, most of them predicting a peak somewhere between 2008 to 2012 were quite on the spot, apart from the effect tight oil had on world oil production.

  3. Makati1 on Tue, 28th Oct 2014 6:55 am 

    Peak oil is not going to matter when the whole economy shuts down. THAT is going to happen long before we run out of oil. I have started to skip a lot of peak oil articles as pure BS/propaganda. I follow the financial news around the world more now as it appears to be approaching critical mass. I also listen to (read about) the ‘war drums’ beating in the background. Ukraine, ME, Africa, Japan, Poland, ETC. FAR more important than oil, I think.

  4. Barrymoose on Tue, 28th Oct 2014 7:02 am 

    Besides the fact that,as mentioned above, that it won’t simply work, why in the world would anyone want to do EOR in a low quality high cost resource? Is it to bring down the decline rate from 85% to 82% in the first three years.

  5. poaecdotcom on Tue, 28th Oct 2014 9:28 am 

    “Peak oil is not going to matter when the whole economy shuts down.”

    Energy is everything. Peak oil, or the inability to increase available net energy to society (the economy) is why we can no longer service exponentially increasing debt.

  6. Northwest Resident on Tue, 28th Oct 2014 9:42 am 

    Best Case Scenario: Peak in 2015 – 2016

    Nony: Read this carefully and report back with what you have learned from this lesson.

    Fracking, a ‘False Premise’ that manufactures ‘False Promises’

    “Also implicit in the rosy numbers and figures is that cash will continue to be injected into capital-intensive shale gas and oil production operations.

    So far, the industry and its financiers have received a blessing from the U.S. Federal Reserve: zero-percent interest rates to issue junk bonds to finance fracking since 2008. But with the Federal Reserve considering hiking rates, economics could change quickly on the feasibility of continued unfettered shale oil and gas extraction.

    Hughes said his findings are based on “best case scenarios” and rule out external conditions that could reverse the drilling treadmill, including higher interest rates.

    “Other factors that could limit production are public pushback as a result of health and environmental concerns, and capital constraints that could result from lower oil or gas prices or higher interest rates,” he wrote. “As such factors have not been included in this analysis, the findings of this report represent a ‘best case’ scenario for market, capital, and political conditions.”

    ht tp://

    And a little discussion on just how bad investors have been taken to the cleaners with all those LTO extraction junk bonds:

    Toxic Mix Blows up: Oil Price Collapse & Junk Bond Insanity

    ht tp://

  7. coffeeguyzz on Tue, 28th Oct 2014 11:42 am 

    Hey, NWR, don’t know about Nony, but I’ve already downloaded Hughes’ report and quickly skimmed most of the executive summary. My keen disappointment in the report’s validity has been touched upon over in the relevant post on this site’s forum.
    Returning to Mr. Patterson’s work above, there are several aspects that are deficient in my view … primarily involving EOR.
    Not completely accurate is Mr. Patterson’s statement that LTO hasn’t undergone CO2 EOR yet as EOG did a pilot test in the Parshall field a few years back. The somewhat cryptic statement from the company’s CEO regarding the non-viability of the process – as it was carried out – has fueled growing speculation that the halt in the Parshall’s further development (this field is widely recognized as the core of the core of the Bakken’s sweet spot) may be due in part to EOG’s plans to develop the field with future optimal CO2 (or nat gas, nitrogen, or other components) EOR in mind. This company, EOG, is well viewed as a successful visionary in this field having pioneered CBR, been an early mover in the Eagle Ford, and purchased its own frac sand mines when it realized the upside to massive amounts of proppant in well stimulation.
    Mr. Patterson’s graphic of CO2 above is for conventional fields. The horizontals in the shales will resemble what DeeThree Exploration is doing successfully up in Canada (in the upper Bakken, no less) although D3 is employing captured, processed field gas that is injected in a once-producing lateral.
    As these shales are developing with numerous well bores spaced a few hundred feet apart – see slides #28-31 from Continental’s recent investor/analyst presentation for a one-of-a-kind visual of what a multi well frac job looks like – the potential for effective EOR is very positive.
    Final note regarding Mr. Patterson’s accurate observation on the flow of the CO2 thru the formation … various ‘diverters’ are already being employed to force the fracturing medium to open new fissures.
    This industry has “problem solving” inherent in its DNA.

  8. paulo1 on Tue, 28th Oct 2014 11:58 am 


    re: This industry has “problem solving” inherent in its DNA.

    And what will this ability return in your estimation? 1-2 more years of muddling on and a few more dozen CNBC headlines?

    I don’t always agree with Mak, but in this case I say, “make some preps”.


  9. Northwest Resident on Tue, 28th Oct 2014 12:01 pm 

    coffeeguyzz — When it comes to stretching out the peak oil date by extending the life of LTO, there’s something about the great hope in advanced technology improvements that turns me off. As in, I don’t believe it — or rather, I severely doubt it and I’ll believe it when I see it.

    You are far more aware of and educated in the CO2/EOR “advanced technology” details that I am, or to be honest, than I have a desire to be. I admit, I have a negative attitude toward any potential technological improvements that might make shale/LTO anything other than the Ponzi scheme, investor duping, money losing, debt accumulating, hype-driven, environment sliming Last Hope For Mankind that I believe it is.

    Lurking behind all these soon-to-be-used LTO/shale extending technological wonders is the monstrous fact that even in best case scenario, the LTO/shale production contributes insignificant energy to the world economy while sucking up debt and investors and spitting them out all along the way.

    I’m not holding my breath for CO2 or EOR to make things better in the world of rapidly declining energy, which is the one we all live in.

    Nony will no doubt be along shortly to enthusiastically agree with you, and to rip off yet another rendition of his Marcellus cheerleading routine one more time.

  10. Davy on Tue, 28th Oct 2014 12:06 pm 

    Java, good homework! But don’t forget we as a country and a global world are quickly going broke. Just like we don’t put men on the moon anymore we can’t aford expensive EOR on already expensive LTO’s. That is IMHO for what it is worth because I only had 3 electives in college in Geology.

  11. rockman on Tue, 28th Oct 2014 1:22 pm 

    It so easy to post a chart showing a projected increases in production from any formation if you don’t actually show on a map where those future wells will be located. For instance it would be really interesting to see if they post most of the future Austin Chalk wells right next to the thousands of Austin chalk wells, including mucho horizontal bore holes, that have been drilled over the years. Obviously that boom they show starting very soon must be somewhere else than Texas. During the 90’s the AC play in Texas was THE hottest oil play on the planet and eventually covered a DRILLED area several time larger then the current Eagle Ford Shale play.

  12. coffeeguyzz on Tue, 28th Oct 2014 2:30 pm 

    Paulo1, While none of us may be too certain of what the future holds , one of the immediate ‘returns’ in this ongoing shale development is the now copious amounts of natgas that is increasingly making its way into the American marketplace. Today’s retail price for CNG in Oregon is less than a buck fifty for a GGE (gallon of has equivalent). As manufacturers of power plants, vehicles, (esp. over the road trucks), and other industrial goods convert to nat gas usage, the follow on effects may be very significant.
    Despite any and all reports to the contrary, the amount of nat gas available/accessible is truly stupendous.

  13. Makati1 on Tue, 28th Oct 2014 9:25 pm 

    poaecdotcom, “energy is everything” to the capitalist system of profit, but the oil resource is NOT necessary for survival. A working, human supporting ecology is, if we want our grand kids to survive.

    The world is in more danger of being destroyed by nukes than it is by lack of oil to waste driving to WalMart. In fact, too much oil is drastically changing the ecology we, and they, need to survive, so less oil is better.

    As for the financial part of my comment, I realize the connection between energy and finance. Siamese twins in today’s world. I watch it so I can possibly see the collapse as it happens and move into survival mode the day before, not after.

    And, being retired, I can spend my day getting an on-going education in current events. Much more interesting, challenging and entertaining than any TV programming ever was.

  14. Nony on Wed, 29th Oct 2014 3:47 am 

    It’s a biased report. “Post carbon institute” indeed. Peaker shale critics have been off so far and way off on natural gas.

    Some of the crits are silly Berman-like (Haynesville in decline therefore NG overall scarce, when it’s the Marcellus that KICKED Haynseville [and Rock in the GOM].)

    In other cases, he cites revisions of EIA estimates to make it look like EIA is over-estimating. But he leaves out the Bakken estimates by USGS that got estimated up. And for the Marcellus, the 2011 downward revision from 400 to 100 is rather dated itself. A couple more recent estimates by ITG, etc. have been in the 300-400 TCF amount.

    There also is only a single mention of the Utica (do a search by word within the pdf). A play that has had phenomenal growth, is now being tracked by EIA, shares infrastructure with the Marcellus, and has had poster-child wells recently (including stepouts to NE PENN!)

    Maybe self-organized sillies like the ASPO should go picket DOE again. What a joke. TOD is dead for a reason. And the more analytical peakers are hiding from their previous silliness.

  15. marmico on Wed, 29th Oct 2014 7:37 am 

    Hughes is credible. I wouldn’t dismiss his analysis.

    The interesting proposition is that Hughes’ drilling locations in the Bakken (rockman’s favored metric) are copied straight from the EIA. From 11K in his initial report to 30K in the current report. So Hughes’ October 2014 analysis of total recovery may be upgraded in time.

  16. marmico on Wed, 29th Oct 2014 7:59 am 

    is only a single mention of the Utica

    If there was a futures market, I would place a bet that Utica natural gas production will exceed either the Haynesville or Barnett by early 2017.

    Upper New York state mineral rights owners must be furious with Berman’s report based on his track record.

  17. Nony on Wed, 29th Oct 2014 8:27 am 

    The idea that Berman can do a report on NY shale, based on how he talked down the Marcellus (with Haynesville data!) is just silly, silly. I think even the peakers and anti-frackers know he is biased.

    Yeah, Hughes is one of the better ones. I only had a quick skim but will read it more this weekend. He deserves that.

    I do think that EIA may be low on drilling locations given company PV-10 reports, development plans, etc. The Bakken in particular has grown over time in terms of estimates and it is possible EIA is still behind the curve.

    For, Hughes, I think it’s a pretty safe bet that LTO goes up faster than EIA says (they have been under 4 years in a row). But not so easy to say that there is a hard crash afterwards. If you look at drilling productivity, downspacing, completion techniques, even geological understanding…there has been evolution of knowledge enabling more production. That may continue…and thus help keep the plateau longer than expected from a simple exhaustion of fixed pool. After all the TRR is a very small fraction o the OIP.

  18. Davy on Wed, 29th Oct 2014 8:45 am 

    Good Corn analysis boys. NOo and Marm are very well prepared. I know I am a doom and prep but I am a realistic one. We have to avoid the cornucopian mistake of taking our ideology too far. If there is one defect of the PO movement it is hubris in the cornucopian attacks on shale.
    If there is a defect with doom it is forecasting an imminent doom continuously. There is no defect with prep. Prep is just risk management in action. We know there are problems that appear to be predicaments. One must prep for predicaments if one believes in risk management.
    I will say this the corns are going to be blindsided by the economic effects of a correcting financial system and its knock on effects. The shale effort is going to be severely effected by the pressure of a financial correction. It is a complex and capital intensive undertaking. Price is critical to successful returns on investment which is vital for capex investment. It is unclear whether the government will step in someday with a bailout but currently the juggernaut of shale drilling requires massive capital and resources that may be disrupted. Shales are too vital to the economy currently to be allowed to stop.
    The same can be said about the cheap oil in the ME, Russia, and other opec countries. These countries must have a decent oil return to support their above ground stability or the effort can be disrupted. I see every indication that price will be pressured pressuring both cheap and expensive oil sources.
    Once we reach a downward momentum the inertia may be too great to reverse the momentum downwards. The economy is the big unknown for shale efforts currently. Marm & NOo are well aware of this. These intelligent guys are right to defend these shale efforts from unfair criticism. There is allot to crow about with shales.
    There would not be unfair criticism if the cornucopians would not have distorted the truth behind shales. This whole shale effort has been a gold rush financial bubble. The Wall Street psychopaths have done a disservice to our economy by market manipulations. These manipulations have resulted in individualized profits at a society wide expense if this whole process stalls. We are talking our survival here that should not be in the hands of the financial psychopaths. Greed and survival don’t mix.

  19. Tim Milder on Mon, 22nd Feb 2021 12:01 am 

    This aged fantastically.

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