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Fracking responsible for the big boost in US crude production?

hedgeless_horseman's picture




 

I am not an expert in trading oil, its production, or fracking.  However, I can interpret a production chart, and I do live in Texas where I can see the drilling activity, first hand.  Here is a road-side rig that I photographed on 290 between Houston and Austin this past weekend. 

These beasts are everywhere, and they eat tubular steel...tons and tons of it!

 

Here is a close up of the giant Hydrogen Sulfide tank.  Nasty stuff.

 

And here is the chart I am interested in right now.

You can make your own version here, courtesy of the EIA.

This chart depicts crude oil production, not Natural Gas, yet it appears that the big shale plays in Texas and North Dakota are exactly where the new crude oil production is coming from.  This correlates with what I wrote a couple years ago on zerohedge, that a neighbor of mine who is in the fracking business told me they were getting A LOT of crude from South Texas shale, even though they originally thought they were fracking for natural gas.  From the looks of this chart, it appears he was telling the truth.

I do know that the tubular steel conversion business has been a money-making machine in and around Houston for the last three years.  If fracking comes to your neighborhood, it may be a good idea to get in on some Reg D Private Placement offerings for tubular steel suppliers and steel conversion shops.  Don't let the local bankers make all the money...practice disintermediation.

If you do not have the net worth to invest in a Private Placement, consider getting a gooseneck-flatbed trailer for your truck and getting in the hot-shot business.  There is good money to be made when the fracking frenzy comes to your watershed town.

 

 

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Mon, 12/17/2012 - 22:42 | 3073569 SubjectivObject
SubjectivObject's picture

Take a nightime drive north out of Fort Stockton.  Between there and Artesia, there has to be ~200 visible rigs.

And here's a bonus:  After seeing the landscape around Roswell, I think it highly likely that the aliens don't like trees.

Mon, 12/17/2012 - 21:46 | 3073446 TheMayor
TheMayor's picture

It is much simpler, just buy stock in HEK.

And don't wait for the fracking to come to your town, just buy HEK and do it NOW!

Mon, 12/17/2012 - 21:42 | 3073431 GAAPpreNixon
GAAPpreNixon's picture

Solar and wind are seriously starting to compete with big oil. I can tell because gasoline prices are crashing! Big oil did the same in the 80s. It WON'T WORK THIS TIME!

GASOLINE IS SO YESTERDAY!

 

http://www.youtube.com/watch?feature=player_embedded&v=YQgTne7TAGY

Mon, 12/17/2012 - 21:54 | 3073470 1100-TACTICAL-12
1100-TACTICAL-12's picture

If it comes to your town raise hell. All the shit they pump in the ground will eventually get in the ground water. History will look @ fracking like Jonestown KOOL-AID. No disrespect HH ..

Tue, 12/18/2012 - 08:22 | 3074220 Lumberjack
Lumberjack's picture

"All the shit they pump in the ground "

 

You might want to catch up on Carbon Sequestration...

Mon, 12/17/2012 - 21:29 | 3073397 Bicycle Repairman
Bicycle Repairman's picture

Everyone knows we ran out of oil 40 years ago.  Shale oil may be good on a salad, but you can't run your car on it.  These fracking wells run out of oil before the rig even gets set up.  But not before they pollute the planet.  Guess we'll just have to make due with drinking shale oil.  And the natural gas isn't useful for anything.

LOL.  Morons.

Mon, 12/17/2012 - 21:08 | 3073331 are we there yet
are we there yet's picture

Fukashema is really fracked.  All energy has a trade off.  Even green windmills kill birds.

Mon, 12/17/2012 - 19:39 | 3073096 kaiserhoff
kaiserhoff's picture

Who are you kidding, HH?

There's no water in Texas.

Mon, 12/17/2012 - 19:35 | 3073075 rjs
rjs's picture

this graph comes from a report from the N.Dakota Dept of Resources (pdf), and shows the production over time from a typical well in the Bakken shale, which is now the most productive field in the US; what you see here is that unlike conventional oil wells, where you might drill one well that produces decently for 40 years, the typical bakken well production falls by over 80% in just two years, because after the initial oil flow from the pulverized rock, the flow slows to a trickle; so to continue to produce oil from the bakken, or any other shale formation, you have to drill more & more wells, smash more bedrock, truck in millions of gallons more of water & chemicals, all of which is an ongoing capital drain...and even though we are expanding our capacity to tap shale oil considerably, the seven fold increase in oil drilling rigs in the US since 2009 has only produced about a 20% increase in oil production...

Mon, 12/17/2012 - 19:31 | 3073060 Martel
Martel's picture

Exit Oil Wars, enter Water Wars.

Mon, 12/17/2012 - 19:07 | 3073005 Lord Koos
Lord Koos's picture

If fracking comes to your neighborhood, it may be a good idea to move to a different neighborhood.

Mon, 12/17/2012 - 18:31 | 3072902 Joe A
Joe A's picture

I foresee money to be made from clean water exports to America.

Mon, 12/17/2012 - 19:18 | 3073027 Martel
Martel's picture

Hey, we've got clean water here in Northern Europe! Maybe we could swap water for oil, liter for liter. A good deal?

Keep on frackin', it keeps you busy.

Mon, 12/17/2012 - 18:24 | 3072791 Lumberjack
Lumberjack's picture

I took some pictures of quite a few new ones going up between San Antonio and Corpus Christie a few weeks ago. If you are a talented and need a decent job, I would highly recommend the oil field services sector now. I am currently working on an article regarding some new developments at another financial news site. Stay tuned.

 

edit: Nice pix of the tanks. What I am working on involves H2S among other things. It's a real game changer. 

Mon, 12/17/2012 - 21:34 | 3073410 otto skorzeny
otto skorzeny's picture

roughneck is a shit job that is the favored field of PTSDed ex-military(those don't go into the growing US mercenary field)

Mon, 12/17/2012 - 18:03 | 3072787 CrashisOptimistic
CrashisOptimistic's picture

Folks need to think carefully about what it means when at first there are no drill rigs somewhere and they suddenly there are zillions?  Doesn't that imply a measure of desperation?  Would we not label it "frantic"?

Horizontals die vertically on the graph.  Those wells you're seeing will be producing just 25% of what they produce now in about 36 mos.  It is that sharp decline curve that requires the frantic explosion of drilling.  You have to make up for the decline.

And each and every one of these new wells is a new source of decline in 36 mos, added to the other sources of declines in the other wells. 

It gets very hard to run up that down escalator in a very short time.

Mon, 12/17/2012 - 18:21 | 3072866 tip e. canoe
tip e. canoe's picture

Doesn't that imply a measure of desperation?

sure does, which makes it even more dangerous.   they're gonna run around deploying a scortched earth tactic, especially if the FedGuv is implicitly backing their efforts behind closed doors.    anything to avoid facing the bitter truth.

if i were living in a shale zone, even around "protected" lands (cough, catskills, cough), i'd get the fuck outta Dodge.   or a buy a flatbed.   or both.

Mon, 12/17/2012 - 18:02 | 3072785 azengrcat
azengrcat's picture

Frac'em with some turbines!  'Murica!!!

http://www.marineturbine.com

Mon, 12/17/2012 - 17:24 | 3072631 LadyEconomist
LadyEconomist's picture

I listened to Stansberry Research presentation one day. I usually don't buy that crap but this cought my attention and made sense. They claim it is going to be the next biggest Gas and Oil boom in the history of America. Obama would go along with licenses and EPA would lift regulations because the government needs money badly and it is the way for them to get our of recession and debt. Too many people are going to be involved with this industry, too much money to be made to ignore it or limit it.

Mon, 12/17/2012 - 17:33 | 3072653 tip e. canoe
tip e. canoe's picture

don't worry, denial's a helluva drug, so drill baby drill it will be.

Mon, 12/17/2012 - 17:05 | 3072566 Stud Duck
Stud Duck's picture

Hey boys, you otta see the panhandle of Oklahoma and Texas, there are riggs everywhere. On our ranch in Beaver County there are 3 of these rigs, all drilling horizontally, We are expecting some big, big check in the mail box in a few months.

But like my mother always said, we have seen them come in and boom boom, boom, then bust, bust , bust! She is alway grounded on the boom thing, and can be a oil producers accounting dept nightmare when see finds error in their settlement checks, nothing get past her.!

 

Mon, 12/17/2012 - 20:07 | 3073158 LithiumWarsWAKEUP
LithiumWarsWAKEUP's picture

a few years back I was hauling crude around Cushing. We hauled for an old widow farm lady who had 2 new wells that had been recently drilled. They didn't even have pumps set on them yet. Still free-flowing. She was making $50,000 a month from them. Price of oil then was around $71 a BBL. And they were dozin' off a flat spot to drill another one. Made off pretty good. Much better than the hog farming they had done all their lives. Sure wish I had a few wells,,or at least the mineral rights.

Mon, 12/17/2012 - 21:36 | 3073416 otto skorzeny
otto skorzeny's picture

she'll be lucky to get back into hog farming someday when she has to pay to have water trucked into her

Mon, 12/17/2012 - 19:58 | 3073147 gmrpeabody
gmrpeabody's picture

Quite a sight from the air, too. I was wondering how to make money from all that junk steel down there if this fracking thing truely does blow up in our faces. Steel scrapping..., going long. WINNING

Mon, 12/17/2012 - 21:48 | 3073448 Cthonic
Cthonic's picture

I remember the oil bust of the 80's, lot's of rigs and pipe parked idle south of OKC along I44 for the next twenty years...

Mon, 12/17/2012 - 16:18 | 3072352 tempo
tempo's picture

GWB exempted fracking from the clean water act allowing for state regulation making billions for his buddies. When the EPA takes over regulation frack drilling will disappear and 1 million class action lawsuits will filed making billions for his trial lawyer buddies. Be prepared to make a quick exit as this boom is about to blow up.

Mon, 12/17/2012 - 20:26 | 3073220 LithiumWarsWAKEUP
LithiumWarsWAKEUP's picture

Has ANYONE done any serious Research and discovered how far away from a well, the water table is polluted due to oil well drilling, pumping, etc.?  Anyone??

    To hear MSM talk about it, they think the entire state of Nebraska will have every bit of their aquifers polluted if they build a pipeline thru there. Do you know how many aquifers there are around the oil fields of Oklahoma?? Does every square mile of underground water table flow to the next town 20 miles away? (no) How far out from a well is it polluted?? A half mile? A mile??  I'd guess at most, a mile away and you will NOT have any pollution. That is from what I've seen. I have lived much of my life in the biggest oil field in Oklahoma. We had Rural Water system, from wells by the river, 20 miles away. The local town had their own lake supply. Lots of cows in the pastures above this lake, too. And lots of fish in that lake. We drank it. They still do. It has a clorine treatment plant/safe water.

    Still, it isn't polluted w/chemicals or oil, yet sits right in the middle of the biggest oil field in Oklahoma. How can this be??? Maybe the EPA is just ran by a bunch of Socialists who have to do something and make Rules and Fines to justify their Gov't job? Then again, I'm sure they do some good too. The 1920 thru the 1960's saw lots of top-side oil spills, and not much cleanup. The ameoba ate it, I suppose. I suppose they will have their genetic structure changed, huh. Wow.  Then again, maybe the ameoba have been eating oil for Millions of years.

    This 'fracking' , this 'fracturing of the rock the oil is in', is a good thing. It allows the pumps to get to the oil. Not just the oil that is right by the drilled hole,

    And this BS of it causing earthquakes. What a load of crap. More stuff to scare you. You scared?? You scared to maximize the oil wells now?? They couldn't do this horizontal drilling 30-40 years ago, so they abandoned the oil fields. "they' being the Big Oil companies. The Little Guys have been here ever since tho, and now that Tech has availed the horizontal drilling, we are maximizing Production. Which means the Sheiks who walk around as Kings,,,because of our money we gave them,,,well, they won't be getting so much. They sure like their arses kissed by American MSM tho. I bet they will miss that, huh.

   Maybe these sheiks can go to their Arab brethren in Afghanistan and give them some of their oil money, so they won't have to have the opium trade. Maybe...  well, I can dream. Ain't gonna happen tho. We are there to secure the Lithium supply, you know the one the Russians found in 1980 when they were in Afghanistan. The second biggest lithium deposits on earth, behind Bolivia. Any need for lithium in those fancy APPL etc phones, cameras, electronic crap?? Yeah,,, It's the real reason we are fighting there. Making CEO's rich. 'Americas Interests'. No? Yes?

 

 

Mon, 12/17/2012 - 16:53 | 3072378 hedgeless_horseman
hedgeless_horseman's picture

 

 

...frack drilling will disappear...Be prepared to make a quick exit as this boom is about to blow up.

To be replaced with what, exactly?  Did you even look at the charts for Alaska and the GOM? 

At least 99 out of 100 Americans will trade clean water for Happy Motoring any day of the week.  The typical Los Angeles soccer mom would rather her children shower in H2S than walk to the grocery store.

Mon, 12/17/2012 - 17:26 | 3072645 tip e. canoe
tip e. canoe's picture

sad but true.    been wondering if this whole meme about the explosion in US petrol production was real or just a bluff.   thanks for connecting the dots.    looks like ol' Lindsey Williams wasn't too far off after all... 

Tue, 12/18/2012 - 00:57 | 3073865 Flakmeister
Flakmeister's picture

Thing is that Lindsey was telling us that the manna was going to be coming from Alaska...

If you predict everything, you predict nothing...

Let's see how far the Brent price drops...

Mon, 12/17/2012 - 16:56 | 3072530 Flakmeister
Flakmeister's picture

Well that is the issue isn't it?

I suggest you look at

http://www.theoildrum.com/node/9506

pay attention to figure 13, 14

The comments are very good as well...

Mon, 12/17/2012 - 17:31 | 3072672 falak pema
falak pema's picture

very interesting TY

Mon, 12/17/2012 - 17:32 | 3072671 tip e. canoe
tip e. canoe's picture

this all may be true flak, but how much of the water table will be fracked up before reality sinks in?  

Mon, 12/17/2012 - 18:42 | 3072926 Flakmeister
Flakmeister's picture

Whatever the fraction, it will be too late to do anything about it...

We deserve what we get, that is becoming more and more apparent...

Mon, 12/17/2012 - 15:46 | 3072150 otto skorzeny
otto skorzeny's picture

clean drinking water and a healthy environment are for suckers...LOVE CANAL BITCHEZ!!!!!

Mon, 12/17/2012 - 15:46 | 3072146 DavosSherman
DavosSherman's picture

You had me at "I'm not an expert".

Mon, 12/17/2012 - 15:44 | 3072138 lasvegaspersona
lasvegaspersona's picture

Porter Stansberry says that the shale oil/gas activity will pull the USA out of recession and make Obama look so good that we will demand '4 more years'.

On the other hand we are told that these wells peter out and have lower than predicted yields. They won't be economical at least for the nation.

Who to believe.....

Mon, 12/17/2012 - 15:50 | 3072174 otto skorzeny
otto skorzeny's picture

we will fill up our tanks cheaply and drive to Mcdonald's to work the night shift-leaves more $ for a pack of smokes-WINNING!

Mon, 12/17/2012 - 15:31 | 3072002 firstdivision
firstdivision's picture

 

Overlaying states that fracking is just really picking up steam, shows the impact quite well

FYI: Gas sales are down to levels not seen since the late 90's

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=c100000001&f=m

Mon, 12/17/2012 - 15:21 | 3071991 Casey Stengel
Casey Stengel's picture

Spent most of this year working on the Eagle Ford shale play. Just keep your H2S monitor on your belt, keep your eye on the wind sock and keep cashing the checks!

Mon, 12/17/2012 - 15:17 | 3071979 lasvegaspersona
lasvegaspersona's picture

what is 'hot shot?

thanks

Mon, 12/17/2012 - 15:46 | 3072016 hedgeless_horseman
hedgeless_horseman's picture

 

 

A delivery service that hauls tubular steel to the rig site, conversion shop, airport, or wherever.  These frackiing rigs cost a metric-buttload to operate, so the drillers do not like to have them idle for long, just because they need one special pipe...

http://profiles.hotshotcarrier.com/index.php?show=1&filtertext=hotshot

Mon, 12/17/2012 - 16:37 | 3072445 CunnyFunt
CunnyFunt's picture

"Special" pipe? Looks like schedule 40 to me.

Mon, 12/17/2012 - 21:53 | 3073464 rustymason
rustymason's picture

Red stainless moly. I guess.

Mon, 12/17/2012 - 15:16 | 3071964 FanCap
FanCap's picture

That H2S "tank" is actually a scrubber to remove H2S. They dont just keep big tanks of it sitting around...

It's a contaminant in hydrocarbons that will foul up your tubular steel and is toxic at low concentrations. We put H2S scavengers downhole and run scrubbers to mitigate that.

Mon, 12/17/2012 - 14:56 | 3071843 malikai
malikai's picture

I used to make that trip on 290 every weekend when in lived in Houston back in 01. I remember there was literally nothing in the way of rig activity then. Now it's quite a different story. Same for Barnett up in Ft Worth. Rigs everywhere.

Mon, 12/17/2012 - 14:52 | 3071816 Stoploss
Stoploss's picture

So, when we frack in frozen methane, what are we doing with that? Anybody?

Mon, 12/17/2012 - 14:30 | 3071659 Larry Dallas
Larry Dallas's picture

Love this article. Thanks for the posting.

 

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