Guest Post: U.S. Shale Goes Boom, Rest Of World Goes Bust

Tyler Durden's picture




 

Submitted by Daniel J. Graeber of OilPrice.com,

OPEC, in its World Oil Report, said there's an overall sense that developing shale oil and natural gas could start to redefine the global energy mix. In the United States, the cartel said shale natural gas production alone grew by more than 60 percent from 2010 to 2012.  For shale oil, supplies in the United States have already passed the 1 million barrel-per-day mark. Though shale reserves may ultimately be a game changer, said OPEC, outside the United States, the sector is in its infancy.

The Organization of Petroleum Exporting Countries published its 300-page World Oil Outlook this week. The cartel said it was "evident that this resource (shale oil and gas) will contribute to the overall energy mix."  The cartel found total shale natural gas production in the United States increased from 15 million cubic feet for day in 2012 to 25 billion cubic feet per day two years later. There is a clear potential for shale natural gas on the global energy stage, said OPEC, as clean natural gas starts to replace coal as a source of electricity and becomes a major feedstock in the petrochemicals industry.

U.S. President Barack Obama last year said there was "perhaps a century's worth" of shale natural gas available in his country. The Ohio Department of Natural Resources, in a November report, said the Marcellus shale play contains as much as 363 trillion cubic feet of natural gas. Spanning an area from New York to Ohio, that reserve alone has enough natural gas potential to meet U.S. energy demands for the next 14 years.

Related Article: US Shale Gas Supplies won't Last Ten Years: An Interview with Bill Powers

In terms of shale oil, OPEC said it expects to see a rise in the importance in the reserve potential, whereas last year, "no significant shale oil contribution to liquids supply was envisaged."  Resource development in the Bakken play in the northern plains states, the Eagle Ford play in the U.S. south and the Niobrara formation in an around Nebraska has pushed production over the 1 million barrel per day mark. For its WOO reference case, OPEC said as much as 3 million barrels of shale oil production could emerge per day in the United States by 2035.

OPEC, however, is less optimistic when it comes to a more comprehensive look at shale oil and natural gas. On a global scale, the report finds that shale natural gas production is coming mainly from the United States. Reserves exist elsewhere, like China and Eastern Europe, though the cartel cautioned there are "considerable" uncertainties when it comes to assessing the size of those resources. For shale oil, it said, there's been "no serious attempt" at estimating reserve potential, where recovery factors a "very low."

"Globally, shale oil and gas development is in its infancy, and there are thus considerable uncertainties about the size of the resources, the economics of development and the potential contribution to future supply," the report read.

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Mon, 11/12/2012 - 17:59 | 2974115 Stochdoc
Stochdoc's picture

We have greater oil assets in the Western US than Saudi Arabia and Russia combined.  THe asshats in Washington just need to open these lands to our oil companies.  Then we can tell the Middle East to fuck off.

Mon, 11/12/2012 - 18:05 | 2974137 centerline
centerline's picture

First you trade paper for thier oil... and be sure to keep them fighting amongst themselves.  Never use your own supply first!

Mon, 11/12/2012 - 18:22 | 2974190 Zer0head
Zer0head's picture

job one is to kill the shale boom

starting with CA cap n trade

http://www.washingtonpost.com/business/california-poised-to-begin-cap-an...

Mon, 11/12/2012 - 18:46 | 2974277 francis_sawyer
francis_sawyer's picture

@Stochdoc

How about we all just tell YOU to fuck off & call it a day?

Mon, 11/12/2012 - 20:11 | 2974548 SafelyGraze
SafelyGraze's picture

mag 4.3 quake in KY on nov 10

the quake was *not* from mining

that's because there's no natural gas in eastern KY

Mon, 11/12/2012 - 22:27 | 2974884 TruthInSunshine
TruthInSunshine's picture

This must be why Nestle and other multinationals have moved fast & hard to stake "pre-existing" claims to tap indirectly into the Great Lakes (on the "provable" claim that the volume of water taken will be replenished in equal or greater amounts; the Great Lakes contain 20% of the world's fresh water) that Michigan, Minnesota, Illinois, Wisconsin, Ohio & Canada border, and why an international treaty between the U.S. & Canada is on the fast track to being significantly revised.

Tue, 11/13/2012 - 00:09 | 2975122 markmotive
markmotive's picture

According to the same IEA report everyone is salivating over, peak conventional crude production occured in 2008:

http://www.planbeconomics.com/2012/11/12/according-to-iea-peak-oil-occur...

And has anyone in the MSM considered the financial and environmental cost of getting that sludge out of the ground so fat bastards can drive their Hummers?

Mon, 11/12/2012 - 19:12 | 2974379 CrashisOptimistic
CrashisOptimistic's picture

The "shale boom" is going to kill itself.  It won't require any help at all from anything but geology.

Mon, 11/12/2012 - 19:37 | 2974456 Bicycle Repairman
Bicycle Repairman's picture

This is utter nonsense.  Fracked natural gas wells only produce for like a week.  The methane out of your ass has more energy value.  Shale oil is best used on salads.  The USA ran out of energy 40 years ago.

Why do these guys even bother?

Mon, 11/12/2012 - 19:43 | 2974468 falak pema
falak pema's picture

hey you used to be abiotic man and you swore there would never be peak oil. When did you convert to Islam?

Mon, 11/12/2012 - 20:01 | 2974517 CrazyCooter
CrazyCooter's picture

If we are talking about fracked shale wells that produce liquids, then those are making money

If we are talking about fracked shale wells that produce natural gas, those wells require approximately 8 bucks per million cubic feet in the market to break even. These wells have high capital costs due to the drilling and cyclical refracking required over time (e.g. re-frack required every 12 months).

Given that gas has been under 2 bucks per million cubic feet for a long time now just shows you how stupid investors are because when this goes tits up, the big boys will get the best leases/infrastructure at fire sale prices and investors will lose their shirts. The price of gas will go to the moon as supply is constrained and the new lease owners will profit nicely.

As far as actual shale oil goes, assuming we are talking about mining rocks and extracting "oil" then the process has not ever been shown to be economical. Folks been working on that forever. We will be driving mules to work before it will ever be economical.

Regards,

Cooter

Mon, 11/12/2012 - 20:11 | 2974547 francis_sawyer
francis_sawyer's picture

Mules bitchez!

Mon, 11/12/2012 - 20:39 | 2974592 DoChenRollingBearing
DoChenRollingBearing's picture

Burros bitchez!  Actually, Peru is NOT going bust.  In fact, things are pretty good, bearings are MOVING down in Peru.

"Another Digit, Another Comma!"

http://tinyurl.com/btxe7xg

Mon, 11/12/2012 - 20:44 | 2974600 francis_sawyer
francis_sawyer's picture

Burros need bearings?... Whocoodanode?...

Tue, 11/13/2012 - 01:02 | 2975203 redpill
redpill's picture

Just ask everyone to eat Del Taco and hook a hose up to their ass.  Energy problem solved.  Master blaster runs barter town.

Mon, 11/12/2012 - 21:46 | 2974756 Bicycle Repairman
Bicycle Repairman's picture

I'm f'ing you, man.  It's how I roll.

This should have been your first clue: "The methane out of your ass has more energy value."

Ever try lighting a cigarette off of a lit fart?  No?  For real?

Mon, 11/12/2012 - 18:31 | 2974227 Facemelt
Facemelt's picture

Never get involved in a land war in Asia!

Mon, 11/12/2012 - 19:54 | 2974507 SILVERGEDDON
SILVERGEDDON's picture

"Save Gas. Fart in a jar." First seen as a bumper sticker on a Caddilac Eldorado in 73, during the Arab oil embargo. Everything's the same, nothing has changed.

Mon, 11/12/2012 - 18:17 | 2974139 TruthInSunshine
TruthInSunshine's picture

If your claim is true, then the USD won't need U.S. hegemonic military power to retain reserve currency status, but merely some form of somewhere above nearest competitor power, coupled with a proven M.A.D. deterrence doctrine.

I'm not a scientist specializing in carbon chains nor a geologist, though.

Forward Bakken formation & Leigh Price ???

Mon, 11/12/2012 - 18:27 | 2974204 1100-TACTICAL-12
1100-TACTICAL-12's picture

Yea polluting the H20 supply is a real good idea. unfracking beliveable.

Mon, 11/12/2012 - 18:36 | 2974242 oddjob
oddjob's picture

Seems thats the goal, by mistake of course.

Mon, 11/12/2012 - 18:47 | 2974283 francis_sawyer
francis_sawyer's picture

@TIS

Not an option until the poppy crop gets going in the 'seceded' state of North Dakota...

Mon, 11/12/2012 - 23:41 | 2975061 TruthInSunshine
TruthInSunshine's picture

The Marines guarding the Afghan poppy fields were told that Afghanis absolutely love poppy seed bagels.

Mon, 11/12/2012 - 19:42 | 2974467 macholatte
macholatte's picture

 

If your claim is true, then the USD won't need U.S. hegemonic military power to retain reserve currency status,

 

Think it thru......

If the Arabs stop getting wealthy from oil sales, then they can't afford to buy weapons and will have to become peaceful. If China remains the manufacturing hub for the world, then "real" jobs are not created anywhere else. If the USA becomes energy independant, then who will buy our weapons?  If the EU collapses, who cares?

NO no no. Don't change anything. Keep the gerbal wheel right there in plain sight.

Mon, 11/12/2012 - 18:11 | 2974159 Motorhead
Motorhead's picture

Man, I sure hope no country attacks the US for its oil.

Mon, 11/12/2012 - 18:48 | 2974289 francis_sawyer
francis_sawyer's picture

Not to worry... The jews are already here...

Mon, 11/12/2012 - 19:45 | 2974160 SILVERGEDDON
SILVERGEDDON's picture

Yeah, sure. Good one, Stochdoc.

USA FRACKING WET DREAMER.

EVEN REPUBLICANS AREN'T THAT STUPID.

 

 

You go there, girl. I'm long on sources of pure water for farming and drinking.

There won't be much of that around once the multinationals finish polluting the water table completely with fracking the living rat fuck out of every acre in the USA.

Just so you can feed your Expedition for the Costco trip a few years longer.

So, I can tell you to fuck off.

 

Go suck on some frack water, ass breather.

Mon, 11/12/2012 - 21:34 | 2974724 Ignatius
Ignatius's picture

I'm sure we -- as a nation -- will despoil everything so we can crank up the 4-banger and cruise the gut on Friday night.  What a world.

Mon, 11/12/2012 - 21:06 | 2974642 post turtle saver
post turtle saver's picture

"Don't get high on your own supply."

Mon, 11/12/2012 - 22:44 | 2974940 PD Quig
PD Quig's picture

The entire environmental movement turns out to have been a clever plot to allow the US to suck the rest of the world's oil wealth dry (for a fair price, mind you) and to leave their well heads spitting dust...just as our shale oil deposits come on line.

The beauty of this is three-fold: 1) we can tell the Sand N***ers to f*ck themselves (which they will actually greatly enjoy) 2) we can retain control of the wealth of the world by owning a huge source of cheap, plentiful energy, and 3) we can turn their sh*thole countries into glass with no serious economic ramifications if they can't learn how to play nice.

Mon, 11/12/2012 - 18:01 | 2974121 ZippyBananaPants
ZippyBananaPants's picture

+1 for anyone using the term Asshats!

Mon, 11/12/2012 - 18:04 | 2974135 Stochdoc
Stochdoc's picture

Thankyouverrymuch!

Mon, 11/12/2012 - 18:02 | 2974123 Catflappo
Catflappo's picture

And you'll be able to repatriate all your troops

Mon, 11/12/2012 - 18:02 | 2974126 Cathartes Aura
Cathartes Aura's picture

and there we have it, water will indeed be the commodity most scarce, Blue Gold. . .

http://www.bluegold-worldwaterwars.com/

Dubya's investment in the Guarani Aquifer, uh huh.

http://articlesofinterest-kelley.blogspot.com/2011/03/water-is-next-oil-...

Mon, 11/12/2012 - 18:51 | 2974298 francis_sawyer
francis_sawyer's picture

So tell me... Who owns Antarctica again?...

Mon, 11/12/2012 - 19:34 | 2974446 Bunga Bunga
Bunga Bunga's picture

Next wars won't be about oil but clean water.

Mon, 11/12/2012 - 20:03 | 2974516 francis_sawyer
francis_sawyer's picture

refer to ^^^ comment... (an entire continent ~ packed a mile high with the stuff ~ ready to be transported by tanker vessels to the Agenda 21 location of your choice)...

Hell ~ & I ain't even a Rockefeller...

Mon, 11/12/2012 - 22:09 | 2974831 Dr. Sandi
Dr. Sandi's picture

I assume the water tankers will be powered by fracked oil then.

That makes a shitload of sense.

Tue, 11/13/2012 - 05:22 | 2975438 francis_sawyer
francis_sawyer's picture

I'm not saying it makes any sense... I'm saying that in some weird way, it's possible... & then you stop to think... What [in the world today] makes sense?...

- We print debt money out of thin air and enforce its use globally as legal tender by way of military force projection...

- All of Tesla's work [which, arguably, could provide free energy] lies buried somewhere & instead we're hogtied to energy production channels which include nuclear reactors built on fault lines

- Don't get me started on the medical profession

~~~

So all in all... I'd expect the MOST RETARDED solution to emerge when the water crisis hits... A feature of this being only a handful of profiteers... After that, it'll be the air you breathe...

Thu, 11/15/2012 - 19:45 | 2986174 Dr. Sandi
Dr. Sandi's picture

Damn, I have to agree with you. History has your back.

Mon, 11/12/2012 - 18:03 | 2974129 centerline
centerline's picture

What is the EROEI here?

Mon, 11/12/2012 - 18:11 | 2974148 Manthong
Manthong's picture

You nailed it.

Not to say that we can't vastly improve and even become independent, and shale can play a big part.. but somehow the words "prices will necessarily skyrocket" keep coming to mind.

This regime cannot possibly pick the best energy path for the US with it's constituency.

Mon, 11/12/2012 - 18:21 | 2974187 buzzsaw99
buzzsaw99's picture

Negative, as is ethanol.

Mon, 11/12/2012 - 22:17 | 2974858 Matt
Matt's picture

no problem, just make it up with volume.

Mon, 11/12/2012 - 21:12 | 2974661 post turtle saver
post turtle saver's picture

It's a function of the price of conventional oil over time.

Mon, 11/12/2012 - 18:03 | 2974131 mc_LDN
mc_LDN's picture

Hmmmm.Mis-information going on here by the Oil industry and even ZH is falling for it. Read...

 

http://www.resourceinsights.blogspot.se/2012/10/why-us-is-not-new-saudi-...

Mon, 11/12/2012 - 18:23 | 2974189 rhinoblitzing
rhinoblitzing's picture

Agreed - MIS Information - distraction - as Saudi's shift exports to China

Mon, 11/12/2012 - 22:17 | 2974861 Matt
Matt's picture

it is a guest post ...

Mon, 11/12/2012 - 18:07 | 2974142 yabyum
yabyum's picture

Stuff takes a lot of water to produce. Utah and the west slope of northern Colorado are very dry. This oil is going to be damned expensive.

Mon, 11/12/2012 - 18:10 | 2974155 Motorhead
Motorhead's picture

The easy stuff's been hard to get for a while.  In fact, we are about due for Goldman Sachs to run the price up to $150/bbl...it's been a while.

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