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The Shale Oil Party Is Ending, Phibro's Andy Hall Warns

Tyler Durden's picture


Phibro's (currently Astenback Capital Management) Andy Hall knows a thing or two about the oil market - and even if he doesn't (and it was all luck), his views are sufficiently respected to influence the industrial groupthink. Which is why for anyone interested in where one of the foremost oil market movers sees oil supply over the next decade, here are his full thoughts from his latest letter to Astenback investors. Of particular note: Hall's warning to all the shale oil optimists: "According to the DOE data, for Bakken and Eagle Ford the legacy well decline rate has been running at either side of 6.5 per cent per month... Production from new wells has been running at about 90,000 bpd per month per field meaning net growth in production is 25,000 bpd per month. It will become smaller as output grows and that’s why ceteris paribus growth in output for both fields will continue to slow over the coming years. When all the easily drillable sites are exhausted – at the latest sometime shortly after 2020 – production from these two fields will decline."

From Astenback Capital Management

Oil Supply

The speed with which an interim agreement was reached with Iran was unexpected. Equally unexpected was the immediate relaxation of sanctions relating to access to banking and insurance coverage. This will potentially result in an increase in Iranian exports of perhaps 400,000 bpd. Beyond that it is hard to predict what might happen. The next set of negotiations will certainly be much more difficult. The fundamental differences of view that were papered over in the recent talks need to be fully resolved and that will be extremely difficult to do. Also, Iran's physical capacity to export much more additional oil is in doubt because its aging oil fields have been starved of investment.

As to Libya, it seems unlikely that things will get better there anytime soon. The unrest and political discontent seems to be worsening. Whilst some oil exports are likely to resume – particularly from the western part of the country (Tripolitania), overall levels of oil exports from Libya in 2014 will be well below those of 2013.

Iraqi exports should rise by about 300,000 bpd in 2014 as new export facilities come into operation. But there is a meaningful risk of interruptions due to the sectarian strife in Iraq that increasingly borders on civil war. Saudi Arabia's displeasure at the West's quasi rapprochement with Iran is likely to add fuel to the fire in the Sunni-Shia fight for supremacy throughout the region.

If gains in 2014 of exports from Iran are assumed to offset losses from Libya, potential net additional exports from OPEC would amount to whatever increment materializes from Iraq. Saudi Arabia has been pumping oil at close to its practical (if not hypothetical) maximum capacity of 10.5 million bpd for much of 2013. It could therefore easily accommodate any additional output from Iraq in order to maintain a Brent price of $100 – assuming it wants to do so and that it becomes necessary to do so. Still, $100 is meaningfully lower than $110+ which is where the benchmark grade has on average been trading for the past three years.

So much for OPEC, what about non-OPEC supply? Most forecasters predict this to grow by about 1.4 million bpd with the largest contribution – about 1.1 million bpd – coming from the U.S. and Canada and the balance primarily from Brazil and Kazakhstan. Brazil's oil production has been forecast to grow every year for the past four or five years and each time it has disappointed. Indeed Petrobras has struggled to prevent output declining. Perhaps 2014 is the year they finally turn things around but also, perhaps not. The Kashagan field in Kazakhstan briefly came on stream last September – almost a decade behind schedule. It was shut down again almost immediately because of technical problems. The assumption is that the consortium of companies operating the field will finally achieve full production in 2014.

Canada's contribution to supply growth is perhaps the most predictable as it comes from additions to tar sands capacity whose technology is tried and tested. Provided planned production additions come on stream according to schedule in 2014, these should amount to about 200,000 bpd.

Most forecasters expect the U.S. to add 900,000 bpd to oil supplies in 2014, largely driven by the continuing boom in shale oil. That would be lower than the increment seen this year or in 2012 but market sentiment seems to be discounting a surprise to the upside. As mentioned above, many companies have been creating a stir with talk of exciting new prospects beyond Bakken and Eagle Ford which so far have accounted for nearly all the growth in shale oil production. Indeed at first blush there seem to be so many potential prospects it is hard to keep track of them all. Even within the Bakken and Eagle Ford, talk of down-spacing, faster well completions through pad drilling and "super wells" with very high initial rates of production resulting from the use of new completion techniques have created an impression of a cornucopia of unending growth and that impression weighs on forward WTI prices.

But part of what is going on here is the industry's desire to maintain a level of buzz consistent with rising equity valuations and capital inflows to the sector.

The hot play now is one of the oldest in America; the Permian basin. A handful of companies with large acreage in the region are making very optimistic assessments of their prospects there. These are based on making long term projections based on a few months’ production data from a handful of wells. We wonder whether data gets cherry picked for investor presentations. We hear about the great wells but not about the disappointing ones. Furthermore, many companies are pointing to higher initial rates of production without taking into account the higher depletion rates which go hand in hand with these higher start-up rates. EOG, the biggest and the best of the shale oil players recently asserted that the Permian – a play in which it is actively investing – will be much more difficult to develop than were either the Bakken or Eagle Ford. EOG figures horizontal oil wells in the Permian have productivity little more than a third of those in Eagle Ford. EOG has further stated on various occasions that the rapid growth in shale oil production is already behind us.

In part this is simple math. The DOE recently started publishing short term production forecasts for each of the major shale plays. They project monthly production increments based on rig counts and observed rig productivity (new wells per rig per month multiplied by production per rig) and subtracting from it the decline in production from legacy wells. According to the DOE data, for Bakken and Eagle Ford the legacy well decline rate has been running at either side of 6.5 per cent per month. When these fields were each producing 500,000 bpd that legacy decline therefore amounted to 33,000 bpd per month per field. With both fields now producing 1 million bpd the legacy decline is 65,000 bpd per month. Production from new wells has been running at about 90,000 bpd per month per field meaning net growth in production is 25,000 bpd per month. It will become smaller as output grows and that’s why ceteris paribus growth in output for both fields will continue to slow over the coming years. When all the easily drillable sites are exhausted – at the latest sometime shortly after 2020 – production from these two fields will decline.

Others have made the same analysis. A couple of weeks ago the IEA expressed concern that shale oil euphoria was discouraging investment in longer term projects elsewhere in the world that will be needed to sustain supply when U.S. shale oil production starts to decline.

Decelerating shale oil production growth is also reflected in the forecasts of independent analysts ITG. They have undertaken the most thorough analysis of U.S. shale plays and use a rigorous and granular approach in forecasting future shale and non-shale oil production in the U.S. Of course their forecast like any other is dependent on the underlying assumptions. But ITG can hardly be branded shale oil skeptics – to the contrary. Yet their forecast for U.S. production growth also calls for a dramatic slowing in the rate of growth. Their most recent forecast is for U.S. production excluding Alaska to grow by about 700,000 bpd in 2014. With Alaskan production continuing to decline, that implies growth of under 700,000 bpd in overall U.S. oil production, or 200,000 bpd less than consensus.

The final element of supply is represented by the change in inventory levels. The major OECD countries will end 2013 with oil inventories some 100 million barrels lower than they were at the beginning of the year. That stock drawdown is equivalent to nearly 300,000 bpd of supply that will not be available in 2014. Data outside the OECD countries is notoriously sparse but the evidence strongly suggests there was also massive destocking in China during 2013.


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Sun, 12/29/2013 - 21:41 | 4284215 LetThemEatRand
LetThemEatRand's picture

There's plenty of oil left.  Just not cheap oil.  A guy who owns a 12 cylinder Bentley doesn't much care if it costs $300 to fill his tank.   Especially when he's long oil futures and MIC contractors.

Sun, 12/29/2013 - 21:50 | 4284233 CrashisOptimistic
CrashisOptimistic's picture

Rand dood, there is a lot of leaning on that phrase now.  It's correct, but not in the way the leaners want.

"There is plenty of oil left, but not cheap oil."

Well, there will always be oil left.  A $15 million well can be drilled for a bubble of oil the size of your fist, but it likely won't be.  Thus, that fist sized bubble will always be left.

And that is the point.  "but not cheap oil".  The leaners on the phrase want to think in terms of "well, we'll add $10 to the price and suddenly have a 50% increase in available oil." 

No.  It doesn't have to work that way and likely won't.  It may take a price increase of 5000% to get a 50% increase in oil, with that 50% increase lasting 1 year.  There is no law of the universe that says things have to be gentle.  They likely won't be.

Sun, 12/29/2013 - 21:52 | 4284241 Croesus
Croesus's picture

Steve Rocco's EROI, Anyone? ?



Sun, 12/29/2013 - 23:21 | 4284418 SRSrocco
SRSrocco's picture

Croesus... My newest article explains in detail why the price of silver is tied to Oil.  According to my analysis, if we just go by the Silver-Oil Ratio in the 1960 decade, Silver should be north of $92 an ounce:

Silver To Hit New Highs As The Quality Of Analysis Sinks To New Lows

Mon, 12/30/2013 - 00:04 | 4284494 PrecipiceWatching
PrecipiceWatching's picture

Fascinating and compelling analysis, and I haven't even completed reading the entire piece.

Regarding silver acquistion: What is your preferred form, if you please?



Mon, 12/30/2013 - 09:15 | 4284843 quasimodo
quasimodo's picture

I can tell you what my preferred form is. The form you can hold in your hand that comes from the earth, not the form that you see as digits on a screen.

Mon, 12/30/2013 - 10:13 | 4284933 PrecipiceWatching
PrecipiceWatching's picture

Of course.

Real tangible silver is what I am asking about.

All things considered, the Canadian Maple Leafs look to be high on the pricing/recognizability/purity metric.


Sun, 12/29/2013 - 21:58 | 4284244 LetThemEatRand
LetThemEatRand's picture

I understand your point, but I don't think we're anywhere near that tipping point yet.  We're just starting to tap into expensive oil.  That will run out in a few decades and then people will wonder why our generations didn't see it coming and develop reasonable alternatives before it became a crisis.  There will be vigorous debate about whether Gen X'rs and Y'rs enjoyed cheap oil prosperity at the expense of later generations.  

Sun, 12/29/2013 - 22:03 | 4284261 Jack Burton
Jack Burton's picture

Rand, do you know of any large cheap oil finds lately? I don't, why do people refuse to understand expensive oil finds are not the same economically as expensive oil finds. Tar Sands and Fracking are not West Texas shallow wells drilled into large fields. It is a cheap trick to drill a shallow hole and attach the production rig. Cheap and simple. Christ, I have seen what it takes just to get the sand frackers use from our farmers fields, under which it lies, to be processed, loaded on trains and sent to ND. Cost a fortune, just to get the sand. Water is a whole other question, and the thing I think will cut short the fracking boom in many areas.

I wonder where all that fresh water will come from.

Sun, 12/29/2013 - 22:10 | 4284272 LetThemEatRand
LetThemEatRand's picture

"I wonder where all that fresh water will come from."

Neste.  They will be happy to sell the water rights they bought before people understood the value of it.

Sun, 12/29/2013 - 22:12 | 4284283 Jack Burton
Jack Burton's picture

Sitting here with Lake Superior outside my living room window, I know the many corporations who lust for access to it's fresh clean cold waters. One tanker filled with this quality of fresh water is worth a fortune to anyone who can bribe access to it from our corrupt political system. One company tried to load a tanker in Lake Superior and sail for Saudi Arabia. Canada put a stop to it using the international law that governs the Great Lakes. But you gotta credit this company for trying. It may even have been Nestle!

Sun, 12/29/2013 - 22:28 | 4284314 Harbanger
Harbanger's picture

When the fuck did the socialists make fresh water a limited substance.  What happens when the lakes run dry?  Great lakes?  The run-off from your land is surely contaminating this resource.

Sun, 12/29/2013 - 22:55 | 4284377 Harbanger
Harbanger's picture

Cheney is on your team and you're too stupid to know it, suck it bitch.

Sun, 12/29/2013 - 22:58 | 4284382 LetThemEatRand
LetThemEatRand's picture

Did I hit a nerve?

Sun, 12/29/2013 - 23:05 | 4284391 Harbanger
Harbanger's picture

You're projecting your emotion bitch,  I'm cold clean logic.

Mon, 12/30/2013 - 07:24 | 4284745 negative rates
negative rates's picture

Red eyes at morning, sailor take warning.

Sun, 12/29/2013 - 22:20 | 4284301 holdbuysell
holdbuysell's picture

Sadly, Tesla was derailed for a reason.

Mon, 12/30/2013 - 04:49 | 4284681 Zero Point
Zero Point's picture

As was Viktor Schauberger.

Mon, 12/30/2013 - 15:18 | 4286026 tip e. canoe
tip e. canoe's picture

as was Wilhelm Reich

Sun, 12/29/2013 - 23:45 | 4284434 SRSrocco
SRSrocco's picture


We are screwed.  According to the Hirsch Report commissioned by the U.S. Govt back in 2005, if the world waited until Peak Oil hit, it would be too late.  We have run out the clock.  The U.S. Govt read the report and promptly shelved it out of the public eye.

Furthermore, we have two addtional NAIL IN THE COFFINS besides Peak Oil.

1) the Falling EROI - Energy Returned on Invested

2) Decline Net Oil Exports

Also, it looks like a former BP Geologist announced in public presentation that PEAK OIL IS HERE & It means it will BREAK OF ECONOMIES:

Things unfortuately get very ugly from here on out.

Mon, 12/30/2013 - 07:33 | 4284747 malikai
malikai's picture

EROEI is the killer, IMO.

When it hits 1, the only economical reason to produce oil will be for plastics and other non-energy uses.

The only thing I can think of to offset that would be a non-fossil input to the production processes. Such as nuclear for heat/steam in Aberta or something like that.

Also, it's functionally pointless to consider any energy resource in fiat "cost" terms. The proper way to consider any energy source is by EROEI, as that's what defines your net energy gain/loss.

Mon, 12/30/2013 - 15:10 | 4285978 DaveyJones
DaveyJones's picture

pretty much

It remind me of Cheney's line" the American way of life is non negotiable." 

the biggest threat to the American way of life, is the American way of life

Nothing can stop the math now

Mon, 12/30/2013 - 00:09 | 4284500 AGuy
AGuy's picture

"I don't think we're anywhere near that tipping point yet. We're just starting to tap into expensive oil. "

That would be incorrect. The US has been drilling for expensive oil for about 3 decades. We tapped Oil in Alaska, In the Gulf of Mexico. Consider that cheep Oil is the oil that costs less then $10 bbl, which consists of on-shore oil located in areas where its easy to transport it markets. We are nearly tapped out of expensive oil and now drilling for the very expensive oil which consist of deep and ultra deep off-shore and Tight Oil. The problem with the very expensive oil is not only is it difficult to extract. the volume that can be extracted is considerable less.

The world production still consists of relatively cheap on-shore oil. We managed to stabilize production declines be using expensive and very expensive oil, but at some oil depletions losses from the cheap on-shore fields will exceed the ability to develop production from expensive oil projects. This will be a tipping point that the world will never recover from as it will have major economic impact. Gov'ts will like tax energy companies heavily in order to meet political promises. Many nations will likely nationalize oil companies in a vane attempt to funnel as much cash to sustain the gov't (ie Venezuela). When this happens Gov't Bureaucrats take over  which takes a serious toll of future production and oild production tumbles.

"That will run out in a few decades"

Less than a decade away from the tipping point.


"There will be vigorous debate about whether Gen X'rs and Y'rs enjoyed cheap oil"

Not really since it was largely the boomer generation that took full advantage of cheap oil, with super-highways replacing rail, jet setting everywhere. Pleasure boats, etc. The Gen X's and Y's did not have the same opportunities. Most were just carried along for the ride. As far as debate, I think it will be much more of a wave of violence and riots as the economy erodes. Only a tiny fraction of the population took action to prepare. Most are hopeless dependent on a broken system and when the wheels come off it, there will be hell to pay. We already see this happening in most of the Middle East which still have the largest amount of cheap oil available.

The odds favor a major Global war and a massive population dieoff as the global population can not possibly be sustained without sufficient oil. Sooner or later some nation is going to war to secure foriegn oil for thier people. The other nations won't be too happy about an oil grab and will join in leading to a large scale nuclear war.

Where does your next meal come from? Odds are it comes from a supermarket, that use fossil fuels to run the freezers, using diesel to transport the food from the processing plants that also uses fossil fuels to clean and process it, which needs diesel to transport the raw material from farms. The farms need fossil fuels to run the machinery to plow the fields, harvest the crops, and uses petro-chemical for fertializer and pesticides. This is pretty much true everywhere in the global.

its also possible that a war between Iran and Israel will result in a global oil crisis that causes the next global war. Both Israel and Iran already have nuclear weapons (Iran has stolen Russia Nukes purchased on the black market during the early 1990's when the Soviet union Collapsed). If Isreal or Iran start a war it will disrupt oil production and likely cause other nations in the region to retaliate. Saudi Arabia  which is between Iran and Israel has purchased Nukes and will like strike back when it infrastructure is damaged or destroyed. Pakistan may also become embroiled in the war and Pakistan also has nukes. Once a single nuke starts flying oil exports from the Gulf will completely stop. Its hard to believe that the world will continue to limp along with 25% less oil available.





Tue, 12/31/2013 - 18:34 | 4289696 mkkby
mkkby's picture

Eventually world population will return to that 1.5 billion sustainable population, or what ever the real number is.  As always the poor will suffer most and die off.  Right now it's easy to envision who that will be. 

Approximately 80% of the world population lives on $10 a day or less -- 5 billion -- africa, india, china, etc...  Westerners are the rich, even if only a few drive bentleys.  Even a person on welfare is rich on this scale. 

The poor will die off quietly as they always have.  Not much to worry about if you were lucky enough to be born in the US, canada, W europe, aussie/nz.  Don't worry about having a bunker.  Just stay away from inner city norwegiens and the crime spree they are already having.

Mon, 12/30/2013 - 06:31 | 4284725 Agstacker
Agstacker's picture

A pastor from Alaska has an interesting story...

Sun, 12/29/2013 - 21:57 | 4284249 Tasty Sandwich
Tasty Sandwich's picture

I doubt the system could handle much more than $10/gallon (and I think that's a high estimate) without just completely collapsing into supply shortages and rioting masses.

Sun, 12/29/2013 - 22:05 | 4284254 LetThemEatRand
LetThemEatRand's picture

Thus the billions of hollow points.  If you want to know who the Department of Homeland Security works for, go rent a DVD.  There is a DHS warning at the outset, along with a new federal agency that appears in a second warning screen.  They work for large corporations and their CEOs.  The Bentleys will roam free on DHS/TSA guarded toll ways long after we're all in FEMA camps.  For our safety.

Sun, 12/29/2013 - 22:06 | 4284269 Jack Burton
Jack Burton's picture

The Federal government has equipped local police to the standards of Navy SEAL teams. What for, to bust dope smoking high school kids? Or to brutally crush any civilian who protests the new government laws and corporate controlled congress and judicial system. The Law Firms of corporations are now sending huge sums to the campaigns of Judges. Imagine the corrpution!!!

Sun, 12/29/2013 - 22:14 | 4284274 LetThemEatRand
LetThemEatRand's picture

You cannot become a Federal judge unless you're part of the machine.  Period, end of story.  Doesn't matter which flavor nominates you.

The militarized police cannot be an accident.  They are planning for something.

Sun, 12/29/2013 - 22:55 | 4284371 Harbanger
Harbanger's picture

It's not by accident, our loss of liberty and increase in misery is proportional to the the rise of socialism.

Sun, 12/29/2013 - 22:59 | 4284376 LetThemEatRand
LetThemEatRand's picture

So the people own more of the means of production, then?   There is less private property owned by a few?

Sun, 12/29/2013 - 23:00 | 4284384 Harbanger
Harbanger's picture

"the people own" Collectively, they don't own anything except the right to hang all you socialist fuckers who sold us out before we're done.

Tue, 12/31/2013 - 01:13 | 4287546 TheReplacement
TheReplacement's picture

The problem with pointing at socialism is that there really is no such thing as socialism as it is commonly defined.  Socialism is no different from corporatism/fascism, communism, banksterism, statism, military dictatorshipism, king and queenism...  they are all a means for a small elite to rule over everyone else.  They are all evil.  They all end in lots of death but usually it is the little people who bleed the most.  As such, it can only be concluded that anyone who supports any of these systems is mindbogglingly naive or insanely bloodthirsty and a disciple of satan. 

With that said, they all deserve a land of their own to do as they please.  Of course the only suitable land for such an experiment is at the bottom of the Pacific ocean. 

Mon, 12/30/2013 - 14:31 | 4285838 Kirk2NCC1701
Kirk2NCC1701's picture

Not 'Socialism'. FEUDALISM!

People are regurgitating words, w/o fully understanding their word choices.

Tue, 12/31/2013 - 01:17 | 4287552 TheReplacement
TheReplacement's picture

It doesn't matter which ism.  They are all vile and the only purpose is to give a few the power of life and death over the many.  Dictatorship is really the term that fits best.  You are all just quibbling over the brand name. 

Sun, 12/29/2013 - 22:40 | 4284343 Harbanger
Harbanger's picture

How do we separate this fascist marriage between Corps and Goverment? Better Govt regulation?

Sun, 12/29/2013 - 23:37 | 4284449 Harbanger
Harbanger's picture

To whomever gives a +1, Please don't upvote me, I love to fight from the bottom.

Tue, 12/31/2013 - 01:20 | 4287560 TheReplacement
TheReplacement's picture

Yeah because that is exactly how corporations gain power over the government to begin with (government becomes dependent on the corporations to the point that the corporations get to write the laws directly, aka Obamacare). 

Yeah, I saw your sarc but there are probably a lot of idiots who don't or just don't understand.

Sun, 12/29/2013 - 22:52 | 4284370 Money Squid
Money Squid's picture

those be some really fat SEALs

Tue, 12/31/2013 - 01:18 | 4287563 TheReplacement
TheReplacement's picture

+1 for funny.

Sadly, funny isn't much true.  There are a lot of scary looking cops out there.  It's like Mr. Universe in blue packing 17+1 and an AR in the trunk.

Sun, 12/29/2013 - 22:15 | 4284287 Tasty Sandwich
Tasty Sandwich's picture

People with Bentleys will be evacuated via Lear Jet to private islands or go to their luxury underground bunkers to wait while the unwashed starve.

The planet's carrying capacity without petrochemicals is ~1.5 billion.

The government would collapse and cease to function in such a scenario, regardless of their plans.

Sun, 12/29/2013 - 22:22 | 4284303 LetThemEatRand
LetThemEatRand's picture

That is their plan.  And they will jet back in from their private islands and save the day.

Sun, 12/29/2013 - 22:28 | 4284322 Tasty Sandwich
Tasty Sandwich's picture

No one is going to be saving the day when that day comes.

Sun, 12/29/2013 - 23:14 | 4284407 Harbanger
Harbanger's picture

"No one is going to be saving the day when that day comes."

Unfortunately, that's not seen as being a defeatist or bitch talk today.  It's the norm.  More chicks and me.

Mon, 12/30/2013 - 00:01 | 4284400 Harbanger
Harbanger's picture

Or, you will be ignored like a bad ex-girlfriend and you will wish they never left.

Mon, 12/30/2013 - 00:17 | 4284506 AGuy
AGuy's picture

"The Bentleys will roam free on DHS/TSA guarded toll ways long after we're all in FEMA camps."

Unlikely. The DHS/TSA is made of largely third rate personal. The only effective security forces the US has is the US miltary which is being gutted and most of the manpower is stationed overseas. The people riding in Bentleys will be strung up, unless they are wise enough to act poor and maintain a low profile.



Sun, 12/29/2013 - 22:10 | 4284279 dick cheneys ghost
dick cheneys ghost's picture

$10 per barrel oil would be the best thing to happen to this country.........blow up the freeways while ur at it........get back to localism


Mon, 12/30/2013 - 00:11 | 4284499 RafterManFMJ
RafterManFMJ's picture

I concur.

We are shipping frozen chickens to China to be cut up and shipped back. WHAT THE FUCK?

Oil at 300 per barrel, or 1/10 oz. Gold. Bring it.

Mon, 12/30/2013 - 05:49 | 4284707 mjk0259
mjk0259's picture

Gas prices went up by a higher percent than that in a few days twice - during each embargo.

Didn't collapse and now petrochemical use is less percent of gdp - our gdp consisting primarily of paper shuffling now.


Mon, 12/30/2013 - 11:32 | 4285088 Cloud9.5
Cloud9.5's picture

The reason the system did not cave during the gas crisis was because most assumed the difficulties were short term and caused by external forces.  It’s like sitting out a hurricane.  There is no reason to go Mad Max because everyone knows that in just a few days, the grid will be back up. Gas will be flowing again and food will be coming in.  In a collapse that the body politic understands to be a collapse, the government would be tapped out just trying to sustain New York and Washington.  The other forty eight major metropolitan areas would be largely on their own.  When a significant minority of the population figures out that help is not coming, that order will not be restored, and that this is it, that is the moment things get interesting.  I have no real evidence as to what percentage that critical minority is.  It might be as little as three percent or as large as thirty three and a third.  Somewhere in there is a tipping point.  When that phase shift occurs I would not rely too heavily on LEO’s to maintain order.


Katrina showed us that when the system cracks, law enforcement collapses right along with the rest of the infrastructure.  What keeps cops in the line is the framework in which they operate, the legal system and the courts and their salary schedules.  If that framework falls apart, even temporarily, cops tend to desert their posts.  Some go home to protect their families.  Others simply walk away.  Some become just another gang.  When groups of cops start going door to door to resupply, that is the day when wearing a LEO uniform will become a death sentence.

Mon, 12/30/2013 - 08:30 | 4284787 ZH Snob
ZH Snob's picture

we are still relying on oil and coal for most of our energy needs, but this approach is antiquated.  the trouble is that zero point energy, torsion and even cold fusion have all been stomped on and surpressed.  we are instead supposed to worship the black oil/coal paradigm.  we are conditioned to see this as the only real energy answer. follow the money and it will lead to the same bloated crew that lies and cheats about everything in our lives.


Sun, 12/29/2013 - 21:40 | 4284216 ebworthen
ebworthen's picture

That de-escalated quickly.

Sun, 12/29/2013 - 21:41 | 4284219 Kirk2NCC1701
Kirk2NCC1701's picture

What's a Petro-Dollar to do now?

Sun, 12/29/2013 - 21:39 | 4284223 JLee2027
JLee2027's picture

Yawn. Same old blackboard, not realistic analysis.

And all the sliderules and mathmatics in the academic World won't be able to predict technology breakthroughs that increase the amount of oil recoverable. Which is what made the Shale Oil play in the first place possible.

Sun, 12/29/2013 - 21:42 | 4284227 CrashisOptimistic
CrashisOptimistic's picture

You're not up to speed.  The magnificent technology advances you're referring to were available in the early 1990s.  There is no new tech that made the shale oil (or pseudo oil) flow.  It was price.  The price in the 90s wouldn't let oil flow using tech that existed.

Don't celebrate technology when it didn't make it happen.  What made it happen was $100/barrel, vs the 90s $20.

Sun, 12/29/2013 - 21:59 | 4284256 Jack Burton
Jack Burton's picture

I believe price rise for oil caused fracking to be cost effective for a profit making company. They were going to frack when oil was low? They couldn't, even though the technology was there 2 decades ago or even more! Only high prices can make fracking viable If prices fall, will they keep fracking. That is like mining gold at a loss. Who would do that. Miners are price sensitve, as are drillers. I remember low prices shutting down Texas like someone turned all the lights off.

Sun, 12/29/2013 - 22:08 | 4284266 LetThemEatRand
LetThemEatRand's picture

Wait, I thought TX was booming because of "right to work" laws, like Saudi Arabia.

Sun, 12/29/2013 - 22:19 | 4284296 Jack Burton
Jack Burton's picture

I wonder what the real Texas story is. They have almost as many Mexican immigrants now as they have right winger old timers. This will shape the politics. If low wage jobs are considered, then Texas has a booming low wage economy. What is their standard of living I wonder. Remember, in the Old South, all blacks had jobs, it was the quality of the jobs that put their economic success into question.

Sun, 12/29/2013 - 22:27 | 4284317 LetThemEatRand
LetThemEatRand's picture

Look at an electoral map of Texas sometime.   Picasso would be confused.  DeLay was bribed so much that he was willing to risk prison to keep the low wage workers from being able to vote as a block.  Of course he knew he would be "vindicated" once his case wound its way to the right court.

Sun, 12/29/2013 - 23:21 | 4284412 TheMeatTrapper
TheMeatTrapper's picture

Remember, in the Old South, all blacks had jobs, it was the quality of the jobs that put their economic success into question.

Interesting stereotype. 40 years ago most of the jobs here in Alabama were low paying, hot, textile mill type jobs. 

Now we have a Mercedes factory, a Hyundai factory, a Honda factory. Thyssen Krupp built the worlds largest steel mill here. Airbus built a factory here. Volkswagen is just across the state line in Tennessee. BMW is in South Carolina.

Our "economic success" is beyond question. The reason we have quality jobs is because we have local governments who that have a laissez faire attitude, low taxation and and a high quality of life. 

Alabama also has the toughest anti immigration law in the nation. Illegals are not responsible for our booming economy. 

Sun, 12/29/2013 - 23:26 | 4284422 LetThemEatRand
LetThemEatRand's picture

Bullshit.  I flew into Huntsville a while back.  Every ad in the airport was MIC shit.  I felt like I was in Starship Troopers (and I almost joined up because the people on the posters looked really, really happy serving their country alongside cool weapons systems).  Okay to take federal dollars in your own backyard, hypocrite?

Mon, 12/30/2013 - 11:30 | 4285082 Citxmech
Citxmech's picture

+1 for the Starship Troopers referance.  

You are absolutely correct about the airport too btw.

Sun, 12/29/2013 - 23:28 | 4284427 Harbanger
Harbanger's picture

I never experienced the "old south" Jack, xcept hollywood..  I'm NOT an American, but I love certain merkins take on their own country.

"almost as many Mexican immigrants now as they have right winger old timers. This will shape the politics."

Yes it will.  Lord knows I can't wait to fuck you born bastards who sold out your republic.

Mon, 12/30/2013 - 11:43 | 4285124 Cloud9.5
Cloud9.5's picture

Mexicans are not Chicanos, Puerto Ricans or Blacks.  They tend to be Catholic, work and family oriented.  It may take a generation or two before the left can pull them into their fold.  

Mon, 12/30/2013 - 19:06 | 4286729 Rafferty
Rafferty's picture

This is an old canard that just will not die. The proportion of social pathologies among Mexican Americans is only slighly lower than for other Hispanics although much lower than for blacks.

Mon, 12/30/2013 - 03:14 | 4284649 Blues Traveler
Blues Traveler's picture

LetthemEatmyballs.  Congrats, You have reached the peter principal of thinking.  TX is proud of our law abiding, taxpaying citizens which includes our immigrants, who come from everywhere.  We take care of old, poor and sick, otherwise we want you to work. To provide jobs, we need to help businesses.  We have 1,000 people a day moving to TX.  Read that sentence again. Now check that number.  Why??? Most people moving to tx are not lining up to work in oilfield services, most are Poliical refugees.

We believe and never forgot what was memorialized in Philadelphia.  You criticize what you don't know and the sad part is that you should.

Mon, 12/30/2013 - 19:06 | 4286738 Rafferty
Rafferty's picture

Any reason why, when those 1000 daily arrivals make Texas majority black/hispanic it won't be the same as Mexico or Brazil?

Sun, 12/29/2013 - 22:22 | 4284305 jcaz
jcaz's picture

Bingo.  Shell, I believe, used to run commericals in the mid-70's about their shale recovery biz-  none of this is "new" technology, it's just price-sensitive.

Sun, 12/29/2013 - 23:20 | 4284414 disabledvet
disabledvet's picture

that was turning shale into oil through an industrial process. this is completely different. having said that if I got paid 100 million for trading oil as this guy did when oil prices topped out at 140 "and Citi cut the check" I'd pay attention. not denying depletion but the Gulf was also off line until this whole BP looting wound down (mostly.) that's a lot of "no longer shut in production" as well as Venezuela which is currently in need of a massive amount of hard currency right now. He also doesn't have a war machine to trade against (no Syria) and there wasn't any Tesla and "a recovery in name only." he does have old man winter.

Mon, 12/30/2013 - 04:17 | 4284669 Casey Stengel
Casey Stengel's picture

I was working on a shale oil play out of Rock Springs WY in 1975. The H2S was absolutely awful.

Mon, 12/30/2013 - 02:19 | 4284611 JLee2027
JLee2027's picture in Fracking, allowing the number of shale oil barrels of recoverable crude to double or more is recent of the past few years.

You're not up to speed.  The magnificent technology advances you're referring to were available in the early 1990s.

Sun, 12/29/2013 - 22:12 | 4284275 Jack Burton
Jack Burton's picture

I'll green arrow you if you disclose some of the new technology that is meant to cost effectively improve fracking performance. I agree that the earth has lots of fossil oils, in many forms from light sweet crude, to heavy nearly solid tars. Given enough money, all this can be produced, but can it be produced at a profit? This is the question. Like Brazil's deep water find, huge oil reserve, mind blowingly expensive to produce.

Sun, 12/29/2013 - 22:30 | 4284330 El Vaquero
El Vaquero's picture

The real cost in extracting this stuff should be measured in joules.  

Mon, 12/30/2013 - 15:13 | 4286008 Kirk2NCC1701
Kirk2NCC1701's picture

Watts is better. Do you know why?

Sun, 12/29/2013 - 23:24 | 4284419 MollyHacker
MollyHacker's picture

Hey jack; the earth has lots of fossil fuels and the galaxy is full of asteroids for fracking! Do I get a green arrow?

Mon, 12/30/2013 - 02:17 | 4284614 JLee2027
JLee2027's picture

Nothing to prove Jack. Time will prove it.

Mon, 12/30/2013 - 13:18 | 4285573 Ms No
Ms No's picture

Nice try Jack.... some will simply never get it.  Very cheritable for you to try though

Sun, 12/29/2013 - 22:15 | 4284293 long-shorty
long-shorty's picture

shale oil was available back when my dad was a young chap fresh out of college. the company he worked for (Celanese) invested tens of millions if not more than $100 mil to build a massive plant to make guar gum, but before the plant was even finished, they abandoned the project and sold the plant. the oil crisis was over and prices had fallen precipitiously from something like $40 back to $10. no shale oil was economic all of a sudden, and nobody needed all that extra guar.

if you are betting that we'll make another big technological advance the next time oil prices appreciate 10-fold, maybe we will and maybe we won't, but it's a hell of a thing to bet the future on. fracking has been an established technology for many decades. i'm no petrochemical engineer, but I'm not aware of the next awesome source for cheap crude and it's pretty absurd to take it for granted.



Sun, 12/29/2013 - 23:16 | 4284408 Money Squid
Money Squid's picture

Funny how people think tight oil is something newly discovered. Or, that hydraulic fracture stimulation is new.

There is method to the oil prices, laws and regs, what the MIC needs, what the economy needs and how the fields are developed. Every boom has its bust. You can look at maps showing well locations for the Bakken and you can see by the number and locations that there are well defined limits. Expensive mulitcompletion wells (not new technology either) can be big producers, for a while. But, all wells and fields decline.

According to George Noory on Coast to Coast crude oil is produced deep within the earth and simply migrates upwards and fills sutiable formations. Why not just drill to where the oil is produced and stop wasting time?

Sun, 12/29/2013 - 23:39 | 4284447 Orly
Orly's picture

Because you risk disrupting the core pressure...sort of like a Butterfly Effect thing.  No reason you can't wait for it to bubble up at fissures, then pump it out.


Sun, 12/29/2013 - 23:41 | 4284453 Orly
Orly's picture

And I'll pull a Sherlock Holmes and say because it's the only thing that makes sense.

Dinosaurs?  Seriously?  Seaweed?


Sun, 12/29/2013 - 23:42 | 4284454 Orly
Orly's picture

And by that theory, asteroids should be dry of crude oil.

Mon, 12/30/2013 - 01:34 | 4284587 Alpha Monkey
Alpha Monkey's picture

According to George Noory on Coast to Coast crude oil is produced deep within the earth and simply migrates upwards and fills sutiable formations. Why not just drill to where the oil is produced and stop wasting time?

Because anyone who listens to coast to coast knows we have to wait for the anunaki to return and they don't give two shits about oil, they just want our gold!!

Mon, 12/30/2013 - 02:06 | 4284603 phaedrus1952
phaedrus1952's picture

I didn't know the anunaki were Chinese.

Mon, 12/30/2013 - 13:24 | 4285603 Ms No
Ms No's picture

You lost me on the abiotic.  George Noory has a great show; however, knows jack about oil or geology.  He needs to stick with little green men and the chupacabra.... both of which are more likely than abiotic oil.  Conspiracies are real and are simple human opportunism but that theory is just stupid.

Sun, 12/29/2013 - 21:45 | 4284226 nmewn
nmewn's picture

Lets cover the desert with solar panels and blot out the sun with windmills.

That'll fix it!

Sun, 12/29/2013 - 22:03 | 4284258 Kirk2NCC1701
Kirk2NCC1701's picture

All quips aside, it's a simple math problem my 8th grader could do.

Hint: the Solar flux per sq. meter is about 750 W. After that you figure out how many Watts you need per household, the conversion efficiency, etc, and you realize that solar panels are indeed a more than adequate solution.

But, Big Oil, Halliburton & Friends don't want you to know that or to do the math.

Sun, 12/29/2013 - 22:07 | 4284270 Hulk
Hulk's picture

clouds, winter, night, bird shit,trees, etc lower that figure significantly...

Sun, 12/29/2013 - 22:30 | 4284321 CrashisOptimistic
CrashisOptimistic's picture

Your math is wrong.

The Solar Constant averaging in atmosphere and clouds is about 1000 Watts per square meter.

If you call tomorrow to buy some solar panels, what you'll get are 15% efficient.  Of that 1000 Watts, you'll get 150 Watts.  I think you thought the 15% was inverted and you get 85%.

You don't.

Mon, 12/30/2013 - 01:20 | 4284578 Not_Sure
Not_Sure's picture

Yeah, but you can't buy those. The cost of manufacturing is going to be too high for the residential crowd. These are multi-junction cells made using very expensive epitaxial deposition tools and are mostly for satellite and space vehicles applications. If they're used for terrestrial power generation, the cells will most likely be used in solar farms by big utilities. The average Joe won't see any benefits from the more efficient cells until the utilities recover their costs....and most likely your average power bill will go UP when these are installed on the grid.

Mon, 12/30/2013 - 08:03 | 4284764 tip e. canoe
tip e. canoe's picture

you can't buy those. The cost of manufacturing is going to be too high for the residential crowd.

for now, but don't forget that one could have said the same thing 5 years ago about the processing power now available in BC mining rigs...or rather more accurately in this case, 20 years ago about smartphones & tablets.

as an aside, just heard that apple is generating so much power at their solar farm that is powering The Cloud servers in NC that they are making the effort to sell the excess to residential a lower price than Duke Power is currently offering.

free enterprise, baby, it works.

Mon, 12/30/2013 - 15:58 | 4286178 Kirk2NCC1701
Kirk2NCC1701's picture

I was shooting off the cuff regarding the Solar Constant, going by memory.

The point was/is that you have to do the math for your location (note that the Flux varies with location), plus factor in your micro-climate. As others have also pointed out, panel efficiency varies. As do prices. Both efficacy and price will improve over time.

There's a site out there (don't know offhand), that lets you play this kind of spreadsheet game, to calculate the probable Wattage per panel at your site.

Bottom line: Solar energy works in significantly reducing our dependence on foreign oil. Some places in the country can be completely free of foreign energy.

Energy independence is not a single, binary step, but a worthwhile voyage of many steps. In fact, I'd argue, it's involves nothing less than the rise of a complex ecosystem of energy collection (from ALL sources), that allow for local solutions. IOW: more Local than Mega solutions.

Sun, 12/29/2013 - 22:41 | 4284349 nmewn
nmewn's picture

All quips aside, it needs to be stored for a cloudy day(s) or even weeks in some locales. 

Battery components don't come from the ether.

Its not that I'm against solar or any "green tech" (on an individual basis for the right reasons) its the mind numbing, centrally subsidized, crony variant that pisses me off. You can't throw a guy in jail for shooting a single eagle and then pass regulations allowing the slaughter of hundreds for "the greater good", for example.

My vision, if I may be so bold, is those individual tiles on your roof being solar panels. They look like any other roofing shingle /panel yet provide exactly what you're looking for, if you can afford it and their maintenance.

Get on it, then we can discuss storage for demand ;-)

Sun, 12/29/2013 - 23:45 | 4284462 Hulk
Hulk's picture

Nothing beats the edison cell for storage

Mon, 12/30/2013 - 08:19 | 4284777 tip e. canoe
tip e. canoe's picture

brother nmewn, those shingles are already available and they're pretty cool.  
unfortunately, it's DOW that's got the patent, courtesy of a US DOE grant.

personally, being equally bold, mine eyes envision ground mounted sculptures that rotate with the sun (simple way to maximize efficiency on a daily basis) covered with "broken" solar panels bought cheap on ebay and put together DIY style with a welder & a solder gun, hooked up to one of those ironedison batteries that hulk linked.   but i'm strange like that ;~)


Sun, 12/29/2013 - 22:53 | 4284372 Money Squid
Money Squid's picture

But Capt'n what about the dilithium cyrstals? They cant take any mooooooooorrrrreeeee !

Sun, 12/29/2013 - 23:22 | 4284413 rubiconsolutions
rubiconsolutions's picture

"the Solar flux per sq. meter is about 750 W."

It's actually 1,360 watts per square meter. At sea level, at high noon, at the equator. With solar cells that are 100% efficient. That the maximum. So what happens in the middle of winter if you are in Seattle and the sun doesn't shine or if it does it's just a few degrees above the horizon? Solar is not an adequate solution for anything other than augmenting local power needs.

Sun, 12/29/2013 - 22:03 | 4284262 Hulk
Hulk's picture

Frack you !!!

Sun, 12/29/2013 - 22:02 | 4284259 grid-b-gone
grid-b-gone's picture

There is oil in shale, oil in sand, gold in Ohio, and common sense in Congress. The cost of consolidating each into a usable form is prohibitive.

Sun, 12/29/2013 - 22:34 | 4284332 RafterManFMJ
RafterManFMJ's picture

My nose has produced WAY to much oil over the past 20 years - if I could trap that I'd be rich and acne free.

Sun, 12/29/2013 - 22:10 | 4284280 holdbuysell
holdbuysell's picture

"A couple of weeks ago the IEA expressed concern that shale oil euphoria was discouraging investment in longer term projects elsewhere in the world that will be needed to sustain supply when U.S. shale oil production starts to decline."

Oh, they'll drill those fields, eventually, but by commanding a higher price and return commensurate with the risk.

Bernyellen be damned.

Sun, 12/29/2013 - 22:59 | 4284383 Money Squid
Money Squid's picture

No need to drill those fields if noone buys the oil cause the price to too damn high. $5 per gallon gas caused demand destruction. The economy can not sustain itself if oil is too expesive and no amounto QE will due, unless Bernyellen pumps the money directly into the wallets of the sheeple so they pay $10 gallon all day long.

Some of the oil just stays put.

Sun, 12/29/2013 - 22:14 | 4284281 Money Squid
Money Squid's picture

the "peak" was 2005/2006. What you see is the bumpy plateau where higher prices and temporary and permanent changes in behavior/demand cause declines is demand and decrease in price. But, there is a new floor, the price must be at least about $80 per barrel to keep the bulk production. With oil back at $100 companies can run less economical fields/wells and distribute profits to executives and stockholders, but the oil companies (small to large) are not saving a drop for later.

Operators are blasting the shit out of their fields with water injection. You hear/read enviros complaining about the fresh water wasted on hydraulic fracture stimulation. If they only bothered to scope out how much fresh water the operators in urban and near ubran areas consume just for makeup water.

Sun, 12/29/2013 - 22:16 | 4284286 Freddie
Freddie's picture

Checkmate Putin.

Sun, 12/29/2013 - 22:30 | 4284328 Son of Loki
Son of Loki's picture

I'm ready for $200/barrel.

Sun, 12/29/2013 - 22:35 | 4284339 orangegeek
orangegeek's picture

pump article to align with $100 per barrel prices


and when oil falls, this article will be quickly forgotten


the KNOWN reserves in the middle east could supply the planet on their own for the next 200 years

Sun, 12/29/2013 - 23:05 | 4284394 Money Squid
Money Squid's picture

You gots a sources for this "the KNOWN reserves in the middle east could supply the planet on their own for the next 200 years" ?

Sun, 12/29/2013 - 22:40 | 4284347 UrbanBard
UrbanBard's picture

Improvements in technology caused the Shale oil boom. The wildcatters were who learned how to do it cheaply. The major oil producers didn't have a clue. The DOE was totally caught off guard. Hence, none of them have credibility since they could not predict the past.

Your projections are based on current technology and discoveries. How do you know that the wildcatters won't find new techniques which will extend the boom? You don't. You are relying on historical data, and that is often proven wrong in the markets.

As things stand right now, Oil Reserves and Resources have never been higher. That means we, in the US, have almost a hundred year's supply at today's price. This is despite the fact that most federally controlled lands, a third to half of the US, are off limits. No one even knows what is underground.

Only Japan is starting to  exploit Methane Hydrates in their coastal shelves  which could give us tens of thousand of years of supply.

You are prophesying on very shaky ground. You have no clue as to what the future may bring.

Sun, 12/29/2013 - 23:03 | 4284387 Money Squid
Money Squid's picture

I will admit I am drinking and posting right now. But, after reading this comment...

"As things stand right now, Oil Reserves and Resources have never been higher."

I want some of what your drinking/smoking.

Mon, 12/30/2013 - 00:19 | 4284509 phaedrus1952
phaedrus1952's picture

I wasn't gonna post tonite on another ZH shale oil article, but here goes ... I've followed this shale explosion since late 2007 when the Bakken started to produce.  The whirlwind developments in maximizing extraction in these plays may be seen as recently as a few weeks ago in the Duvernay play up in Canada.  After two years and 2 billion dollars invested with little to show for it, none other than Chevron finally came up with the particulars to effectively, profitably stimulate the known reservoir and get what appears to be higher than 100% return in the first year.  As these wells cost between 12 and 20 million to drill/complete, the ongoing profitability seems exceptionally high.

This past week, Continental got permits to drill an additional 13 wells in the same spacing unit where one well has been drilled/producing for a couple of years now.  This is just the beginning of the much-anticipated "downspacing" that the industry has been awaiting now that their leasing is protected by the Held By Production contracts.  They are now going back to maximize the resource extraction with all their newly developed knowledge regarding optimal length of laterals, type of fracking, number of stages, materials used, etc.  This is not at all insignificant minutia.  It is the stuff that has made this whole shale development work.  BTW, all the people putting so much emphasis on "early wells being the best because of being in the sweet spot",  well, virtually all those wells were fracked with a minimal number of stages, some as few as one stage.  Companies are starting to return to those wells and re-frack with the early reports of 50% higher oil flow than the original IP (initial 24 hour production).

Noble  Oil has apparently 'cracked the code' to successfully extract their acreage in the Niobrara and is planning on the most densely drilled program of all - one well per 6 by 5 acres.  

Goldman Sachs issued an  analysis in September, 2013, that called for the Bakken  to produce over 2 million barrels a day by 2022 and to continue to put out over a million bpd out to 2040.

Other, seemingly trivial plays like The New Albany play in Illinois may shortly make some impact now that the state's fracking laws have been clarified.

The Monterey Shale in California has, according to the US gov, more than twice the recoverable oil than even the Bakken.

The Permian basin has produced 29 billion barrels of oil over the last 90 years.  Many experts in the field say that the new horizontal drilling/fracking techniques should produce at least that much more in the coming years.

Regardless of what one may bring to this arena, we will have quite a bit of oil and nat gas for the next several decades.

Mon, 12/30/2013 - 00:26 | 4284523 OldNewfy
OldNewfy's picture

Well said, Phaedrus.  Directional drilling and staged fracking can open up a huge surface area witin a tight shale, and yield a sweat of hydrocarbons.

Mon, 12/30/2013 - 01:34 | 4284586 Not_Sure
Not_Sure's picture

There will always be oil "available"'s about the energy expended to get it that matters. If it takes me 1 gallon of gas to get my alloted two gallons of gas at the station......what's the point of going? And it's not about monetary's about physics.

Mon, 12/30/2013 - 06:38 | 4284726 Agstacker
Agstacker's picture

There are other layers around the Bakken that have recoverable oil-

Mon, 12/30/2013 - 08:19 | 4284746 tip e. canoe
tip e. canoe's picture

Regardless of what one may bring to this arena, we will have quite a bit of oil and nat gas for the next several decades.

which is why the greenturds should refocus their efforts on developing technologies that can capture the emission byproducts for later productive use before they are released into the atmosphere (sort of like what the chinese have been doing for generations now with rocket stoves).

especially if it is true that we are currently on the tail end of the earth's current warming period and that as Joe Strummer sang, "An Ice Age is comin..."

thanks for the contribution, phae.   comments like these are why the Hedge continues to remain a gem for those who are willing and able to sort through the alpha boys bickering & bullshit misdirection tricks.   cheers

p.s. one must not forget that what we now consider "gasoline" was once a byproduct with no known productive use until the sly lizard JRock figured out it could power the newly-invented internal combustion engine, albeit at a much less efficient rate than hemp or peanuts.

Mon, 12/30/2013 - 07:36 | 4284748 FredFlintstone
FredFlintstone's picture

Good stuff. Do mind adding a little detail to the "optimal length of laterals, type of fracking, number of stages, materials used" part? I am an engineer and trying to visualize this. Your entry was well written and informative. Oh, and I am going to do some reading on the LENR stuff you wrote about. When you first mentioned cold fusion I almost spit out my coffee, but reading further it seems that you know some stuff that I am unaware of. Thanks!

Mon, 12/30/2013 - 12:19 | 4285303 phaedrus1952
phaedrus1952's picture

Fred, the most extensive and contemperaneous info comes the quarterly conference calls and presentations from the involved companies.  The best - to me - sources to absorb and interperet that data come from analysts like Mike Filloon at Seeking Alpha, Bruce Oksol's, and many more that the net throws up.  There are several graphics on the net that provide great visuals of what these multi-well/pad operations are all about.   Good stuff.

Mon, 12/30/2013 - 00:23 | 4284518 Newager23
Newager23's picture

I'm a writer, who writes about the future. So I've done more than 1,000 hours research on peak oil. The fact is that natgas fracking and tight "shale" oil saved the global economy from already imploding. Those two sources bought us some time. How long is hard to say, I won't even try to guess - and I like to make predictions.

Another thing I learned from my research is that unless we find a new energy source other than fossil fuel (and very soon), our way of life is toast.

The ugly thing about fossil fuel energy is that it is fungible. That means that if you have a shortage in NY, then you likely have a shortage in London. And once you have supply issues, the game is over.

I think fossil fuel energy is the reason for 9/11 and for DHS. Just connect the dots. Without an abundant supply of fossil fuel, the fallout is unfathomable. The outcome is a much smaller economy with one crisis after another. I envision less than half of our colleges surving for another decarde or so. The potential for chaos is quite real.

And yet all we read in the MSM is that the US is approaching energy independence, and that the fracking boom is going to lead to a revival of the economy. I wish that was possible, but as they say in accounting: "it doesn't pencil".



Mon, 12/30/2013 - 01:55 | 4284599 phaedrus1952
phaedrus1952's picture

Hey, Newager, Glad to see you take a lot ot this stuff seriously, cause it IS.  I have a familiarity with, and a great deal of appreciation for, much of the 'all bidness' (that's "oil business"  to you yankees) due to my many years of working on offshore rigs.  You may be surprised to learn that most any guy I ever met who had even a couple of working brain cells, recognized that we were engaged in finding and extracting a FINITE resource.  It just wasn't gonna run out next week.

Having said that, I was somewhat surprised at the derision my comment about cold fusion prompted on this forum several weeks back.  Motivated me to look further, which is why I am replying to your post now.

IF you are receptive to reading about a revolutionary, non-carbon based fuel, check out all the ongoing activity in the LENR (cold fusion) area.  You will find Toyota  and Mitsubishi have said they can repetitively produce 'anomalous' readings in their experiments.  NASA, MIT,  SRI, Lawrence Livermore and other labs hava all said the same thing.  A Swiss company (you know, those hare-brained, unreliable Swiss) called Stmicroelectronics (50,000 employees, $8 billion/yr revenue) has applied for a US patent this past February for a LENR device ... apparently even using the dreaded term 'cold fusion' in the app.

Most intriguing of all, possibly, is this outfit out of Berkeley,  Brillouin Energy.  Their chief fuzzy head, guy by the name of Godes, seems to be the only person who has come up with a theory of what is going on.  Interesting stuff.    

Anyway, if you check out this field, throw in some of the mind-blowing uses of graphene that's comin' our way, you may have fodder for a whole lot of Jetson-like scenarios just over the near-horizon.

Mon, 12/30/2013 - 08:04 | 4284750 tip e. canoe
tip e. canoe's picture

been noticing an increased mention in the woo-woo world re: cold fusion as well.    interesting to read that it's reflecting new discoveries from the Hard Science crew.

have you looked into Livermore's experiments with gold?   if not, you should give it a duckduckgo.   if their discoveries are scalable, it would mean that there is indeed enough gold for everyone on the planet.

that is, as long as it doesn't continue to be hoarded by a selective very few (and thus which may be one of the reasons the selective very few have the tendency to hoard it).

here's a taste:  During the laser experiment, the fuel pellet was placed inside a solid-gold cylinder about the size of a pencil eraser, which was hit by multiple laser beams.The gold cylinder absorbed the laser energy and converted it into thermal x-ray energy.The x-rays then ricocheted inside the cylinder and struck the fuel pellet from all sides. As the pellet absorbed the x-rays, it heated up—eventually reaching about 60 million degrees Fahrenheit (33 million degrees Celsius)—then collapsed in on itself.


Mon, 12/30/2013 - 07:23 | 4284743 FredFlintstone
FredFlintstone's picture

If you make a living as a writer and futurist, my hat is off to you. I have written over 40 articles with the last few focused on the future of a narrow industry. This was all moonlighting stuff. Over a period of about 6 years I only made about $36k at it. Hard work, but mentally rewarding. I am replying about your college survival prediction. On rereading it is see that you added the words "or so" after "decade", which is clever. I always like to hedge that way as well. I think higher education along with healthcare are in bubble phases. Besides the trillion in student loans and the lack of jobs after graduation, what else do you see as drivers and how do you see this playing out?




Mon, 12/30/2013 - 13:35 | 4285648 Ms No
Ms No's picture

Throw some my way too squid! 

Mon, 12/30/2013 - 08:54 | 4284803 samsara
samsara's picture

Methane Hydrates like Fusion are the energy sources of the future and always will be.

Methane Hydrates..... Not a single commercial extraction yet. Why? Well, I guess you would have to read some actual geology stuff instead of financial trades....

Mon, 12/30/2013 - 00:31 | 4284517 OldNewfy
OldNewfy's picture

Ackshully, Oil and Gas Journal Dec 2, 2013 pg-54-61 publishes an admittedly "highly speculative" article  suggesting that the rest of the world (excluding the US shale gas and shale oil output)  by 2035 would reach a  shale gas output out  2170 mtoe ( translated as million tons oil equivalent)  plus 4650 mt (million tones of oil)  of shale oil,  the latter exceeding current (2013) global oil output.   While it's true that the US has   an apparent lead in the technology of shale oil/shale gas recovery, (notwithstanding the difficult management of "new" water to prepare fracturing fluid packages),  the fact remains that  there is, lo verily, a significant global shitpile of shale, a lot of it containing hydrocarbons.  I know one of my peers working for a small producer in France has told me about 400 m thick shale oil formations there,  which will eventually become accessible, when the risks and control of hydraulic fracturing get the right Regulatory spin. We aren't going to stop burning carbon for a while,

Mon, 12/30/2013 - 01:20 | 4284577 phaedrus1952
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Hey, Old, I kinda think there may be some increasing headway in the area of waterless fracking.  Even though the E and P guys are making huge progress in the capturing/recyling of frac fluids, there just seems to be a lot of upside potential to use some form of liquid hydrocarbon as a carrying medium for the proppants.  Gasfrac is getting some competion from other outfits.  Dresser Rand is now manufacturing a micro, mobile LNG plant that, according to its original designers, Energy Expansion, could be used in conjunction with some type of fracking process that would eliminate water altogether.  Lottsa headaches go by-by toute suite.

As China has the most shale-sourced nat gas in the world by far (50% more than US), in its western regions - but no aqua - could make a lot of sense.

Tying in somewhat with all this, is the soon-to-be rampant CNG-fueled vehicles in the US.  Already well under way with the commercial boys and soon to be more visible in the passenger market.   When you can buy fuel (CNG) at little over a dollar a gallon (equivalent) like they do today in the mid-west, make way!

Mon, 12/30/2013 - 01:00 | 4284556 white_guy
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another ZH article about how oil fields decline...color me shocked

Mon, 12/30/2013 - 02:38 | 4284626 Kina
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In the end they will burn coal for energy...and use oil for other stuff.

Mon, 12/30/2013 - 02:39 | 4284627 Joe A
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And the (lack of) clean drinking water party has not begun yet.

Mon, 12/30/2013 - 05:21 | 4284695 enloe creek
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ruh roh news flash oil is scarce run for the solar wind turbine tidal power

Mon, 12/30/2013 - 06:52 | 4284734 tip e. canoe
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and sell the NG plays so Phibro can come in and buy more on the cheap.

Mon, 12/30/2013 - 10:43 | 4284987 realWhiteNight123129
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My hat is off again to the quality of the reporting. Sometimes it is just rant and useless but many times Tyler and his crew are providing interesting, pointed pieces of data and articles. Well done.

Mon, 12/30/2013 - 11:02 | 4285020 realWhiteNight123129
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It sounds like the best way to play a sharp rise in oil prices in the next few years might be buying battered sugar plantations....There is a glut in sugar and the oil-ethanol spread is not large enough to absorb the glut, however if indeed the supply-demand gets tighter than expected, the most battered commodity (Sugar) would reverse abruptly.


Mon, 12/30/2013 - 11:11 | 4285033 esum
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the world is awash in oil... politics keeps the price up... remember obumbler's energy agenda ("electricity prices must soar" B.O.) is part of his plan to destroy amerika...

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