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The US Shale Oil Miracle Disappears

Tyler Durden's picture


Submitted by Chris Martenson via Peak Prosperity,

The US shale oil "miracle" has about as much believability left as Jimmy Swaggart. Just today, we learned that the EIA has placed a hefty downward revision on its estimate of the amount of recoverable oil in the #1 shale reserve in the US, the Monterey in California.

As recently as yesterday, the much-publicized Monterey formation accounted for nearly two-thirds of all technically-recoverable US shale oil resources.

But by this morning? The EIA now estimates these reserves to be 96% lower than it previously claimed.

Yes, you read that right: 96% lower. As in only 4% of the original estimate is now thought to be technically-recoverable at today's prices:

EIA Cuts Monterey Shale Estimates on Extraction Challenges

May 21, 2014


The Energy Information Administration slashed its estimate of recoverable reserves from California’s Monterey Shale by 96 percent, saying oil from the largest U.S. formation will be harder to extract than previously anticipated.


“Not all reserves are created equal,” EIA Administrator Adam Sieminski told reporters at the Financial Times and Energy Intelligence Oil & Gas Summit in New York today. “It just turned out it’s harder to frack that reserve and get it out of the ground.”


The Monterey Shale is now estimated to hold 600 million barrels of recoverable oil, down from a 2012 projection of 13.7 billion barrels, John Staub, a liquid fuels analyst for the EIA, said in a phone interview. A 2013 study by the University of Southern California’s Global Energy Network, funded in part by industry group Western States Petroleum Association, found that developing the state’s oil resources may add as many as 2.8 million jobs and as much as $24.6 billion in tax revenues.


From 13.7 billion barrels down to 600 million.  Using a little math, that means the hoped for 2.8 million jobs become 112k and the $24.6 billion in tax revenues shrink to $984 million.

The reasons why are no surprise to my readers, as over the years we've covered the reasons why the Monterey was likely to be a bust compared to other formations. Those reasons are mainly centered on the fact that underground geology is complex, that each shale formation has its own sets of surprises, and that the geologically-molested (from millennia of tectonic folding and grinding) Monterey formation was very unlikely to yield its treasures as willingly as, say, the Bakken or Eagle Ford.

But even I was surprised by the extent of the downgrade.

This takes the Monterey from one of the world's largest potential fields to a play that, if all 600 million barrels thought to be there were brought to the surface all at once, would supply the US' oil needs for a mere 33 days.

Yep. 33 days.

And along with that oil come tremendous water demands, environmental, infrastructure and air pollution damages.

So if you do go for it California, the rest of the country will be your best buddy for a little more than 4 weeks. But don't keep calling us afterwards, as we'll be off to the next oil party (if there are any other ones to be had). But know that, sure, we still respect you.

Of course I'm being sarcastic here. But if I lived over or near a shale formation, I would be putting up a hell of a fight to prevent the many long-term damages and airborne pollutants that inevitably accompany such short-lived fracking operations.

At this point, you might be wondering just how the EIA got its estimate so badly wrong. The answer is that the EIA relied on a private firm, one now scraping corporate relations and PR egg off its face:

U.S. officials cut estimate of recoverable Monterey Shale oil by 96%

May 20, 2014


Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum.


Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.


The new estimate, expected to be released publicly next month, is a blow to the nation's oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.


The 2011 estimate was done by the Virginia engineering firm Intek Inc.


Christopher Dean, senior associate at Intek, said Tuesday that the firm's work "was very broad, giving the federal government its first shot at an estimate of recoverable oil in the Monterey Shale. They got more data over time and refined the estimate."


Wait a minute. The 2011 California shale oil estimate that launched a flotilla of excited "shale miracle" headlines, led the EIA to publish an estimate of the Monterey at 13.7 billion recoverable barrels, and helped to form a national narrative around potential US "energy independence" was done by a Virginia engineering firm?

Okay, well who are they exactly?

Looking at their website, clearly put together using cheesy stock photos, early Internet font formats, and touting the fact that they've been a business "since 1998" doesn't quite project the hoped-for aura of gravitas and seasoned competency:


Seriously? A clock in an arch? Typing fingers? A woman gesturing in a meeting and a guy on a phone?

I mean, does anyone other than me have a "no lame stock photos" requirement of the businesses they use to generate the data used to justify a major geopolitical energy realignment? It's the closest thing I have to a hard rule.

Okay, just kidding again....sort of.

At any rate, the bottom line here is that the EIA relied on this firm's back-of-the-envelope calculations which turned out to be -- surprise! -- unreliable. And now, Occidental Petroleum is scrambling to get its assets out of the Monterey and deployed somewhere more promising.

The lesson to be learned here is: don't believe every headline you read. Consider the source, and more importantly -- stock photos or not -- always question the data.

Price, It's Always About Price

However, I cannot completely write off the entire 96% as 'gone' because the media has left off the most important part, as they always do: the role of price.

Without having access (yet) to the latest well data to know exactly what sort of potential disaster we're dealing with, the correct way to write-down an oil resource is to say: at today's oil prices, this asset can yield (or is worth) $X.

At higher prices, it is certainly true that more of the resource will be 'worth' going after.

But as you and I know, the price mechanism is just a means of obscuring the most important variable: the net energy that will be returned from a given play. Generally speaking, the higher the price (which is often a function of the energy required to extract), then the less net energy will come from that play.

So anytime we hear that a given play is being 'written down', as the Monterey is in rather spectacular fashion, what's really being said is that the net energy from the play is a lot less than prior and/or existing plays, and will not be useful to us until higher oil prices come along. In the case of the Monterey, much higher prices.

Whether we have an intact, functioning and highly complex economy of the sort necessary to develop and deliver the technology required to prosecute such low-yielding plays is another matter entirely. My best guess as of today is, 'probably not.'


Today's write down of the Monterey shale asset is a huge blow to Occidental Petroleum specifically, to California's energy and employment dreams more broadly, and to the US's energy dreams at a national level.

This is not surprising at all to anybody following the shale story with a critical eye. We always knew that the best plays were being prosecuted first for obvious reasons; it's human nature to go after the easy stuff first. And this is especially true for the folks in the oil patch.

The best plays were tapped first, not by some accident of technology or lucky holes plunged into the ground, but because they were cheapest to prosecute. The remaining shale deposits are less rich, more costly to explore, and the profitable pockets much harder to find.

Your main take-away is this: the US has a lot less shale reserves on the books today than it did yesterday. Look for future downward revisions as the other remnant shale plays are poked and prodded and found to be wanting.

Investors need to be wary here too. The hype about shale prospects are wedded to a Wall Street cheap capital machine that is showing clear signs of over-heating:

Shale Drillers Feast on Junk Debt to Stay on Treadmill

Apr 30, 2014


Rice Energy Inc. (RICE), a natural gas producer with risky credit, raised $900 million in three days this month, $150 million more than it originally sought.


Not bad for the Canonsburg, Pennsylvania-based company’s first bond issue after going public in January. Especially since it has lost money three years in a row, has drilled fewer than 50 wells -- most named after superheroes and monster trucks -- and said it will spend $4.09 for every $1 it earns in 2014.


The U.S. drive for energy independence is backed by a surge in junk-rated borrowing that’s been as vital as the technological breakthroughs that enabled the drilling spree. While the high-yield debt market has doubled in size since the end of 2004, the amount issued by exploration and production companies has grown nine-fold, according to Barclays Plc. That’s what keeps the shale revolution going even as companies spend money faster than they make it.


“There’s a lot of Kool-Aid that’s being drunk now by investors,” Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management LLC. “People lose their discipline. They stop doing the math. They stop doing the accounting. They’re just dreaming the dream, and that’s what’s happening with the shale boom.”


I guess there's a little less dreaming going on in the Monterey shale patch this morning.

Not to pick on RICE here, because they are more typical than not, but when you are spending $4 to earn $1, somebody ought to be asking some hard questions. Especially the investors.

More broadly, I have been clearly concerned by the recent reports indicating that the shale operators have been spending far more in CAPEX than they’ve been generating in operating earnings.

That's a larger subject that I've covered in more detail in recent reports, but the summary is this: over the past four years, free cash flow (FCF) has been negative for most of the major shale players.

Which leads us to the really big question: When will all these shale drilling efforts actually generate positive FCF?

In the case of the Monterey, and at today's prices, the answer looks to be 'Never.'


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Thu, 05/22/2014 - 14:08 | 4785519 Fuh Querada
Fuh Querada's picture

It's all a shale game.

Thu, 05/22/2014 - 14:12 | 4785531 lordylord
lordylord's picture

Still closer than Fed predictions for GDP next quarter.  So who profited from the sale of land that had such high estimate of oil? 

Thu, 05/22/2014 - 14:15 | 4785553 Pladizow
Pladizow's picture

Frack me!

Thu, 05/22/2014 - 14:18 | 4785558 Latina Lover
Latina Lover's picture

So now we REALLY know why the USSA wants to attack Syria and Iran, and is trying to keep the Kiev coup government in power:  it's all about the oil and gas, and how we can steal for the insiders, like Biden's puke boy.


Who would have thought it?

Thu, 05/22/2014 - 14:20 | 4785565 hedgeless_horseman
hedgeless_horseman's picture



Shale oil production in Texas and ND still looking strong.

I don't like to say I told you so...



Thu, 05/22/2014 - 14:20 | 4785572 James_Cole
James_Cole's picture

The 2011 California shale oil estimate that launched a flotilla of excited "shale miracle" headlines, led the EIA to publish an estimate of the Monterey at 13.7 billion recoverable barrels, and helped to form a national narrative around potential US "energy independence" was done by a Virginiaengineering firm?

The wall street funded oil miracle. 

Thu, 05/22/2014 - 14:25 | 4785585 hedgeless_horseman
hedgeless_horseman's picture



...but I told you so.

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.

Thu, 05/22/2014 - 14:32 | 4785619 SafelyGraze
SafelyGraze's picture

as srsrocco teached me, the price and availability of resources (like oil and minerals/metals) are not important

you can always just keep extracting more



Thu, 05/22/2014 - 14:34 | 4785626 hedgeless_horseman
hedgeless_horseman's picture



On a long enough timeline the survival rate for everyone drops to zero.  My investment horizon is much shorter.

Thu, 05/22/2014 - 14:41 | 4785643 Quus Ant
Quus Ant's picture

Use those wise investment $ollars to earthquake proof your house and truck in some non-combustible H20.  Then sit back and let the good times roll.

Thu, 05/22/2014 - 14:47 | 4785700 knukles
knukles's picture

For some strange obscure reason… maybe that I’ve been lied to more in my last 10 years by those who I am supposed to trust… than all other previously that I can discern, my toughts turn to the following…?
1.)  CA does not want shale oil recovery/fracking because it causes earthquakes   Du-fucking-h  And CA has a lot of active earthquake zones?
2.)  CA is notorious for its ecological bent.  And tracking is not “Ecologically Correct”?
3.)  NIMBY?
4.)  Nobody.  Well, maybe close to nobody…. makes fuck-ups like this.  Unless you’re a governmental agency.  Like French railways and who’d-a thunk, huh?
5.)  Just in time for mid term elections out here in CA.  Hah ha ha ha ha?
6.)  You just gotta be fucking kidding me anyhow…. From energy Independence to "Uh-Oh!  We better be real nice to them A-Rabs, Eye-rainians, Rooskies, Chinese and who ever the fuck we arrogantly trod all over…?"
7.)  Fuck it all…  More BS.

Thu, 05/22/2014 - 15:13 | 4785844 tenpanhandle
tenpanhandle's picture

Occidental Petroli-um, um um...doesn't that tie in with Al Gore - through Al Gore senior RIPurgatory?  Hiding those big reserves for a rainy day Al?

Thu, 05/22/2014 - 16:31 | 4786234 Chris Jusset
Chris Jusset's picture

Let's make a list of all the frauds and bubbles currently taking place. 


I'll start:


1. Shale gas/shale oil fraud.

Thu, 05/22/2014 - 20:03 | 4786949 old naughty
old naughty's picture

full speed build: Keystone.

Thu, 05/22/2014 - 23:28 | 4787371 MiguelitoRaton
MiguelitoRaton's picture

Chris is an outsider looking at one geology and claiming that the whole method of extraction is doomed. Mother nature is heterogeneous. Petroleum engineers have known for some time that Monterey is immature and a poor target for fracking. To then use that to paint all US reserves as overstated is silly at best. Dig deeper CM...literally.

Fri, 05/23/2014 - 01:17 | 4787527 MrPalladium
MrPalladium's picture


The burden is on those claiming that shale formations in the continental US will get us to energy independence to prove exactly where there are economic zones and what they will produce. Pointing to large shale formations and claiming that they will be productive is just so much hype.

That being said because of the hype, I will be making a nice living for 8 or 10 years off the backwardation in the crude contract.

So hype on dude!!

Fri, 05/23/2014 - 03:41 | 4787631 doomandbloom
doomandbloom's picture

Aaand its gone!

Thu, 05/22/2014 - 22:21 | 4787237 mccvilb
mccvilb's picture

An inconvenient truth.

Thu, 05/22/2014 - 15:14 | 4785855 power steering
power steering's picture

Little or no serious oil companies drilling there is the real tip off. Get a life already!

Thu, 05/22/2014 - 16:41 | 4786282 Stuck on Zero
Stuck on Zero's picture

Knukles is right.  Now add in corruption and you've got a new reason to doubt the estimates.  The oil majors will pay their buds in the government to vastly underestimate the amount of oil in a formation.  The leasing price will then drop dramatically.  Many years ago one of the majors paid about $90/bbl to lease a Santa Barbara formation.  Oil was selling for $30/bbl at the time.  They are still pumping it and the estimated yield gave them a final price of about $2/bbl.  No matter how you measure it ... the public gets screwed.


Thu, 05/22/2014 - 23:24 | 4787341 deflator
deflator's picture

Yep, bubblin' crude just like Jed Clampett shootin' up some food. Does it not take an abundance of (fresh)water for hydraulic fracturing to be viable?


 While I would never discount fraud in anything humans are involved in I tend to believe reserves are overestimated because it supports the notion that there is and never will be such a thing as scarcity.


 Why have sound money if there is no such thing as scarcity?

Thu, 05/22/2014 - 23:33 | 4787383 MiguelitoRaton
MiguelitoRaton's picture

Inconvenient Facts: (a) they are reusing water from prior wells; (b) they recover some of the water; (c) the water to irrigate a single golf course for a year can frack enough wells to provide heating, cooking and water heating for all of Houston for a year...there are about 160 golf courses in houston

Thu, 05/22/2014 - 23:50 | 4787400 deflator
deflator's picture

 Dude, I am a truck driver and have pulled tankers (of water and fracking fluids)for the oil and gas industry. Blow that copy/paste smoke up somebody else's ass.

 They are calling a time out on estimated reserves in CA cuz they ain't stealin water from CA agriculture industry. They could use seawater for fracking but what would,"salting the earth" do to CA agriculture?

Thu, 05/22/2014 - 23:54 | 4787425 Flakmeister
Flakmeister's picture

You should have a professional interest in this then:

The  Monterey Shale has only superficial similarities to the Bakken and EFS....

Fri, 05/23/2014 - 00:35 | 4787454 deflator
deflator's picture

 Do you not find it amusing that most, "Libertarians" argue vehemently against the concept of scarcity when their Gods Von Mises and Rothbard made scarcity a key element in their arguments for sound money?


 Idealistic me enjoyed reading Von Mises and Rothbard because of their views on scarcity. Most "Libertarians" are Keynesians in sheeps clothing.

Fri, 05/23/2014 - 00:51 | 4787500 Real Estate Geek
Real Estate Geek's picture

What's more amusing is .gov trolls being directed to smear Libertarians.

Fri, 05/23/2014 - 01:52 | 4787529 deflator
deflator's picture

 Ok, I'm on my 12th beer now but I gotsta wonder why a .gov troll would argue pro scarcity?


 I know why .gov Keynesians argue against the concept of scarcity! They think that their "money" that they can create out of thin air will always produce more resources.


Yes I wonder...

Fri, 05/23/2014 - 03:07 | 4787601 Seer
Seer's picture

How's that lobotomy working for you?

Fri, 05/23/2014 - 03:07 | 4787598 Seer
Seer's picture

Glad(?) to hear that I'm not the only other one scratching my head on this.  It's a perfect example of why I don't stick labels on myself (they only cause you to lock your brain).

Fri, 05/23/2014 - 05:36 | 4787711 EscapeKey
EscapeKey's picture

Im wouldn't call them Keynesians in sheeps clothing. I would call them "convenience libertarians", just as most socialists really are "convenience socialists". The very second it doesn't pay for them to be socialist, they won't be.

It was pretty telling when the Tea Party got a stick up the arse because they wanted to cut Medicare/MedicAid. Convenience libertarianism. True libertarianism is rising above it all, and consider what's best for society, not the individual. As is socialism, of course, but where socialism addresses ends (what it's all supposed to do), libertarianism addresses means (what's legal and what's not). Hence, libertarianism actually has a chance to work, whereas socialism doesn't, explicitly because it doesn't say who's supposed to do the shit jobs.

Fri, 05/23/2014 - 09:55 | 4787926 Flakmeister
Flakmeister's picture

Libertarianism has serious issues dealing with the exploitation of the commons. For that reasons it fails, especially when projected unto a finite world...

Most of the ideological strongpoints are subsumed into classic liberalism... Modern "scocialists" greatly value personal liberty and freedom of choice if you have not noticed...

Fri, 05/23/2014 - 10:57 | 4788451 GoinFawr
GoinFawr's picture

not to mention their, contrary to popular conditioning, propensity for fiscal responsibility

Thu, 05/22/2014 - 19:19 | 4786841 post turtle saver
post turtle saver's picture

it's California... give this area time and it will frack itself, as it has for some time now

tar volcanoes pop up all the time through there when the tremors hit

Fri, 05/23/2014 - 01:59 | 4787559 bunnyswanson
bunnyswanson's picture


The following story has been told by Tim Holliday, a Michigan resident, on his Facebook profile.

The man was on his way home when he noticed an adult turtle crossing the road. No cars were coming from either way, but our witness did not feel comfortable getting out of his truck. Instead, he stopped his car with its front end barely over the centerline, so that other cars that came could be alerted.

Moments after, a Comcast pick-up truck stopped about 150 feet of him. Meanwhile, the turtle had almost crossed the road. Sensing the turtle was okay, the man straightened his truck and drove off. But to his utmost surprise, the man saw in his rear mirror how the Comcast truck veered off the road, kicking up gravel to run over the turtle.

Luckily, the man managed to write down the license plate number of the car and a photo of the man.

Thu, 05/22/2014 - 14:41 | 4785661 0b1knob
0b1knob's picture

Estimates are all just POOHA figures.  The current ANNUAL production of the Bakken shale area is more than the entire recoverable reserves estimated several years ago.

Thu, 05/22/2014 - 18:07 | 4786599 CrashisOptimistic
CrashisOptimistic's picture

How do you know that's oil and not 20% NGLs in those rail cars that blow up?

Fri, 05/23/2014 - 00:14 | 4787466 That Peak Oil Guy
That Peak Oil Guy's picture

"On a long enough timeline the survival rate for everyone drops to zero.  My investment horizon is much shorter."

Yeah, fuck the grandkids.

Fri, 05/23/2014 - 02:57 | 4787589 Seer
Seer's picture

"My investment horizon is much shorter."

Wasn't it that kind of thinking that got us into this mess in the first place?

And when all the crooks out there take this same view?

Tomrrow's children will "reap" the outcome.

Fri, 05/23/2014 - 02:24 | 4787571 August
August's picture

America's greatest, future-oriented gurus don't do price.  Let the little people worry themselves about prices.

Fri, 05/23/2014 - 03:12 | 4787607 Seer
Seer's picture

Yep, and it's the "little people" working hard that essentially subsidize all of this insanity.  It's always the first tier folks in selling the "dream" that make the money; scaps are left for everyone else to chase after (with the belief that there's more there to be had [that's the trick/scam]).

Thu, 05/22/2014 - 14:57 | 4785753 Agstacker
Agstacker's picture

With no gas lines nearby, the flaring from the Bakken can be seen from space.  I don't know if it's true, but I was told that $120,000 worth of natural gas is flared every day from just 1 well.

Thu, 05/22/2014 - 15:36 | 4785943 tenpanhandle
tenpanhandle's picture

They should be flaring these wells through nat gas powered generators and tieing into the grid.  Even portable generation capacity will do.  Emitting carbon for no return is plain economic laziness in these instances.  Talk about putting people to work on infrastruture projects.  Factory production of portable nat gas generation units, pipeline and collection point construction, temp powerline constructiuon and maintenance and total project(s) administration and maintanance could employ thousands while utilizing a product that is going to waste.  Temp capacity could be moved site to site or region to region as production dictates.  Fuck the lazy. Fuck the FSA.  Put em to work I say.

Thu, 05/22/2014 - 18:08 | 4786602 Mitzibitzi
Mitzibitzi's picture

That's what they've done at a test frack well near Warrington, in the UK. Since there's gas coming out of the hole anyway and you may as well use it for something as flare it off, they've brought in one of those big mobile generators like they use for power at large concerts. By all accounts, selling the power to the grid pays for the whole shebang, so they're gathering valuable data on the process (and, believe it or not, doing a LOT of study into environmental impact, too. Not that they'd bother much if it was a nice money-spinning field of 50+ commercial wells, I suspect!) and possibly even making a modest profit.

Thu, 05/22/2014 - 18:09 | 4786605 CrashisOptimistic
CrashisOptimistic's picture

Nope, the problem is the nature of the geology.

The wells die so fast you can't complete the pipelines.  The pipelines can never pay for themselves.  These things are miles from any paved roads.  It's all dirt roads that get muddy or snowblocked in winter.

And it's likely the trucks hauling the oil out have about 20% NGLs in them, not 100% crude.

That geology is difficult.  If you slow down somehow to capture the flared gas, then the decline rates of the other wells overwhelm your finances.

Thu, 05/22/2014 - 22:43 | 4787278 OceanX
OceanX's picture

Well, I can tell you how much crude oil they are carrying 0 - Yes zero, Shale is no more light sweet crude than poop.  Go over to the oil drum and read their archives.  This was thouroughly gone over years ago, by Geophyisist, Geologist and Petroleum Engineers..  At the oil drum you can learn about E.R.O.I. and the difference between a resource, reserve, proven reserve and recoverable reserve...

Thu, 05/22/2014 - 23:22 | 4787352 Oliver Klozoff
Oliver Klozoff's picture

The Oil Drum closed its doors cuz there's so much fucking oil that they needed a fucking adding machine to figure it out.

Thu, 05/22/2014 - 23:57 | 4787432 Flakmeister
Flakmeister's picture

The above is a clinical example of projection....


Fri, 05/23/2014 - 00:12 | 4787463 That Peak Oil Guy
That Peak Oil Guy's picture

TOD closed shop due to the realization that we were at the peak "plateau" and that the plateau was likely to go on for some years.  So the work of the people of that particular site was done and the people moved on.

If you want proof of the plateau you only have to look at the declining EROEI.

Thu, 05/22/2014 - 22:58 | 4787308 KansasCrude
KansasCrude's picture

Winner Winner.....Crash well said and the devil is in the details.  Most still don't realize sizeable oil fields produce a large majority of the AFFORDABLE production.  From what I am told you need a lot more years to amortize infrastructure than the shale fields will provide thus the scale to make it work $$$$ does not exist.  The end is near for expanding production from these plays the question remains what percentage of the producers will ever produce wealth for their far not many.

Bottom line reality of the expected bonanza is well below expectations.   Better come up with a real plan cause the current one ain't even close to sustainable.  Its really all about NET energy.

Thanks Mr. Martenson

Thu, 05/22/2014 - 23:39 | 4787394 thestarl
thestarl's picture

Shell got out with the ex CEO saying it was the worst investment decision in his time at the top.


Fri, 05/23/2014 - 00:08 | 4787455 Slewburger
Slewburger's picture

CM can suck a fatty.  He and the dufus' from the oil drum are laughing all the way to the bank, or not.. Look CATs bifuel kits for frac pump trucks or HALs Sandcastle.

They clearly know all, no improvements in process or production are allowed, ever.

Shale is dead! 

Thu, 05/22/2014 - 15:47 | 4786055 Dixie Rect
Dixie Rect's picture

Looking at that screenshot of the companies website. Sure that's not Initech?

Thu, 05/22/2014 - 14:26 | 4785590 McMolotov
McMolotov's picture

I just filled up my tank at almost $4/gal. Energy independence in our time!

Fri, 05/23/2014 - 01:06 | 4787520 Kprime
Kprime's picture

10 years from now, as you fill up at $12.00 per gallon you will reminisce about the 4 dollar good ole days.

Fri, 05/23/2014 - 03:02 | 4787595 Seer
Seer's picture

I'm doing diesel and getting a LOT of work done.  It's a race...

Thu, 05/22/2014 - 14:24 | 4785586 EscapeKey
EscapeKey's picture

Remind me again - what's the half life of these wells again? 18 months?

Thu, 05/22/2014 - 14:27 | 4785589 hedgeless_horseman
hedgeless_horseman's picture



Which is exactly why investing in the steel tube industry has been so profitable.

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

Thu, 05/22/2014 - 14:58 | 4785744 Uncle Remus
Uncle Remus's picture

Hot shots running trailer loads of that stuff all up and down the I-35. Somebody is making some money. Guy I know does security cameras. Puts 'em in at well sites with remote monitoring of course (IP wireless).

Thu, 05/22/2014 - 22:26 | 4787249 Rusty Shorts
Fri, 05/23/2014 - 05:38 | 4787714 EscapeKey
EscapeKey's picture

You're right, of course, but it's just got a bit of the "continuous growth paradigm" feeling about it in my book. Which eventually will break.

As usual, timing is everything.

Thu, 05/22/2014 - 14:43 | 4785669 samsara
samsara's picture

And the Numbers on the LEFT hand side says???

Going from 50,000 barrels a day to 90,000 barrels a day???


We're burning north of 15 MILLION barrels a day.  A 40,000 barrel increase is what....  Fly Shit on a Cannonball.

2 x 0 = 0


Thu, 05/22/2014 - 14:51 | 4785696 hedgeless_horseman
hedgeless_horseman's picture



I cannot argue that our consumption isn't a cannonball, but going from 146,000 Mbbl to 250,000 Mbbl in 6 years isn't exactly flyshit.

Thu, 05/22/2014 - 15:48 | 4786052 what's that smell
what's that smell's picture

dude! screw the head on!

if it took $3 to extract a barrel in 1960 and it now takes $153.29 a barrel, your chart is shit.


Thu, 05/22/2014 - 17:53 | 4786536 gmrpeabody
gmrpeabody's picture

You're new around here, aren't ya?

Thu, 05/22/2014 - 22:17 | 4787228 Spastica Rex
Spastica Rex's picture

And right.

Thu, 05/22/2014 - 23:25 | 4787362 Oliver Klozoff
Oliver Klozoff's picture

Get something to back up $153.29 a barrel or your post is shit.

Thu, 05/22/2014 - 23:43 | 4787404 thestarl
thestarl's picture

World economy and 100+ oil bad combination HH

Fri, 05/23/2014 - 04:18 | 4787640 Bernoulli
Bernoulli's picture

Ok, graph looks impressive as a stand alone, but you can also look at it that way (sorry, nothing against smokers, it's just an example):

You're a chain smoker running out of cigarettes/tobacco (until 2007) although you were already paying more and more for your pack.

All of the sudden you "discover" that in all the ash-trays there is lots of tobacco (a bit more difficult to "recover", but still, it's there).

So you go around and start collecting it and suddenly your supply is ramping up again sharply (2008 til now).

But instead of riding your horse into the sunset being all cool and stuff, you spend most of your time running around in panic searching for cigarette stubs and trying to put together new cigarettes with hard manual work, to supply your ever worse addiction.

I just have a hard time being optimistic about what is happening...

This hailed "energy independence" is in reality just the end game on a larger scale...

Fri, 05/23/2014 - 04:45 | 4787673 tip e. canoe
tip e. canoe's picture

i've been there.  luckily, i smoked rollies so the ashtray supply was a bit deeper than most.

sorta like Texas (nothing against Texans, what's up h_h).

and yes, it's a sign of an addiction refusing to let go in face of an increasingly disturbing reality.

excellent metaphor.

Thu, 05/22/2014 - 19:24 | 4786849 Cthonic
Cthonic's picture

Those are monthly figures, 81,859,000 barrels in feb '14 according to eia, and 60,186,654 barrels according to texas railroad commission.  No idea what causes the discrepancy between the two.

Thu, 05/22/2014 - 22:10 | 4787209 CrashisOptimistic
CrashisOptimistic's picture

Discrepancy is EIA uses a projective model.  Tx RRC deals with confidential wells whose output they don't report without a few months delay.

As of now it appears the EIA's model is becoming optimistic, but RRC's numbers are certainly too low unless you look at what they report (revised) about 6 mos old.

Thu, 05/22/2014 - 14:43 | 4785670 augustusgloop
augustusgloop's picture

Good post Hedgeless: Hard to contradict a 50% increase in oil production since 2008. Doom & gloom has to be tempered by an objective look at the data...Else we'd all be 'stacking' from $50 on down in our collective basements. 


BTW, the Monterey Shale story is a bit fishy...Obviously the orignial firm hired to do the estimate is suspect, but the 96% drop story seems a bit too good to be true for the anti-shale folks). I wouldn't be surprised to hear if the Resnicks of Pom-Wonderful / owners  of Kern Water Bank & all agricultural land in the area had a hand in the revised study.

Thu, 05/22/2014 - 15:10 | 4785839 crunchyfrog
crunchyfrog's picture

So let's destroy a permanent food producing area to get 5 years of oil production.

Works on Wall St. and the Austrians have orgasms.

Thu, 05/22/2014 - 23:34 | 4787386 Villageidiot777
Villageidiot777's picture

No worries. Monsanto is already working on chemical resistant plants.

Thu, 05/22/2014 - 15:50 | 4786074 what's that smell
what's that smell's picture


pump and dump on some other site; you and reggie middleton should get an encrypted bed together.

Thu, 05/22/2014 - 15:59 | 4786108 CrashisOptimistic
CrashisOptimistic's picture

Since the day the 2011 report was filed, a zillion folks have said it was bogus.  They had the data, but no contract.  They looked at it and said the 2011 report was absurd.  The Hughes guy mentioned in the article was one.  

Also, this is not that unusual an event.  There are lots of fields that are estimated with big numbers and after some drilling and seismic work, the estimates ahve to crash.  Look up NPR-A in Alaska.  They had a huge estimate (this is not ANWR I'm talking about ), and then some exploratory drilling was done.  What was thought might be oil turned out to be natural gas.  The estimate was redone down 90%.

Fri, 05/23/2014 - 03:23 | 4787614 Seer
Seer's picture

It's pretty much all marketing hype shit.  It's the "story" that the've made up in order to pull in more of the "free money" that govts are pumping out there.

Seems that you can find this shit just about anywhere:

Boston consultant Lux Research has issued a study declaring Australia "the next big energy market" for shale ahead of China, which was once seen as having similar potential to the US.

Australia beats other nations with potential shale and other unconventional resources because of know-how and government stability, Lux says

"the next big energy market" for bilking investors...

Beats? "other nations with potential"...

Fucking hype.  Another page from "dot com."

Lux Research:  Appears to be from the same cookie cutter that Intek came from.

Thu, 05/22/2014 - 23:47 | 4787413 thestarl
thestarl's picture

Ah look at the wonderful economic growth we've had in the last few years a golden age awaits us frack baby frack 

Fri, 05/23/2014 - 01:02 | 4787514 Kprime
Kprime's picture

I see what u mean...hard to contradict a doubling of US debt in the same time period....and adding trillions of phony assets to Feds balance sheet...and stuffing billions of mark to fantasy mortgages under fanny's ass...we could go on and on..  So how many trillions did it take to increase oil production by 50% on a non sustainable trajectory?

Shale oil will be seen in the not to distant future to be the "vomit comet" of false hope.  Gravity is a bitch.

Fri, 05/23/2014 - 04:55 | 4787681 tip e. canoe
tip e. canoe's picture

the Resnick's slimy fingerprints were the first thought in my mind as well.  of course, they probably have a side deal going with Feinstein's hubby to buy all those sites on the cheap once Oxy bones out.  tribe eat tribe.

what would be a delicious irony is that the new report is a fake that turns out to be true.

still think anyone in the southern/western climes should be planting an almond orchard toots sweet.

Thu, 05/22/2014 - 15:11 | 4785842 rubiconsolutions
rubiconsolutions's picture

I can never get a straight answer to this question: How much energy - BTU's, barrels, etc. - of energy does it take to extract and process all those barrels in a shale reserve? Does it take 1 barrel to extract 2? How much water is used to extract and process that oil? The days of Jed Clampett firing his musket and getting oil out the ground is over. That to me is a point that people don't want to talk about. You can have a shale play with billions of barrels of oil in it but if it takes tens or hundreds of millions of barrels of oil in the form of energy and trillions of gallons of water to 'crack it' free of the shale then it doesn't seem particularly efficient or practical. And precisely why with the so called shale plays going on we're all still paying north of $3.50 for a gallon of gasoline.

Thu, 05/22/2014 - 15:35 | 4785992 Serfs Up
Serfs Up's picture

That's the key issue.  How much *net* energy are we getting for our invested energy?

Measuring costs only in dollars is one abstraction too fancy for most people's ability to divine the implications of declining net energy.

That is *everything* to how all of this plays out.

And by all of this I mean piling up more and more paper claims when your primary fuel for production is steadily delcinging in net energy returns to society.

/Reality, it's not just for shroomers anymore

//My time.  It is coming.

Thu, 05/22/2014 - 16:03 | 4786124 CrashisOptimistic
CrashisOptimistic's picture

You can never get a BTU ratio answer.

What happens is you start saying, okay this truck brought drills to the site so let's count its fuel burned.  But then what about the energy to make the drills.  And the energy to make the drill factory.

And the energy to transport the people to do the work at the site.  And the energy to transport food to their stomachs.

There are a lot of attempts at computing EREOI.  They all fold up at some point.

Thu, 05/22/2014 - 17:00 | 4786342 cougar_w
cougar_w's picture

The analysis could probably be done, if it's not being done then I think that means they did it already and did not like the answer they came up with so they buried it. "Too hard never happened" is what they would tell you.

It doesn't have to be a projection, we model these things in the market. Company ABC decides to extract and sell an energy resource, they have "C" cash on hand, are willing to suffer "L" losses up front, on expectation of "R" net return on run.

They burn through "C" cash and while doing so notice if they are making trend on projections. If so they continue. If not they bail out. In the corner case where it's close they allow to go "L" into the hole. When that day arrives and they are not netting cash flow, they bail.

Is anyone bailing out of these ventures? You bet. And notice that most of the discussion is around the "L" part or how much loss you're willing to suffer toward some supposed "R" down the road? We get a lot of "It's there keep drilling baby!" but the return is really small. Without an obvious return to offset early losses these things just die and nobody has to wonder why.

Thu, 05/22/2014 - 17:53 | 4786538 Broccoli
Broccoli's picture

Actually it can be very easy if you change the units and worry about the relative value. Just do a simple NPV calculation with a 0% interest rate if you don't want to bias it in time, or positive interest if you do. NPV of revenue stream divided by NPV of CAPEX plus OPEX if you want your ratio. If you have positive NPV you have positive energy, negative NPV will be negative energy.

The point is that the price of things is a proxy for everything that happens in the supply chain. All the transportation energy, mining energy, forging energy, worker consumption of energy, the taxes that are used to fund the government, everything. You don't have to do an EREOI to know how good a well is going to be and how energy positive the well will be.

Yes your untis are dollars and not BTUs, and the current market price will distort your calculations and introduce error. (Especially since it takes a while for high energy prices to translate all the way through the supply chain, so a rising price is going initially  positively effect the caluclation before the cost side rises to match.) 

Thu, 05/22/2014 - 22:12 | 4787215 CrashisOptimistic
CrashisOptimistic's picture

Maybe that was meaningful pre QE.  Hard to make a case for it now.

Fri, 05/23/2014 - 03:35 | 4787622 Seer
Seer's picture

Sadly, I'm afraid, our assessement pre-QE wasn't likely all that great either, that during earlier times there was a lot more cheap energy to "hide" the numbers: by "hide" I mean that people could look past things- we're pretty good at externalizing costs, shifting off on to some other entity/future generation; at some point, however, we'll run out of hiding places...

Thu, 05/22/2014 - 17:27 | 4785868 Joe A
Joe A's picture

HH, where have you been? Did not see you for a long time. Were you busted for making your own cheese?

Thu, 05/22/2014 - 21:37 | 4787146 Mark Urbo
Mark Urbo's picture

More "Peak Prosperityhysterical BS...

Thu, 05/22/2014 - 22:39 | 4787275 f16hoser
f16hoser's picture

Add Fuck-Nut Cheney to your list too!

Thu, 05/22/2014 - 14:19 | 4785566 Bananamerican
Bananamerican's picture

"Drill Baby Duh-rill!!!"

Thu, 05/22/2014 - 14:40 | 4785656 Fuh Querada
Fuh Querada's picture

not here, in public

Fri, 05/23/2014 - 06:25 | 4787740 cnmcdee
cnmcdee's picture

There is a total shell game going on.  Oil is abiotic and Russia proved this with their 320 super-deep wells, the first one being Kola SG-3. Russia has managed to produce *more* oil than Saudi Arabia through this technology.  The number one problem today in the world is creating scarcity. We live in a world of incredible resources, and have allowed elite to create these shortages through market manipulations.  The Thorium Reactor is a good starting point - it's allowed construction would have made electricity, heat, and the empowerment of the electric automobile near free (minus grid distribution cost).  Truman made sure they were not built to protect the then Coal / Gas / and Oil industry from being wiped out.

Goto type in 'abioticoil' all one word and read it for yourself.

In 1996 an oil deposit in hundreds of billions of barrels in Montana was discovered, sealed and secreted. Additionally the same thing was done with Prudhoe Bay (Gull Island) Alaska where the head pressure on the well is rumored to be in the order of 800 psi.  What do both wells have in common?  A. They sit ON US continental soil  and B. They have the ability to break dependence on Saudi Arabian oil supplies.  This would be in violation of the secret OPEC agreement the US has held with Saudi Arabia since 1973 to not break oil dependency on Saudi Arabian oil, and in exchange Saudi Arabia would not break dependency on US dollars.

CLEARLY the *real play* is IMHO is the California government immediately began to move on the oil companies with reserve taxes, and eyed it as a method to begin to balance it's books.  This cannot be allowed so the oil companies had to come up with a reason *NOT* to drill in California so that they could end up bailing out California's monstrous debt.

In Alberta in case you didn't notice we GIVE AWAY OUR OIL, they do not even pay $1 in taxes on it's removal as Canada has inked a deal that as long as the oil companies are under 'construction' they will not have to pay tax. Syncrude (the first site built) is still under construction today - it's construction was started in 1973. Go figure, while provinces around Alberta that would step on the oil companies have seen in comparison almost zero investment.

The 300 mpg car from Europe needs to be introduced :

The building of Thorium reactors needs to commence immediately, with the drilling of many abiotic oil wells. Gasoline MUST go back to $0.80 / gallon.  The Washington Whore-Dogs must all be voted out at the next election and independents brought in.



Fri, 05/23/2014 - 08:06 | 4787934 Flakmeister
Flakmeister's picture

The term wingnut comes to mind...

Fri, 05/23/2014 - 08:31 | 4788005 Debt-Is-Not-Money
Debt-Is-Not-Money's picture


Frack yeah!

Thu, 05/22/2014 - 14:11 | 4785532 Greenskeeper_Carl
Greenskeeper_Carl's picture

This article may well be correct, but I've long since stopped believing any numbers any of these agencies or administrations put out.

Thu, 05/22/2014 - 14:16 | 4785556 sessinpo
sessinpo's picture

Greenskeeper_Carl       This article may well be correct, but I've long since stopped believing any numbers any of these agencies or administrations put out.


Well said. And we should view such authors with skepticism for using such data from a goverment most of us don't trust.

Thu, 05/22/2014 - 14:19 | 4785569 lordylord
lordylord's picture

Fake numbers hide the failures of government while making any knowledge-based free market decisions impossible.  Win-win for the government.  Fuck off Obomney voters. 

Thu, 05/22/2014 - 14:22 | 4785583 James_Cole
James_Cole's picture

If you read the article you'll find that the numbers came from a private virigina engineering firm. Apparently only when someone decided to look into them that they realized it was all bullshit and EIA published a 'revised' view based somewhat in reality. 

Thu, 05/22/2014 - 14:36 | 4785635 Winston Churchill
Winston Churchill's picture

Someone from Wall Street lied thru' a front company ?
I am shocked , truly shocked , that people still fall for this crap.

Thu, 05/22/2014 - 14:55 | 4785740 James_Cole
James_Cole's picture

I am shocked , truly shocked , that people still fall for this crap.

The odd thing is gold / sliver miners do this all-the-time (bit more sophisticated) and then have their buddies (sprott & merry band of charlatans come to mind) sell the shit out of it, yet no one on here calls them on it? And then if you do point it out, everyone goes nuts on you...

Thu, 05/22/2014 - 14:17 | 4785560 Grande Tetons
Grande Tetons's picture

Well, when they are 96 percent off...anyone would be a fool to argue with you. 

Fri, 05/23/2014 - 03:37 | 4787627 Seer
Seer's picture

Ha!  It's only a "flesh wound!"

Thu, 05/22/2014 - 14:19 | 4785571 NoDebt
NoDebt's picture

I think you nailed it.  Somebody paid to have this study done.  If the drilling stops because of this (if there is any drilling going on to begin with- I thought that was basically outlawed in The Peoples Republik of Kalifornia), I might pay some credence to that.

Were they lying before or are they lying now?  I would guess the answer is 'yes'.


Fri, 05/23/2014 - 03:39 | 4787629 Seer
Seer's picture

Meanwhile, in the "grow-or-die system," things are dying... and they're not dying because of phony numbers, they're dying because Mother Nature doesn't lie...

Thu, 05/22/2014 - 16:04 | 4786131 CrashisOptimistic
CrashisOptimistic's picture

Well, true.  Maybe the 600 million estimate is still high.

Fri, 05/23/2014 - 00:00 | 4787437 Flakmeister
Flakmeister's picture


Thu, 05/22/2014 - 14:14 | 4785548 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Unfortunately, to get any ventures moving these days one has to lie about the gains to get anyone to invest. Most corps lie now and accept consequences later. 

Thu, 05/22/2014 - 14:17 | 4785557 McMolotov
McMolotov's picture

In other words, the myth of energy independence is a lot like the myth of American Exceptionalism: it's a bunch of bullshit that always comes back to bite us in the ass.

Thu, 05/22/2014 - 14:28 | 4785606 Dr. Engali
Dr. Engali's picture

Hey... Americans are exceptional. how many other groups of people can be handed such a fantastic country with rich resources and limitless opportunities just to  fuck it up this bad? We are an exception breed.

Thu, 05/22/2014 - 14:39 | 4785650 Winston Churchill
Winston Churchill's picture

Truly, a land blessed with everything,wasted.
Exceptional indeed.

Fri, 05/23/2014 - 00:04 | 4787450 Spastica Rex
Spastica Rex's picture


One word:


Thu, 05/22/2014 - 14:43 | 4785673 john39
john39's picture

the same myth used over and over to mind control... you are special, you are unique...  you are chosen...  now where have i heard that before...

Thu, 05/22/2014 - 16:08 | 4786144 CrashisOptimistic
CrashisOptimistic's picture

Hell, no.  We've been tapping that oil for 100 years.

We didn't waste it.  We did a huge increase on the population.  Rose to world dominance.  

And now the party is over.  It wasn't squandered.  A lot was gotten from it.  haha Do you really think the Saudis are going to be sitting pretty when Ghawar goes dry?  They didn't squander it either.  

The problem is oil is everything.  When you have it, you're powerful.  When you don't, you die.

Thu, 05/22/2014 - 16:48 | 4786306 cougar_w
cougar_w's picture

As a species we may have seriously over-shot our limits. As a result I don't imagine anyone is going to get the chance toharvest their profits now. Things that can burn -- will.

Thu, 05/22/2014 - 23:33 | 4787384 Oliver Klozoff
Oliver Klozoff's picture

The problem is oil is everything.  When you have it, you're powerful.  When you don't, you die.


Not just oil

Fri, 05/23/2014 - 03:45 | 4787635 Seer
Seer's picture

Actually, it's pretty much par for humans (and for life forms in general).  Problem was that the "New Americans" were able to do it far quicker: lever up that exponential function and it's a rocket!  In the past humans just trashed and moved.  Nowhere left to move.

"limitless opportunities" - Might want to tone down "limitless," as this is, after all, a finite planet: I'd argue that the "problem" of "exceptionalism" is directly tied to the notion of the infinite being available within the finite.

Thu, 05/22/2014 - 14:26 | 4785593 Tod E. Tosspot
Tod E. Tosspot's picture

I guess "it's easier to ask for forgiveness than permission" works for companies as well.

Thu, 05/22/2014 - 14:15 | 4785551 ShrNfr
ShrNfr's picture

That comment was very shalefish. You should be ashaled of yourself. Let there be no mistake. When I learned about that comment I was mad as hell. You shale not make another one like that period or there will be consequences.

Thu, 05/22/2014 - 14:21 | 4785579 NoDebt
NoDebt's picture

Well played.  I think you meant that you were "mad as shale," though.

Fri, 05/23/2014 - 05:05 | 4787689 tip e. canoe
tip e. canoe's picture

no shale, sherlock


Thu, 05/22/2014 - 17:47 | 4786514 Captchured
Captchured's picture

The Monterey and California are two things that the oil and gas industry do not see as big players. Very few companies in my business would even consider dealing with the headache that is California. The companies that started there have generally stayed there and done well. Companies not already working there typically don't try to go there. 

We all know the Monterey exists and don't think anything more of it. For it to be reduced 96% means that it is finally being valued by that agency the way the industry generally values it. If the story were about something other than sensationalism, it would have discussed how Oxy is trying to pump up its share price by pumping up the potential of the Monterey and how the EIA disagrees. You know...SOP for all publicly traded businesses everywhere

This massive pile of crap is getting too large and it is becoming too difficult to discover the real stories on this website. Are there 20 Tylers now or is it just a free-for-all where anybody can post a "story" here? 

Thu, 05/22/2014 - 22:00 | 4787196 intric8
intric8's picture

If you think this is a massive pile of crap, wait and see whats coming up under the next republican administration. The "drill drill drill!" drivel will be all over the airwaves, with the crisis of peak oil as the next shrill topic for americans to reckon with, and trillions of taxpayer dollars jockeyed for to subsidize the costs for the oil industry.

Dont get me wrong- we need a republican administration more than a democratic one at this point - a lot of constitutional harm needs swift rectification, but both ideological stripes need to be put down for good and a new one needs to emerge. the preservation of our constitution is foremost enabled by politics that are truly for the american people. REAL americans, not those in transition. Enough bullshit in the guise of 'hope' and 'change'.

Fri, 05/23/2014 - 00:02 | 4787446 Flakmeister
Flakmeister's picture


Clueless is as clueless does....

Fri, 05/23/2014 - 00:57 | 4787502 Dr. Destructo
Dr. Destructo's picture

So will the Republicons repair their end of the constitutional damage as well as the damage done by the Demoncrats?

Besides our constitution has been under siege since it's creation and has been changed for convenience or ignored outright throughout the course of our history. "Liberty and justice for all"? Complete bullshit and always has been.

Empire is in our blood and always has been; we need new blood.

Fri, 05/23/2014 - 03:52 | 4787641 Seer
Seer's picture

"The companies that started there have generally stayed there and done well. Companies not already working there typically don't try to go there. "

Perhaps this is because the first one "in" get the lowest hanging fruit?  And given that this shale stuff is a flash-in-the-pan it's really not worth it to any other top-tier companies to strive for lower-tier reserves (given that consumer prices are pretty much constraining things [stagnant wages; declining employment]).

"This massive pile of crap is getting too large and it is becoming too difficult to discover the real stories on this website."

Real stories?

Apparently people STILL are not getting it that ENERGY is what makes WORK possible, and that without work there's no output?

Sorry, but energy IS the story of our lives.

Thu, 05/22/2014 - 19:16 | 4786835 post turtle saver
post turtle saver's picture

old news

Fri, 05/23/2014 - 04:44 | 4787672 OldPhart
OldPhart's picture

And's gone

<iframe width="1280" height="720"And's gone" frameborder="0" allowfullscreen></iframe>

Thu, 05/22/2014 - 14:12 | 4785537 exi1ed0ne
exi1ed0ne's picture

Shit.  Better get some subsidies on that PRONTO.

Thu, 05/22/2014 - 14:12 | 4785538 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Yes, you read that right: 96% lower. As in only 4% of the original estimate is now thought to be technically-recoverable at today's prices:

But that doesn't mean it ain't recoverable. When there is an energy squeeze due to dollar reserve status price won't matter when you are starving for energy. It is all about subsidies. Don't think the government won't subsidize the operation to make it 'profitable' if their survival depends on it.

Thu, 05/22/2014 - 14:31 | 4785616 Joe Tierney
Joe Tierney's picture

Yeah, they'll subsidize it with toilet paper dollars.

Fri, 05/23/2014 - 03:55 | 4787644 Seer
Seer's picture

So, we're going to keep shitting...  It'll be death by diarrhea.

Thu, 05/22/2014 - 15:11 | 4785845 Matt
Matt's picture

Alternatively, why would you expect oil to remain at today's prices for decades into the future?

"As in only 4% of the original estimate is now thought to be technically-recoverable at today's prices"

How much is recoverable at double today's prices? Quadruple?

Fri, 05/23/2014 - 03:59 | 4787646 Seer
Seer's picture

"How much is recoverable at double today's prices? Quadruple?"

I don't think that it's CM's call on this.  It's the folks dumping money into these plays that have the numbers.

What matters, what I'd been saying for MANY years is that it's a matter of affordability rather than price.  Given this then one has to ask whether they see the general consuming public More or Less able to afford such energy in the future.  The current trend here is clearly favoring the "Less" path/angle.

I'm sure that the same question could have been asked of the Easter Islanders- how many more statues could they have gotten out of their island had the "price" been higher?

Fri, 05/23/2014 - 12:25 | 4788935 Matt
Matt's picture

Americans will afford less, but humanity as a whole can probably stand quite a bit higher prices.

Thu, 05/22/2014 - 15:16 | 4785876 Liquid Courage
Liquid Courage's picture

"It is all about subsidies."


No. It's all about oil. If it takes, say, 2 barrels of oil to produce 1 barrel, are you producing oil or consuming it? Those rigs don't run on Fairy Dust.

EROEI ... ENERGY Returned On ENERGY Invested. The article did mention this, but it's amazing how so many people just refuse to consider such an obvious principle.

Thu, 05/22/2014 - 17:25 | 4786434 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

As long as there is someone someone who they can gladly pay next Tuesday for those 2 barrels today, they will figure out a way and come next Tuesday they will put it off till the Tuesday afterwards if they can't borrow another 2 barrels somewhere else. The system is predicated on that fact these days.

Fri, 05/23/2014 - 04:06 | 4787653 Seer
Seer's picture

We're running out of "bigger suckers" really fast!

Like I've been saying, slowly more and more people will find themselves outside of the "system,"* and that this strips away "economies of scale" such that these kinds of things pretty much collapse.

* Per Capita energy consumption is the US is in significant decline.

As someone stated above, it's about EROEI.  The "volume" of "consumers" represents "energy" ("money") into the Energy industry.  "Economies of scale in reverse," it's going to be a bitch...

Thu, 05/22/2014 - 14:13 | 4785542 SelfGov
SelfGov's picture



Sexually abused by Gaia.


On a serious note, 600,000,000 barrels works out to about 35 days of US consumption.



Thu, 05/22/2014 - 14:21 | 4785578 Bananamerican
Bananamerican's picture

that counts as "long term thinking" in amerika these days....

tell us MORE about yourself, "SelfGov"....

Thu, 05/22/2014 - 14:53 | 4785732 SelfGov
SelfGov's picture

I am a bit of universe bewildered by the fact that a bit of universe has the capacity to feel bewilderment in the first place. ;)

Fri, 05/23/2014 - 05:11 | 4787695 tip e. canoe
tip e. canoe's picture

nice slogan from your link:

Plan Ahead – Plant A Garden

like right now

Fri, 05/23/2014 - 09:29 | 4788213 SelfGov
SelfGov's picture

Thanks though I stole that from a sign at Occupy Minneapolis.

Fri, 05/23/2014 - 04:07 | 4787654 Seer
Seer's picture

And one day in the future those barrels would last MANY years.  *BUST*

Thu, 05/22/2014 - 14:14 | 4785543 Atomizer
Atomizer's picture

Assclown Cramer will have T. Boone on Mad Money to inflate speculative derivative finance models.


Thu, 05/22/2014 - 14:15 | 4785544 williambanzai7
williambanzai7's picture

Spending $4 to earn $1 dollar.

Sounds like something Geithner designed for Goldman Sachs.

Shale oil reserves are not the only bullshit being camoflaged by the Keynesians.

Thu, 05/22/2014 - 14:19 | 4785568 Save_America1st
Save_America1st's picture

See my comment further below.  You should spoof their site:

Thu, 05/22/2014 - 14:34 | 4785608 Quus Ant
Quus Ant's picture

Printing $4 to maintain the status quo for a little while longer.  Costs them nothing. 

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