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About That Shale Oil 'Miracle'...
Submitted by Chris Martenson via Peak Prosperity,
Our work here at Peak Prosperity largely centers on trying to use facts and data to shift people’s actions towards the more positive and sustainable things that we not only can do, but should do.
There’s nothing preventing us from behaving in ways that increase the Earth's abundance rather than deplete it, but generally speaking we choose depletion. Besides being both prudent and needed, the positive actions we could take are usually cost-effective, in our best interest, and worthy of our creative talents as human beings.
We can build rich topsoil at 100 times the rate of nature alone. We can build negative-energy footprint buildings that actually add electricity back into the system rather than draw it down.
There are thousands of wiser steps we could be taking right now, but aren't.
It's been said that humans are rationalizing -- not 'rational' -- animals. The deep truth in that statement is that we humans have strongly-held beliefs that color the information we take in an accept. We're often guilty of recognizing only the data that supports those beliefs while rejecting the rest.
For example, today most people place a great deal of faith in the potential for technology to fix whatever predicaments society may face in the future. And they support that view with cherry-picked data, while conveniently overlooking evidence suggesting technology is instead a sword with two edges.
Here's a recent example of that duality:
The USDA Approved a New GM Crop to Deal With Problems Created by the Old GM Crops
Sept 25, 2014
Last week the U.S. Department of Agriculture approved a new line of genetically modified corn and soybeans for use in the U.S. The crops, made by Dow Chemical Company and running under the brand name “Enlist,” may be the future of genetically modified crops. This future, though, has been largely determined by the problems caused by the last generation of GM crops.
Dow's new Enlist genetically modified crops are the intellectual descendants of Monsanto's genetically modified “Roundup Ready” crops. Like Monsanto's crops, Dow's are designed to be resistant to a patented herbicide.
By planting the modified crops, farmers can spray the herbicide to kill weeds without worry that it will affect their crops.
(Source)
Well isn’t that just great. There’s a new batch of herbicide-resistant plants out there because the old batch is being overrun by RoundUp-resistant weeds. To me this is merely a sign that technology is not trouble-free, and quite often creates problems equal to the ones it was ‘solving.’
The record is rife with such new technological fixes for problems caused by yesterday’s technological advances.
Geo-engineering is being proposed to deal with the excess carbon released by -- you guessed it! -- all the marvelous technology that allowed us to find and burn all those wonderful fossil fuels in the first place.
Antibiotics are slowly being rendered useless by their overuse leading to stronger 'superbugs'. And so what are focused on? Developing ever stronger antibiotics in a race most doctors assure us we will eventually lose.
And on and on.
My point here is the extent to which we fail to confront the facts, free from beliefs and the biases that come with them, is the extent to which we are deluding ourselves.
About That Shale Oil Miracle...
A recent piece of belief-based propaganda, designed to dovetail perfectly into society’s main belief in technology, ran in the Wall Street Journal. Based on the comments it generated, it scored a bull’s-eye.
I’m going to pick this piece apart one belief or fact-free assertion at a time. The reason this is important -- besides using it as a teaching tool to expose the degree to which thoroughly debatable, if not blatantly false, ‘facts’ masquerade as truth in the mainstream press -- is because such unchallenged views are hindering our ability to confront reality as it exists.
Here’s the opening salvo:
The Oil Price Swoon Won’t Stop the Shale Boom
Oct 23, 2014
[T]he current slump sets the stage for what I call America’s shale boom 2.0.
Three factors make it unlikely that the decline in oil prices will bring the shale revolution to an end.
First, shale production is profitable at today’s lower prices. We know this because the boom began during the Great Recession years of 2008-09, when prices fell below $50 a barrel. The price U.S. shale producers got for their oil during the boom averaged around $85 to $90, even though the world price stayed well over $100.
(Source)
For starters, the author calls for a “shale boom 2.0”, which is hugely appealing to people already in love with technology. “2.0” always means something better, more evolved and more advanced. It’s way better than “1.0”, right?
And yet, the more subtle reader can detect an underlying current of concern in the author's tone. Even though there have yet to be reports of lower oil production out of the main shale plays due to falling oil prices (or any other factors), the author feels it necessary to immediately begin listing factors as to why the shale revolution will keep chugging along.
But who exactly has been warning about an imminent production drop-off? Answer: no one. This is a strawman argument of the most common variety. Even if not one single new shale well is drilled from here onwards, the existing wells will continue to produce oil for years, albeit in ever diminishing quantities.
So the author already wins! No matter what happens next, for the next decade or more he can always claim that shale oil is still flowing.
But the real problem in these opening lines is the claim that “we already know shale oil is profitable below $50” based on the 'evidence' that oil prices briefly fell below that mark in 2009. That's just not a logical conclusion...revealing the actual profits of the companies during that time period would have made a case, but simply noting that drilling occurred is not the same thing.
The data we have shows that the shale oil producers, as a collective industry, have not yet turned in a positive year of free cash flows since 2009. They have reported profits, but all sorts of accounting gimmicks can show a ‘profit’ even when a company is burning through cash at a faster rate than it is earning it.
Perhaps for a year or two this can be perfectly reasonable. But what are we to make of a shale industry that is now 7 full years into its ‘miracle’, and yet free cash flows remain persistently negative? Since the wells deplete ~90% in 3 years and the best spots in the play get drilled first, shouldn’t we expect the shale companies to be in full stride and generating oodles of free cash flow by now? If not, then why not?
I mean, heck, if the author’s claim is valid, and “we know” that shale operators are profitable at $50 a barrel, then what is the explanation for the huge negative free cash flows over the past 4 years as oil has persistently traded above $90 per barrel?
There is a perfectly valid reason that we saw so much drilling in 2009 and that was because the shale operators had spent an enormous amount of money locking up shale leases when oil surged to $147 a barrel in 2008. In 2009, even as oil collapsed to less than $40/barrel, they faced the choice of either drilling and losing a little bit of money, or not drilling and losing the entire value of any leases which had “drill or forfeit” clauses (which was most of them).
So maybe the fact that shale operators were drilling like crazy back in 2009, when oil was briefly below $50, isn't the slam-dunk evidence our author hoped it was. Maybe it was evidence of a 'least bad' decision to drill anyways.
Let’s move on to the next part of his article:
Second, shale production is getting more efficient, which means that profits are possible at prices even lower than today. Smart drilling techniques—horizontal drilling, hydraulic fracturing and information technologies that accurately locate where to place rigs and enable precise steering of the drill through meandering horizontal hydrocarbon-rich shales—are far more productive than when the boom started.
According to the Energy Information Administration, the quantity of shale or natural gas produced per rig has increased by more than 300% over the past four years. This rise in productivity matches (in equivalent terms of capital cost per unit energy out) the improvements in solar power, but it took 15 years for solar’s gains. Solar is now experiencing a slow-down in efficiency improvements; there is no sign of a slow-down in shale technology.
Ooooooh. He mentions “smart” technology, which is everybody’s favorite kind. It's hard to argue with smart technology. /sarcasm off/
While it's true that there have been improvements in the past few years, the technical efficiencies he mentions here have been with us for many years. Horizontal drilling and hydraulic fracturing are decades old.
Where he goes completely off the rails is to then ‘prove’ his point by noting that the EIA says that ‘per rig’ drilling productivity has gone up by 300%. While I have not vetted this number (yet) to ensure it's accurate, it’s a misleading number to cite when talking about the role of technology in oil production.
The "smart" innovations he's touting are used in individual oil wells. But then he cites the ‘per rig’ data, and rigs are used to drill multiple wells per year. Is it that the individual wells are producing 300% more (as he implies), or is it that the rigs are able to drill more individual wells each year?
That is, if a rig used to drill 5 wells per year but now it can drill 15, there’s your 300% increase -- without anything at all changing in terms of how much oil will eventually be extracted from each individual well.
In fact, the main reason that the ‘per rig’ productivity has gone up is because the industry has switched from drilling one well per ‘pad’ to drilling multiple wells per pad.
A pad is a 1-10 acre flattened, gravel lot upon which the drill rig is parked so that it can bore down into the earth. By not having to move rigs from pad to pad, but just shifting them a few feet in order to drill a new well off in a new direction, has saved a lot of time.
This is a process improvement, not a technology improvement. I think it’s all very well and good that the industry has found a way to be more productive and not move the rigs around as much, but it's absolutely wrong to claim that this is the same thing as proof of the inexorable rise of increasingly superior technology to yield more more petroleum from the ground that other means would give.
But people love to hear about how technology always saves the day. And so people gobbled this part of the article up, mainly because the assertion fit into their preferred belief system. I wonder how many people have regurgitated these ‘facts’ about the role of technology in boosting shale output?
My guess is quite a few.
On to the third factor:
The third factor is the profound economic leverage afforded by the enormous scale and diversity of America’s hydrocarbon infrastructure. Many oil-producing nations have only a few big oil fields and a handful of companies, sometimes just one. The U.S. has dozens of world-class fields, thousands of production companies, tens of thousands of related businesses, and millions of miles of pipe and rail.
Among the thousands of shale producers, you can guarantee there are pioneers just like those who started the shale revolution. As profit margins erode due to low or even lower future prices, the pioneers will try out the revolutionary new shale techniques that have yet to be deployed.
I have to confess, I don’t even understand what the third factor is as described. It’s a lot of jargon and buzzwords put together. What exactly is “profound economic leverage afforded by enormous scale and diversity”?
It sounds good in the same way that Twinkies taste good. Unfortunately both are more than a few ingredients short of a well-rounded meal.
He gets down to it in the last sentence there, which basically boils down to – you guessed it! – another expression of his faith in technology where he states that more companies vying for shale oil means more pioneers to try out the next great technology (which, presumably, we don’t even need because shale oil is profitable at $50, according the author).
When someone claims that any rough spot in the shale patch will be met with “revolutionary new techniques that have yet to be deployed.”, you know you're getting out pretty far on the hopium branch.
I would remind people here that back in the 1700's the South Sea company, the stock shares of which bubbled up enormously -- even causing Isaac Newton himself to lose the then-staggering sum of 20,000 pounds -- was billed as “a company for carrying out an undertaking of great advantage, but nobody to know what it is".
Would it be unreasonable to restate the author's claim as "shale operators to deploy new technology of great advantage, but nobody to know what it is?". Ungrounded hype is the same thing no matter when or where it happens.
In Part 2: The Hard Facts About Shale Oil we reveal in detail the facts behind the reality within the shale oil industry: the economics of production, the technology (where to place hope and where not to), as well as the impact shale oil production will have on the larger Peak Cheap Oil outlook. Suffice it to say, not only are shale companies not profitable at $50 per barrel oil; most are not profitable at prices nearly 100% higher than that.
So if they persist much longer, today's lower oil prices are going to create a world of hurt for quite a large number of shale operators. And shale-rich regions like North Dakota and Texas will discover what the opposite of ‘oil boom’ feels like.
Click here to access Part 2 of this report (free executive summary; enrollment required for full access)
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Hiding operating costs in cap-ex works until there is no cap-ex.
I love that quote from the South Seas Bubble era stock prospectus; any time you think people are foolish to buy faceplant stock; just remember that one.
Exactly! Capitalizing a well over a 'life' and then getting returns on half that life spells disaster.
In other news, most of this 'new' technology they are talking about is old. I was one of first 'automated' directional drilling techs in the gulf. Hit 5 targets with a TD of over 30k' (TVD of over 20k')....it was a site of beauty...in 1997.
Listen oddjob.
Bathing your American food in poison during it's entire lifecycle and then wondering "WHY" you have cancer at 37 works until there are no more Americans.
So, if drilling 15 wells is a 300% improvement over 5 wells drilled the previous year, then I presume drilling 10 wells is a 200% improvement over 5 wells, and drilling 5 wells is a 100% improvement over drilling 5 wells.....wait a minute....oh, I get it, drilling 5 wells every year is really a 100% improvement every year! Not a 0% improvement as some of us who are burdened with a math education might figure.
By the way (and this is an open question), I read that there is a new pipeline being planned and built from the Bakken to south central Illinois, to be functional by 2017. If the shale business is as phony as many claim, why is this pipeline being built? Are pipeline builders/operators too stupid to do a life of field analysis? Flow depletion analysis? Have they been taken in by all the shale hype? Do they intend to disassemble their pipeline after 5 or 10 years?
Such a pipeline could easily be re-purposed to carry Canadian oil. So it wouldn't end up as a stranded/wasted asset even if the Bakken stopped producing.
you ask
Building that pipeline, pal, is just another lie from the establishment. We've had the military lies (submarine off Stockholm) economic lies (Dow makes new, all-time high. wow) the lie of omission (Ukraine ATC tapes)
The pipeline lie. Listen, Ernie, they're building a pipeline through Galena. How bad could things be?
The road to 1984 is paved with lies.
Too damn many human apes.
Time to thin the herd to 25% of current level.
Long Agenda 21.
Martenson is a socialist, Luddite hack, who stole almost all of the above piece from the Wall Street Journal, without attribution.
ZH readers deserve better, a lot better.
Its getting pretty bad around here lately isn't it?
A whole weekend of fluff articles. Sad.
The article he so blatantly ripped off appeared in the Friday, Oct 24 print version. The net version does not always correspond, but it's a great read. One of the best points was that critics are always bitching about declining yields in the bakken, the oldest and best known of the fields, but there are literally dozens of fields, some on top of each other.
In any case, the original point of fracking was nat gas production, but with gas near all time lows and oil over $100 guess what the wild catters went after? We will not run out of nat gas anymore than we will run out of coal or fire wood, but some of the crazy city folk just refuse to listen.
kaiserhoff
Chris linked to the The Wall Street Journal as (Source).
Listen EI.
The takeaway here is that there is an "UNDERCURRENT" of frustration here by the "SPACE MONKEY'S".
They are recognizing that Murdock is using ZH as an incubator for his MSM poison.
Then the Zero's see the same stories run on MSM that they read previously on The Hedge.
They know something's up but haven't yet connected the "DOTS".
Bangalore Equit...
Thanks for your insights.
And I am glad you’re keeping track of these unfolding events.
Obviously you know more than I do, so keep me updated, because Murdoch and Zero Hedge at the same paragraph, I sure don’t want to miss it.
Thanks again, because things are looking up!
Listen EI.
Let's try an experiment. Just sit back and observe the behavior of "OUR" protagonists.
Keep in mind "OUR" objective, the thesis. We'll regroup and compare notes after a few. Keep your eye open for "OUTBURSTS", flareups. Be careful, eyes open, mouth closed.
Bangalore Equit...
You might need to lead on. Not sure what you mean by "OUR" protagonists, but looking forward developing, and read this thesis.... as well as in being part of it.
Sounds promising way at looking at about human behavior..... While blogging.
When you're standing on your head, everything looks up.
Wrong!
He linked the GMO portion of the article to "Source."
Not any of the extensive material he stole on fracking.
Barry isn't the only one with total contempt for law, rules, and integrity.
He may be a hack...I can't argue that point...but the shale oil miracle is anything but. It's a fucking scam that has been piled on by bankers, lawyers and land agents alike. A land scam at the very least.
Nothing would please me more than to see all of these fucking good for nothing carpet baggers and land speculators, making property totally unaffordable, get caught with their pants down and holding the bag. That hack Chesapeake CEO would make a great posterchild for the demise of that industry. One can dream, right?
Lest you think that I'm a foaming environmentalist or some such shill, think again. I hate those fuckers more than I hate the fucking Okies out here in the East. They can all fucking hang. They both bring the scumbag lawyers and bankers with them.
Oil business being what it is you should stop filling up your tank.
Banking business being what it is you should only transact in cash from your mattress.
Hopefully the foam won't be a problem while you're pulling your head out of your ass.
I think that both ideas sound pretty good to me.
In the meantime, Kindermorgan, Buckeye and MA can build moar terminals and tank farms to store more fuel that ain't being consumed. Go fuck yourself, shill.
They are good ideas,. And I'm guessing that you don't need petrol at the home, and that your lack of a bank account isn't be because of your morals.
Don't throw the oil industry under the bus because it has some bad actors.
And try to pull your head to as well. Who would you have dictate the scope of participants in an industry? Are you whining? Are you sensitive that way?
Your dear leader should send some experts from Chicago to check out those tank farms right away! They may not be fair!
Look, Its simple so you should be able to understand it...
The Shale "boom" is like QE. It exists to enrich a chosen few actors and has NO NET BENEFIT to the average American citizen, only negatives. There is no fuel shortage that isn't engineered and that is simply the fact of the matter. We argue over whether the boom is a fraud, right? Well, each of us could name a half dozen or more statistics supporting our case.
Have oil prices dropped commensurate with increased supply? No. They have continued to rise. Only when SA orchestrates an increase in production and a subsequent oil drop do prices change. By design, not by an overabundant supply chain illiquidity. Are reserves, real reserves, reserves that are in physical possession (not just as claimed by a few "bad actors") at all time highs? Why, yes, they are. Look at an annual report from KM, Buckeye or similar. Where does Joe the plumber benefit? How does some poor jamoke without a job trying to get by benefit? He doesn't. Meanwhile, scumbags at the shale trough continue to scam shareholders and retirees who are doubly fucked because the asshole managing their money buys into the BS as put forth by the likes of your "bad actors".
Certainly "Out East" they haven't benefitted, save a few farmers and land grabbing consortiums...them and a few scam artist NIMBY groups. The pushers and worker-bees come from Oklahoma, Louisiana and similar regions with low tooth to head ratios. So much for the job boom brought to these regions. The only other group benefitting are dentists.
So wait... You're saying that oil supply going up and prices not dropping is proof of price manipulation while SA increasing production to lower prices is also proof of price manipulation?
That's a fine looking cake. How did it taste when you ate it?
Hey "Chief" you're still broad brushing. Sound like some one who has a lack of opportunities..., I'm sorry. I hope the Okies and everyone else you deride who will still work for a living don't have to look up your nose at you, especially if your head is up your ass like the welfare queen that you come across as.
Sorry "Chief", got it now. You're one of those special Appalachian folks that are entitled. Shame that the stout Appalachian people have to be associated with the stereotype that you present so well.
Thats exactly what Im saying. Indeed, proof of manipulation. Supply and demand affect on prices only works when the masses need manipulatin'
The shale oil boom came about for 3 reasons.
1) horizontal drilling technology.
2) to end global peak oil which the industry briefly slipped into 2006 and 07.
3) as a means, temporary or not, of avoiding having to disclose to the world's population that we were running out of gasoline and all the gas stations would soon be closed.
TC
It may be a scam, but it is a necessary propaganda tool to deceive the people into thinking that things are okay.
That they should continue to go to work and go to the mall and buy things they don't need with their Visa cards
The whole business is a scam, he only calls it for what it is. However, feel free to believe in the Tooth Fairy saving the day...
Why is the Angel of Joy so cynical?
Now THAT is a very good question, indeed ! He must have some reasons...
These should help
Toolpush:
… it amazes me how reliant the US is planning to become on the Marcellus. The spreadsheet from EIA, has so many pipelines currently being built, or reversed that when they come on line it appears the Marcellus will nearly supply all of the US plus part of Canada, and why did I forget Mexico. This is not in 30 years time, all these pipelines will be on line in the next 4 years.
Either a lot of people are going to loose absolute fortunes or the Marcellus is really really big.
Jeffrey J. Brown:
Of course, it’s when, not if, that the production from new wells can no longer offset the declines from existing wells, i.e., Peaks Happen.
Year over year, from July, 2013 to July, 2014, the industry was able to offset declines. US dry gas production was 70 BCF/day in July, 2013 and 70 BCF/day in July, 2014. However, at about a 24%/year decline rate, we need about 17 BCF/day of new dry gas production, every year, just to maintain current production.
To put this in perspective, Canada’s 2013 dry gas production was 14 BCF/day. Based on the Citi report, in order to maintain current US dry gas production we need to put on line the productive equivalent of all of Canada’s current dry gas production, every single year, times 1.2. Or, over the next 10 years in order to maintain current dry gas production, we need to put on line the productive equivalent of 12 Canadas.
http://peakoilbarrel.com/aeo-2015-preliminary-report/comment-page-1/#comment-398827
the lower the price of oil goes....the more articles like this coming to zero hedge near you. used to be when oil fell to $90.00 a barrel these articles would show more and more. now with oil at $80.00 a barrel whats in store?
more Chicken Little bullshit from the Post Carbon Institute... let's go back to our revisionist history...
http://web.archive.org/web/20090404031955/http://postcarbon.org/manifesto
post turtle saver....good to see someone else googling the references there authors are using. did this the other night with the post carbon boys...academics....public grant dole...never put in a hards day work....ever.
Boom!
What a joke by a fuking greeney enviro sky is falling global warming fear monger!!!
For the record this is bullshit........
It is an oil recovery game and it is just getting started.......
The big oil feild in Saudi Arabia is less than 10% depleted and it has been pumping an average of 10 million barrels a day for 60 years.....
So if they can get 50% out (with current production techniques, which they can). then that is another 240 years production out of just one field......
None so far have gone beyond 15% depleted.....
Do the math buddy.
AND as an added bonus...we were heading towards the Carbon Death of the earth.
That is where all of the Atmospheric Carbon being sequestered by plants, insects and animals is slowly being buried under layers of soil then rock and in a few more million years is going to be buried underground and unavailable to us Carbon life forms.
THANKFULLY man has managed to reverse this process and save planet earth.
Global warming nuts hate CO2. Plants not so much.
burningfuld....i stop the enviro freaks on global warming by asking at what level is the co2 level too high or low? what is the measurement yardstick and how did professor numb nuts arrive at that figure? high school science teaches that all plants need co2 to thrive and survive, so at what level does remove co2 than start killing off plants aaaaand then animals that eat those plants? shuts them up every time.
Exact-a-mundo. These fucks need to go down to Hobbs, NM and spend a few weeks in the oil patch; they'll quickly realize the 'source rocks' of the Permian are in 5 pay zones, of which we've only tapped #1 & parts of #2.
More-fucking-over, Neptune's in Pisces until 2027 = meaning = oil is gonna be found in your Grandma's coffin.
I lost count of the number of new wells & supporting crews & infrastructure I drove past when I was on vacation in NM last year... trucks everywhere, hell most of them still had wet paint practically
Ha ha
Yep. luckylogger was there with his tape measure, calipers, and candy thermometer and assured the King it was only 10% depleted.
He could be making hundreds of thousands of dollars a year as an oil field depletion estimator, but he has given up that income and chosen to sit at home, eat bags of Fritos and comment at zh.
I have stopped going out because I'm afraid of missing his next post.
What a joke of an "analysis". He knows less than the WSJ article writer. It is true that the wells are more productive because the frac process has become far more sophisticated. They are using acid, slick water and multiple densities and sizes of sand on these fracs. Some of the older fracs used a lot of gel which would later clog the frac and reduce production too quickly. The frac lengths are also increasing which means more production per well. Another way of improving production is to recover more of the available oil and that is how the improved frac process and technology is doing it, not simply by drilling more wells.
"We can build rich topsoil at 100 times the rate of nature alone. We can build negative-energy footprint buildings that actually add electricity back into the system rather than draw it down." I quit reading after that garbage. Anyone who believes in free energy or free anything does not know physics, economics or much of anything. The solar panels on any such building would require more energy and rescources to produce than they would give back in their usable life. ZH should preface any green nut articles with a warning of some kind.
Oh you can pretty much guess by the title. Anything with shale miracle in the title is likely to be anti-shale, that seems to be the pattern I have observed. Most of these writeres tend to be peak oilers that don't get the basis for the shale oil. The geologists have known it was there for a long time but the drilling tech to get it just hasn't been there. It's not worth much with vertical drilling but the horizontal wells are the ones that are producing the good volumes. How long they can produce is the bigger question. Even at a 90% depletion after three years, a 1000bbl/day well is still at 100bbl/day and it might flow that way for 10 years. That is way better than a 30 bbl/day depleting by 90% in ten years and then producing another thirty years. This is typical of most of the shallow reservoir wells in the US. True the 30bbl/day wells were cheaper to drill but it takes lots more of them and hence, way more environmental impact. The shale rock is the best oil reservoir we have in the US I believe.
When you say anti-shale, do you mean anti-shale hype?
The snake oil and pie in the sky from those who think shale oil is the Savior of Mankind?
Or did you mean those who just don't want anything to do with rocks and stones?
My favorite is "environmental scientist". the perfect oxymoron. You know right away, if you've ever read anything by these people that their cult members; not scientists.
I don't consider the term "environmental scientist" to be an oxymoron, for two reasons. First, ALL science is environmental science. Second, all the environmental scientists I have met actually had earned at least college Bachelor of Science degrees, and most of them had college Master of Science degrees.
Perhaps Martenson lives in D.C. or New York City, two places which probably ACTUALLY COULD build topsoil at 100 times the rate of nature alone, on account of their primary product being bull. But for most of the world, I would be happy if we just stoppped LOSING topsoil, which I think is still going on at an enormous rate.
hideously generalized, wordy, useless. there are a bunch of different shale plays going on right now all over the country. in my area it costs millions to develop a single well. i would rather have a marginal well than a bunch of clownbux in the zirp bank even at today's oil prices. these low oil prices WILL NOT LAST. do not be fooled. I'm not saying that KOG, OAS, CLR. WLL. CHK, DVN, COP, EOG, MRO, PXD, APC, APA are great investments but never ridicule infrastructure of this type because it can be a great asset to have and could be profitable in ways you might not think of right now. some leases produce for a hundred years and you can bet that 100 years from now oil won't be a measly $80/bbl. By all means flame on about GM crops and overprescribed antibiotics but it is obvious the author did very little research and knows next to nothing about the oil business.
An example of a "real good' that someone can invest in; where there's not much question of it's ongoing value. I like to remember that Warren Buffet just bought a Railroad. not t he stock; but the whole Railroad; all the phsyical assets. Verrry interesting.
cold fusion will make it all moot.
LOL. Now why didn't I think of that ! I remember when someone ran up to me and told me breathlesly that cold fusion had been discovered; I thought about it for about thirty seconds and then said; nope.
SAT 800-right you are. If cold fusion was for real, there wouldn't be many elements below Iron. The smaller elements would have fused to make larger ones. It takes energy to make the element Iron and all of the larger elements from smaller elements via fusion.
You are both wrrong and show an ignorance of what is currently happening in the 'low energy nuclear reactiojn' field. As an example, (and there are several others involving variations of this technology, see the following report recently released by European scientists testing a new form of energy production with an energy density a couple orders in maginitude above gasoline and only between 1 and 2 orders of magnitude below nuclear fusion.
http://www.sifferkoll.se/sifferkoll/wp-content/uploads/2014/10/LuganoRep...
This technology is realy, and now proven. And though scientists still can not explain it theoretically, they do now know that it works and can provide cheap energywithout pollution and without radioactive risks.
It weill likely take a few years to bring it to maturity, but that will happen.
Victor999 "You are both wrrong and show an ignorance of what is currently happening in the 'low energy nuclear reactiojn' field."
Look at the title of your link!
"Observation of abundant heat production from a reactor device and of isotopic changes in the fuel"
We were talking about "cold fusion"
This IS NOT cold fusion.
It appears that you don't known the difference between an isotopic change and fusion. I suggest that you review your PHYSICS before you make a fool of yourself.
From the article:
"Very large energy transformations can only take place when binding energies at the nuclear level are exploited, as in fusion reactions for light elements and fission reactions for heavy elements.
However fusion reactions between free charged particles are extremely unlikely AT LOW ENERGIES due to the Coulomb barrier. "
LOW ENERGIES, in this case, would mean COLD TEMPERATURES.
I thought Ebola will make it all moot (or rather mute...).
North Dakota is becoming a shit hole. The Oil is not being cleaned up but covered up. There is no such thing as cheap oil unless it is polluting the other guys country like SA which is another....shit hole!
Drive by some old oil fields some day and tell me it is reclaimed! Abandoned oil fields are toxic to this day and make for some good wind farms or solar farms as the earth is totally fucked over with toxic oil waste.
Suckers are still poring into oil and gas....while the majors are investing in other tech!
The post says something that I have not seen in WSJ:
"The data we have shows that the shale oil producers, as a collective industry, have not yet turned in a positive year of free cash flows since 2009."
Seven years without free cash flow????
Try these:
http://www.outsiderclub.com/report/the-coming-bust-of-the-us-shale-oil-g...
http://energypolicyforum.org/2013/06/19/huge-capex-free-cash-flow-not-in...
http://srsroccoreport.com/the-coming-bust-of-the-great-bakken-oil-field/...
http://www.businessweek.com/articles/2013-10-10/u-dot-s-dot-shale-oil-bo...
http://www.zerohedge.com/news/2014-05-28/shale-boom-goes-bust-costs-soar
http://www.climatecentral.org/news/fracking-boom-leading-to-fracking-bus...
If you want more links, I can give you as many as you like.
Thanks. The absence of free cash flow for seven years shows that this is a failed business model of epic proportions.
Process improvements are technology improvements. When are they not?
An Erhlichian a day keeps progress at bay.
Gawd I love Chris Martenson... 'PhD' he is ya know... But when it comes to $$$Selling FEAR, he know's how to roll around in the mud with the best of the $$$pigs... See folks? Make sure to tell the kids, that just because you earned a PhD and breathe the rarified air of those with foreheads that double as helipads, doesn't mean you can't make a $$$buck. And make sure to remember: 'Enrollment is required for full access'...!!!
Does this not mean that you can drill more holes thereby sucking out he oil more quickly meaning the field depletes even FASTER?
Does this not indicate that we are desperate to get as much oil out as fast as possible?
Where he goes completely off the rails is to then ‘prove’ his point by noting that the EIA says that ‘per rig’ drilling productivity has gone up by 300%. While I have not vetted this number (yet) to ensure it's accurate, it’s a misleading number to cite when talking about the role of technology in oil production.
The "smart" innovations he's touting are used in individual oil wells. But then he cites the ‘per rig’ data, and rigs are used to drill multiple wells per year. Is it that the individual wells are producing 300% more (as he implies), or is it that the rigs are able to drill more individual wells each year?
That is, if a rig used to drill 5 wells per year but now it can drill 15, there’s your 300% increase -- without anything at all changing in terms of how much oil will eventually be extracted from each individual well.
In fact, the main reason that the ‘per rig’ productivity has gone up is because the industry has switched from drilling one well per ‘pad’ to drilling multiple wells per pad.
A pad is a 1-10 acre flattened, gravel lot upon which the drill rig is parked so that it can bore down into the earth. By not having to move rigs from pad to pad, but just shifting them a few feet in order to drill a new well off in a new direction, has saved a lot of time.
This is a process improvement, not a technology improvement. I think it’s all very well and good that the industry has found a way to be more productive and not move the rigs around as much, but it's absolutely wrong to claim that this is the same thing as proof of the inexorable rise of increasingly superior technology to yield more more petroleum from the ground that other means would give.
Magoo
It is by getting as much oil of the ground as fast as possible that peak oil is avoided.
As long as production out strips consumption we are free from the ravages of peak oil.
The term 'Peak oil' actually refers to a couple of concepts. First, there is only so much oil in the ground - eventually, you reach a point at which it becomes more and more difficult to keep production at current levels because the easy oil is extracted first, followed by successively more difficult to reach oil. Even with high prices global oil production has not increased substantially since around 2005. There are two reasons for this: 1) we have not discovered much oil since the 60s (relatively speaking), and 2) the economy since 2009, when oil hit $147/barrel has dropped off the cliff, and has never really recovered from that - in other words, demand has fallen significantly - which of course is why we are pumping oil like crazy (but at the same relative levels), prices are falling and there is an inventory glut occurring over the world.
Secondly, the quality of the oil found is generally less energy dense than that of the 60s and more energy has to be expended to get at it - it takes more oil today to get the same energy output as it did in the past. So we need to pump more just to stay even - but we are not. The old wells are keeping our feet out of the fire for now. When they start seriously depleting, then the game is over since technologies like fracking will never be able to produce the same quality and quantity of oil as was first discovered.
All this to say that the peak oil advocates are basically telling you that because oil is becoming more expensive, it places severe limits on the global economy, which results in lower demand for oil, which results in lower prices and inventory gluts. But beyond that, if prices fall to the point that the economy picks up again significantly, it will almost certainly hit a ceiling at which point it will not be possible to produce enough oil to keep up with demand - which means rising oil prices again, followed by another global recession.
The peak oil position is that once this undulating 'economic plateau' is reached, we will never again see a true economic recovery, and that this situation will continue until oil resources are finally depleted to the point that we will see less and less oil produced each year.
All this UNLESS a new non-fossil-fuel based economy is developed involving new sources of energy and technology. But for that to happen will require a MASSIVE global re-tooling effort - perhaps impossible to achieve in a world still dependent on cheap oil to make progress.
Very well said
I don't remember Hubbert describing (as you do) an economic slowdown as a result of the higher price of the oil of diminished oil supply as one of the reasons 'peak oil' temporarily ceases to be in effect, i.e. jumbo strikes, improved recovery techniques.
'Peak oil' is self-governing.
For the last 2 or 3 years, I have nurtured a conspiracy theory that the sub-prime bubble was created in the halls of the Fed and then made legal by Congress.
I figured it was the military that approached Greenspan to come up with a plan to hobble demand. As the military was worried about their oil supply in the mid 21st century.
But you reminded me that, without that bubble bursting in 2008, the global economy would hit the 'peak oil' wall at Mach 2, way too fast for it to self-correct.
So the army may have approached Greenspan. Not save oil for them in 30 years, but to prevent the mayhem and riots that would certainly occur when a booming economy goes bust.
That's why QE is sine qua non to the pathetic economy we have today.
I love how you have to pay to get at Martenson's secrets as to how you can survive the coming collapse.
Why does he charge?
If Saudi Arabia holds oil prices low, many drillers will go bankrupt. Who will end up owning the wells then? Bankers, perhaps? And the asset harvesting marches on ....
According to some experts, Saudis are working with the Pentagon agianst the Bankers.
Another clueless Peak post. If fracked oil is so doomed, how come the Saudis - the most powerful nation on earth - have declared war on it?
Thanks to some very astute commentary, we have a reasonable idea of what 'peak oil' looks like on paper.
But 'peak oil' is much the same as 'critical mass'.
You obtain much more information from the reality than you do from the postulate.
"The Oil Price Swoon Won’t Stop the Shale Boom, Oct 23, 2014" Everybody talks their book, including those invested in "the shale boom".