Shale Oil: Expensive, Over-Hyped, & Short-Lived

Submitted by Adam Taggart via Peak Prosperity blog,

If you've watch the previous video chapter on Peak Cheap Oil, you may be wondering how any of that could be still be true given all the positive recent stories about shale oil and shale gas , many of which have proclaimed that “Peak Oil is dead”.

The mainstream press has faithfully repeated every press and PR statement made by the shale producers. And if you simply followed the headlines, you might even believe this about the US:

• It is soon going to be energy independent,
• Its oil production will surpass even Saudi Arabia putting it in the number one spot,and
• The US will even be exporting oil again like the days of old.

The only problem with this story is that it is misleading in some very important ways. And entirely false in others.

Here are there are five main things to know about the shale plays.

1. They deplete very quickly. The typical shale, or tight rock, well production declines by 80% to 90% within three years.
2. They are expensive. All oil and gas coming form them is several times more expensive than what we got from conventional oil plays.
3. They are environmentally damaging because the fracking fluid is highly toxic and much of it escapes during the blowback process and sometimes water wells are contaminated.
4. Because each well has low flow and depletes quickly, massive numbers of wells must be drilled creating significant infrastructure damage to roads and bridges. Currently no state or municipal authorities are capturing anything close to the total cost of the infrastructure damage from the shale operators which means taxpayers are gong to be left paying those bills. 
5. Not all shale plays are created equal – some are vastly superior to others.  And even within a given play there are sweet spots and dry holes which can only be determined by punching a well in and seeing what comes out.  Some call this the ‘mapping by braille’ approach.

When we put all of these together it adds up to a very expensive set of plays that will only last for a very short while.

To the extent that mainstream press has been conveying the message that peak oil is dead and that our energy concerns have been laid to rest is the extent to which they have been misleading us.

In many ways, the increased crude output from shale plays has bought us some time.  We can either use the temporary boost in energy supplies, expensive though they are, to build towards a future when these too eventually run out, or we can use them as an excuse to carry on with business as usual.

If we do choose business as usual as our operating strategy - I use that word very loosely – then we will just march straight into the shale oil peak around the year 2020 and be very disappointed with ourselves and our utterly inappropriate transportation infrastructure.

Comments

[_ConanTheLibert...]

I stopped listening to John Mauldin when he fell for this hype.

[TurdOnTheRun]

EIA initially stated on their website there was 15.4 billion barrels in the Monterey shale in California, but then quietly reduced the estimate to 0.6 billion barrels. One has to wonder what the actual accurate tight oil estimates for the Bakken and others. The operators always go for the least expensive plays first leaving the more expensive plays for later.

[David Wooten]

"They deplete very quickly. The typical shale, or tight rock, well production declines by 80% to 90% within three years.

They are expensive. All oil and gas coming form them is several times more expensive than what we got from conventional oil plays."

We already know it's expensive. Eventually, expensive oil will be the only oil.  As for depletion, it doesn't matter that much.  There are probably vast untapped areas of the earth that contain small amounts of expensive oil.  It means more jobs/barrel for those continually having to find it.  Perhaps people should consider embarking on a new career.

[silverer]

As the older lady said at a rally: "The problem is not global warming, it's global swarming". Imagine a population at 10% of the present population, worldwide. Any energy shortages? Not for a long, long time. It's the best solution, and that's why the US government subsidizes the population to have as many kids as possible. Because the government is against solutions that work. One kid: tax deduction. 2nd kid: tax neutral. 3rd kid, pay $200. extra tax/yr.. 4th kid, pay $500.00 extra tax a year, and $500 for each additional kid. On welfare? One kid gets supported. 2nd kid gets half. More kids get you nothing. Free sterilizations. Anyone in office proposing this? I thought not.

[kappal_toba_dhu...]

USA is cooked. They use fuel like no other.  They are the most indebted nation on earth, yet they point to others after they cook their books to make  it seem that they are doing OK. Very frightening.