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Why US Shale May Fizzle Rather Than Boom
Submitted by Nick Sunningham via OilPrice.com,
The Shale Revolution may not really end up being a revolution after all. A new study in Nature finds that the estimates for shale gas production could be vastly overblown, and production could peak within the next decade.
It is first important to note that forecasting energy production years into the future is always difficult and pinpointing the trajectory of oil and gas production years out is an impossible task. However, many forecasters, including the closely-watched Energy Information Administration (EIA), have highly bullish projections on the ultimate recoverability of natural gas trapped in American shale.
For example, in its latest Annual Energy Outlook, the EIA predicts that shale gas production will continue to climb upwards over the next several decades. By 2040, the agency forecasts, the U.S. will be producing 56 percent more natural gas than in 2012, largely driven by a doubling of natural gas production from shale.
Writing in Nature on December 3, Mason Inman reports that such predictions could be wildly optimistic. Using data from a team of researchers from the University of Texas, which studied the topic for three years, Inman concludes that the shale story is not nearly as revolutionary as everyone thinks. Inman says that shale gas production from the big four shale plays – the Marcellus, Barnett, Fayetteville, and Haynesville – which account for two-thirds of the country’s shale gas output, will peak in 2020, declining thereafter. If that is true, even the EIA’s most downbeat scenario for shale gas production could be overly optimistic.
Obviously, the UT researchers could be wrong, but Inman says that they have produced the most authoritative forecast on shale gas production to date. That is because they analyzed figures from individual blocks, whereas the EIA simply extrapolates from county data. That means that the UT researchers are working with “a resolution at least 20 times finer than the EIA’s,” Inman says in his article. Even EIA researchers have acknowledged problems with the agency’s methods.
The repercussions for the U.S. would be enormous. Billions of dollars of investment are pouring into shale gas production, refineries, factories, petrochemical facilities, and natural gas export terminals – all based on the assumption that the shale gas revolution has decades of life left in it. But in reality, it could all peak within the next decade or so, after which, “there’s going to be a rude awakening for the United States,” Tad Patzek, a researcher with the UT team told Nature.
If that ends up being the case, shale gas may look more like a blip rather than a monumental revolution for the United States. When production declines in the 2020’s, natural gas prices will rise. That could raise the prices of everything from electricity, to plastics and fertilizer. It could also make LNG export terminals uneconomical.
“The bottom line is, no matter what happens and how it unfolds,” Patzek said, “it cannot be good for the US economy.”
Again, it is important to emphasize the difficulty in forecasting – the UT team could be wildly off base. For now, it is hard to see over the peak. Natural gas production has been rising since 2005 with no end in sight. In November 2014 the U.S. produced 2.1 trillion cubic feet of natural gas, the seventh consecutive record-breaking month for natural gas production.
One uncertainty that is always challenging to incorporate into forecasts is the rate of technological innovation. Maybe oil and gas companies will find new drilling techniques or cheaper ways of extracting hydrocarbons in the coming years. After all, the surge in shale gas production caught everyone by surprise a decade ago because no one predicted the substantial progress that would be made in horizontal drilling and hydraulic fracturing.
On the other hand, after missing the Shale Revolution, analysts may be making the same mistake by predicting several more decades of increasing output. “[W]e're setting ourselves up for a major fiasco” Patzek of UT tells Nature.
Considering the staggering amount of money that is currently being invested in drilling, refining, petrochemical manufacturing, and export facilities, we should welcome any contribution that can be made that can shed light on where we are heading. In that context, Nature’s article raises some red flags that policymakers and investors should be paying closer attention to.
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...more wildly optimistic, overblown projections of intrinsic worth? say it ain't so...
I'm sure you can find a Nature article from the 1970s saying we had 10 days of oil left.
EIA has NEVER been right, there's your first clue.
Yes,
The fact this article picked 3 plays which are not even in core production, and omit the DJ, Wattburg, Midland, 3-forks, and the entire Utica is kind of amusing. That Marcellus number also looks very low. Hell I could make a great bear chart too by omitting half the SPX. Not talking a book, just pointing out the flaws with this article.
Anyways, oilvoice is a shit site, I think this has been well established by now and is the Gawker network of oil industry articles. Take that for what you will.
OT: Republicans fully fund Zerocare and Amnesty
http://www.cnsnews.com/news/article/terence-p-jeffrey/gop-cuts-spending-...
whores.....
That's usually what it's called when you're paid to fuck others.
The EIA's U.S. Shale Oil Long Term Forecast would be SPOT ON if they disregarded DECLINE RATES. The U.S. oil industry annual decline rate was 5% in 2007. At the time, total U.S. ol production was about 5 million barrels per day (mpd).
Thus, the U.S. oil industry had to replace 250,000 barrels per day (2007) each year to keep production flat. With the addtion of Shale Oil into the mix, the U.S. annual decline rate is now over 10%.
Currently, the U.S. is producing about 9 mbd of oil, thus the industry now needs to replace 900,000 barrels per day each year just to remain flat. The more shale oil that is added to the mix, the higher the annual decline rate percentage. I would imagine by 2015, this could reach 15%.
Which means the U.S. will have to replace 1+ mbd each year to remain flat going forward. That's a lot of oil.
With the current low price of oil, I believe we will start to see a peak in Shale Oil production in 2015. By 2025, the U.S. will be producing approxiately 4-5 mbd... half of what it is today.
That's because both Zerocare and Amnesty are their ideas. They just hate 0 because, much like Clinton, he enacted their agenda and took credit for it.
Hey, Vile, you are completely correct in your assessment. I have no time to elaborate, but I rebutted in detail this study's conclusions on another site. (They disregard, among other things, drilling under lakes. The folks in North Dakota have umpteen wells under Lake Sakakawea with a bunch more planned.)
The amount of gas to be produced in this country in the coming decades will be staggering. Anyone saying otherwise knows jack shit.
anyone bold enough to use the word 'staggering' about anything is feeding you bullshit hyperbole...
Yawn... How about a link with supporting data pal?
"production could peak within the next decade."
So the end of a plateau is called a peak.
No, but it "defines" the peak - or more specifically it defines the end of the peak. A Plateau can be a peak.
I agree. They will find other plays. This article presumes we know everything there is to know about the earth and no new discoveries will be made. People have thought to know everything since ancient times, and each time, they were proven wrong.
Yawn... So drop trou and show us your supposedly big data set (with links to verfiable data).
"I'm sure you can find a Nature article from the 1970s saying we had 10 days of oil left."
It was probably called "The Last of Plenty"
insanelysane...exactly this article is from oil "price".com and yet is quoting from "nature" magazine?????? WTF????? you just have to ask the tylers, are there no "oil production.com" oil business magazine.com? you know, articles by people actually in the business of oil extraction? these clowns fought the good fight for months around the $80 a barrel oil, now here we are $20 lower and we get "you didn't believe me at $80 now you will have to believe me if i quote from nature magazine at $60!!!!!" let us see where the sweet spot for price/production takes us, shall we.
Price discovery???? That is soooooooooooooo early Twentieth Century.
THE FED WILL BAIL OUT THE BANKS FRACKING LOSSES WITH QE4 IN 2015 !
... and the FDIC will bail out subprime auto loan tranche investors when their bets sour. this isn't news.
Ask Poland and Hungary about Fracking deposits. The Americans told them both to Frack everything, they were richer than Russia in gas. Then they drilled, and what came up? Not much. Poland went from energy independence to energy dependent in a year or two, once real wells were put down, and geology seen close up. Hungary was already preparing budgets with Frack gas profits and low gas prices built in, then the same thing happened. They drilled, they looked, they shut her down! Again, the Frack Gas dream went up in a puff. Ask California, and the central basin, again, a Saudi Arabia of gas was right under their feet, until they drilled, and presto, all gone, the real geology, once seen for real, produced nothing economically viable.
That said, the USA does have some nice gas plays already, but I suspect the claims of well life are not what we are being told, investors in fracking, and there are many, from the big boys, to the retail stock buyer, I know a few, they could all end up losing.
Recently, a campaign has begun that claims two things. 1. The cost of fracking is nose diving, as cheap ways to frack come on line. 2. Cliams that double fracking a well after it slows down opens a bonanza of new gas. I fail to believe either is long term for real. Not when I see the vast frack sand mines and brand new railroads being built to haul that sand. Sand that is mined, processed and cleaned before loading onto rail cars for the trip out to ND and Texas. The capital for building, leasing and processing this sand, not to mention hauling half way across the country, I can't believe the cheap fracking myth is real.
Hahaha they gave the same dream to Gyspies recently too .
Romania has been forced to face the facts when it comes to the fracking, or lack thereof. It had hoped to seal a lucrative deal to extract 1.4 trillion cubic meters of gas, which has now turned to out to be zero.
“It looks like we don’t have shale gas, we fought very hard for something that we do not have,” Victor Ponta, Romanian Prime Minister said.
Chevron, one of the ‘Big 6’ oil companies, has spent over $500 billion in searching for shale gas in Romania, and has the rights to over 9,000 square kilometers of land to drill, according to unconfirmed reports.
The American oil giant’s huge investment in the country caused anti-fracking protests to erupt in December 2013.
http://rt.com/business/204803-shale-gas-boom-bubble/
.
Looks like the source article has a typo. I'd believe $500 million.
Well, Bearing Guy is not an expert like these UT guys, but I have heard from a number of oil people (inc. exploration geologists, I used to work in the oilfields), and there is NO CONSENSUS on Peak Oil or even Peak Shale Hydrocarbons.
ZH almost always shows the pessimistic side of oil. While that may wind up being true, it is not a done deal in the oilpatch.
if there's one thing to remember about peak oil
it's not about what's left
it's what it takes to get it
Well, given the pessimistic side of oil is the financialization of the industry via leveraged debt and derivatives, what exactly is the optimistic side? A dead economy has no need for massive quantities of oil.
@ DJ and NA just above
True comments!
Nothing is really known now re the future of producing shale hydrocarbons. High costs, yes. Weak US economy, yes. We'll see what the future has to say.
I'm an exploration geologist who's worked in the patch for more than 30 years, more than 20 with a Supermajor mainly in global deepwater exploration which is where the Supermajors (XOM, RDS, BP, CVX, TOT, COP) focus most of their upstream exploration budgets.
In general you are correct that there is no consensus among geologists and engineers about the concept of peak HC's (conventional or unconventional) Although, within reason, most would agree that there are plenty of HC's left to be explored for, drilled, and produced in the next couple of decades. But the problem isn't the remaining quantity of HC's; it's the balance of exploration/ production cost, sustainability, and profit margin of different types of plays. In particular, margin and long-term sustainability, not quantity, is where shale plays are hurting relative to other currently "hot" conventional plays, such as the deepwater Gulf of Mexico sub-salt, deepwater South Atlantic pre-salt, and the circum-Arctic plays. This is why the Supermajors are placing bigger bets on these plays rather than the relatively low cost but low margin and low sustainability shale plays, which are largely dominated by heavily-leveraged small and mid-sized operators.
One example of many illustrating my point above would be the $700 million bet recently placed by XOM on one play-opening well in the Russian Arctic's Kara Sea where they disovered HC's but have, at least for now, lost the bet due to geopolitical BS.
http://www.ft.com/cms/s/0/d667e26c-457e-11e4-9b71-00144feabdc0.html#axzz3LWhz8BXH
Thank you, Do Chen Rolling Bearing.
Some eco whacko from Nature quotes a Polish professor from UT-Austin and his proprietary model.
The author never bothered to ask others about the model, the, data, or the academic's conclusions. Did he ask petroleum engineering professors from TAMU or LSU? Did he ask industry experts?
There are no credible numbers of U.S. total potential supply, only biased ones, because there are many more holes to drill.
Technology has changed...namely horizontal drilling capabilities. Nobody can predict when it will change again, and even more supply will be economically accessible.
It's all a matter of economics...saels price and the cost of production.
Thank you, Do Chen Rolling Bearing.
Some eco whacko from Nature quotes a Polish professor from UT-Austin and his proprietary model.
The author never bothered to ask others about the model, the, data, or the academic's conclusions. Did he ask petroleum engineering professors from TAMU or LSU? Did he ask industry experts?
There are no credible numbers of U.S. total potential supply, only biased ones, because there are many more holes to drill.
Technology has changed...namely horizontal drilling capabilities. Nobody can predict when it will change again, and even more supply will be economically accessible.
It's all a matter of economics...saels price and the cost of production.
SH~ZIZZLE bitchez!
Tylers ~ I promise to give you full copyright on SH~ZIZZLE if you promise to never kick me off ZH
+ SH~ZIZZLE !!
add a little butter & Worcestershire sauce & u got urself a burger!
ahoy...i'm sure you met...never again , or again, or again again....
Ahoy is just humbly sh~zizzlin' with Spaulding Smails
su nombre era
You don't sell the 'oil', you sell the 'SH~ZIZZLE'
Well, at least Goldman Sachs will be OK.
<Whew, that was close.>
Some important data about shale oil production which is more interesting than misleading stuff about shale gas.
The most number of producing wells in Texas was hit in 1985 with 210,477 wells producing 2.28m bpd.
In 1980 there were 175,673 wells producing 2.583mbpd.
So during the "oil boom" when prices were over $20/bbl for a few years in the early 80s, 35,000 new wells were drilled resulting in a production decline. Hardly seems profitable and it resulted in a spectacular bust because it was a bubble.
In 2008 there were 156,588 wells producing 947k bpd
In August 2014 there were 185,180 wells producing 2.53m bpd.
The 28,592 new wells are averaging 55 bbl/day while the old stuff operating in 2008 were averaging 6 bbl/day. The new wells drilled in this boom have resulted in a return to production levels that haven't been seen since the last boom started and all the new wells didn't even maintain production.
So what does that tell you about the productivity of new wells drilled today vs those conventional wells drilled in the past?
You think the Saudis are right to be shitting their pants? You bet they are and for good reason.
The last time production in Texas doubled it took eleven years to do from 1935 to 1946. This time it happened in three years and it's still climbing.
TEXAS HAS NEVER SEEN OIL PRODUCTION INCREASES LIKE THIS BEFORE IN IT'S HISTORY. Go look at the data for yourself
http://www.rrc.state.tx.us/oil-gas/research-and-statistics/production-data/historical-production-data/crude-oil-production-and-well-counts-since-1935/
Shale gas is for real.
So is oil at a buck a barrel.
Oil at a buck a barrel will happen when jesus returns.
in 1927 dollars?
But how much do the new wells cost to drill and run compared to the wells of 20 years ago?
And not only that, what is the difference in demand with EMs?
Cost to drill is higher because they are deeper. Cost to drill is around $500/ft and the average wolfcamp shale well is 14,000 feet so say $7m to drill and $2-3m to frac (bone springs wells are shorter by 3000 feet or more). IP rates will be in the 400 to 1000 bbl/day rate for a 4100 foot 22 stage frac. Now keep in mind that both drilling rates and fracking rates can come down. You can figure out profitability assuming a 60% annual decline rate which I think is more realistic than the silly 90% ruler being applied by those who wish to paint a dim picture. Service companies will cut profits to maintain business, they raised prices while oil prices were rising, they will cut them as oil prices drop.
Welcome back to the 1980s. The same thing happened out here -- then -- in my beautiful Western Colorado: it's not sustainable unless oil's at $140 in today's worthless fiat. Also, fuck shale and all other oil grubbers with a rusty auger like Eddie in Total Recall. Fuck them all.
speak for yourself, I own the land and water where oil is coming out of the shale and if I want to use the water to frac for oil, I will.
IN addition, this is nothing like what happened in the 80s, read my post above. From 1980 to 1985 here in Texas, 35,000 new wells were drilled and production declined. From 2009 to 2014, 28,500 new wells have been drilled and production has nearly tripled. WAY DIFFERENT THIS TIME.
Yeah, well if that's how you want to use your water, maybe we should engineer more drought for you prairie fucks. We should suck down all that rain so you're drier than a popcorn fart. Sip your own toxic brew for a while without dilution, you thoughtless money-grubbing pricks.
Also a landowner, who fights mindless cocksuckers like you every day of his life.
Sipping toxic brew is how I would describe reading your comments.
You should be sorry you posted that, Barnababy. I'm sorry I wasted time reading it.
Why? I bring the fight to these fuckers who come to my county, murder our whores and defecate in my streets.
You really need to scale back the invective and speak like a human. I will wager I am smarter and more educated than you and I don't suck dick. The water on my land is not drinkable and my land isn't useable for anything else. I have posted a picture of the frac well before but suffice it to say, my wells are in nowhere land. The section in Culberson county is 12m miles to the southwest of Orla, 40 miles northwest of Pecos and 70 miles south of Carlsbad. There is nothing out there to hurt for the most part and conventional shallow drilling is a lot dirtier than the horizontal frac enhanced wells they are drilling now. Save your invective for someone who cares.
That's a lot to type for somebody who doesn't care. Somebody drinks your goddamned water, Mr Frac Baron.
Cows and cactus thats it. What I don't care about is your invective. I won't let your baseless arguments by though.
21st century wells cost way more to drill and last far less time as producers than those in the 1980s. Well count went up by 28,500 between 2009 and 2014, but more than that were drilled as some of the 2009-2010 wells already aren't producing.
at $10m per well, cost $300b or so of capital to build those new wells, for that you got an extra 400m barrels or so per year of production, even at $100/barrell, that's $40b of annual revenue on production that is declining without continued investment in new well drilling. Hard to see how the math adds up.
the oil may be there, but it's not economic and there's going to be a lot of financial pain
but don't worry Janet will rev up the printers and make everybody whole
Don't exxagerate and not all those wells were shale either, there are plenty of conventional wells still being punched into the chalk because they make money over $40/bbl. The average cost per well is definitely lower than $10m. The ones that produce 1000 bbl/day are that expensive but those all paid for themselves in a few months as even you could figure out by doing the math using $90/bbl. The greatest amount of the production increase came from those kind of wells.
Can you tell me which wells drilled in 2009-2010 wells aren't producing now? Go look into some well production data before you just repeat baseless statements you read on the internet. I have, I know better. The crummy plays are the ones they use to pan the whole story, it's typical misdirection and misinformation. How do you think production has almost tripled in five years when that never happened before and well counts have increased more in less time in the past. Why don't you explain that along with the 90% decline rate bullshit. You can do the math on that and see it's a lie.
Admittedly I am not as close to the field as you, but I see $100s of billions of capital going in for incremental production that averages far less than 1000 bbl/day per well.
Even at the 60% decline rates that you say are a fair assumption, the capital needs to keep flowing at those levels just to maintain steady state. US public company shale plays have not generated free cash flow even with the high oil prices so on average safe to say they aren't enjoying the kind of economics you refer to.
And the bigger the play gets, the more needs to be invested to offset declines, and the more marginal the new properties to exploit.
No axe to grind, except to say that I think the idea of energy abundance or US energy independence is misleading and wasteful
Plummeting NGL prices will force NatGas producers costs way up.
Costs don't go UP because prices go down. They might go up for other reasons but not due to a price drop.
High NGL prices have subsidized Natgas production. It's called a by-product.
Anything else I can clear up for you?
That's okay... We'll all be puttering around in flying cars that run on solar power , wind power, and puppy kisses by then anyhow.
Puppy kisses - nice one!
OIL prices are headed for a bottom no one sees at the moment. Oil shale production isn't profitable below $60 dollars. All those shale fields will be abandoned when it's realized the price of oil ain't coming back any time soon.
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
" natural gas export terminals" Hell would freeze over before I invested in these businesses. If the great EU shift from Russian cheap gas to American LNG, shipped across the Atlantic in hundreds upon hundreds of LGN tankers, ever happened. The new gas price in Europe would simply bankrupt their economies. Existing low cost fields, existing pipelines right to distribution hubs, compared to Fracked Well, new pipelines, new terminals, new tankers, fuel for the voyage, capital investment in tankers, new terminals in Europe, new piplines to distribution points, and Debt Service costs for all that build up. Unlikely to be economically viable for the Sick EU economy.
There already is an LNG terminal in Freeport Texas. It hasn't been used much though. I think it would have to be a very cold winter in Europe for that to happen.
US LNG can't even fulfill Japan needs let alone Europe .
Yup. This is just yet another example of how the financialization of the global economy (while positive in some ways) created more harm than good. Loosy goosy coke and heroin handed out by the Fed via the FRN with dumbasses left and right taking the bait YET AGAIN on a Goldman hockey stick projection so they can sling toxic sludge all over the globe entirely reliant on iffy science and an artifically inflated oil price. Nope - no reason for caution here fellas!
It doesn't matter though when the game is being played. It's all about the action and buying and selling of bullshit back and forth.
I was going to upvote your comment until I noticed your belief that ponzi economics has some positive effects for those not in on the ponzi.
There's never a net positive when it's our future that's being consumed to pay for yesterday.
So shale is a bust because a government entity controlled by the new weather underground said so?
Shale is a boom or bust ? It's hard to understand .
US shale industry faces endurance test after Opec rejects cuts one of the leading shale oil producers, said Opec had “declared war” on the US industry US shale industry faces endurance test after Opec rejects cuts
http://im.ft-static.com/m/img/components/common/standfirst-border.png) 0% 0% repeat-x scroll;">If US crude were to average about $70 per barrel next year, EOG Resources and Anadarko Petroleum would have debts roughly equal to a year’s earnings before interest, tax, depreciation and amortisation
http://www.ft.com/intl/cms/s/2/1fedfe66-7f9b-11e4-b4f5-00144feabdc0.html...
OPEC was divided on the cuts. It's the gu lf states and Saudis against the rest and now the spilt is showing up in public.
http://news.yahoo.com/iran-fall-oil-prices-muslim-treachery-113608236--f...
TEHRAN, Iran (AP) — Iran's President Hassan Rouhani said Wednesday that the sharp fall in global oil prices is the result of "treachery," in an apparent reference to regional rival Saudi Arabia, which opposed production cuts.
Oil prices have plunged by more than 40 percent since June to around $65 a barrel, placing severe strain on Iran's economy, which is already hobbled by international sanctions imposed over its nuclear program. An OPEC meeting last month failed to reach agreement on production curbs, mainly because of Saudi opposition.
Rouhani told a Cabinet meeting Wednesday that the fall in prices is at least partly "politically motivated," the result of a "conspiracy against the interests of the region, the Muslim people and the Muslim world." His comments reflect concerns among Saudi Arabia's rivals that the kingdom is capable of withstanding the revenue losses and is forcing lower oil prices to damage their economies.
"Iran and people of the region will not forget such conspiracies, or in other words, treachery against the interests of the Muslim world," he said.
Saudi is also muslim so what exactly does he mean to say?
The drop in oil prices is already having an impact on shale extraction and offshore drilling.
While many claims have been made that US shale drilling can be profitable at low prices, actions speak louder than words. (The problem may be a cash flow problem rather than profitability, but either problem cuts off drilling.) Reuters indicates that new oil and gas well permits tumbled by 40% in November.
Offshore drilling is also being affected. Transocean, the owner of the biggest fleet of deep water drilling rigs, recently took a $2.76 billion charge, among a “drilling rig glut.”
Shale isn't that profitable at lower prices but it's here to stay . Thats what I believe .
Moslems have differences among them too Saudis are Sunnis and Iranis are Shias . They have been fighting for ages to proof that they are true descendant of Allah .
EXPLAIN THIS WRS1 : http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2...
and yet again another article with comments that can't separate shale oil from shale gas.
Are you saying this topic is "lacking in hydraulics?" Because if that's the case, it's a major burn for all the limp-dicked asswipes around here.
The bashers are stuck in the early 1900's Texas Oil Boom way of thinking -- drill to you find a 'gusher' that indicates a giant pool of oil waiting to be tapped. Shale oil and gas is not like that. The shale oil fields are spread over millions of acres, some more rich that others, but there is oil and gas under a LOT of those acres. You have to drill, frack, and suck a lot more times, and do it with a lot of wells, but until you run out of acres, there will be oil and gas out there.
The net cost of a lease that never gets drilled is low, as in near-zero.
The shale well's have a short life-span, and are far from the only source of profit for the companies involved.
So, how does this bankrupt them?
It seems to me that those companies will pump the existing wells dry, then wait for prices to rise again, and repeat.
Why wouldn't they?
No one has even mentioned the Green River formation, which is all BLM land and about the size of SPAIN.
I grew up there.
Drilling? We used rocks instead of firewood.when camping.
The cost of making shale into OIL is higher than conventional Oil.
But you don't really need OIL
You need energy. And shale has it.
So long as that is true, and The Powers That Be allow it to be used, then 'Shale Oil' will keep rising from the grave like a vampire.
Because Oil isn't getting cheaper for long, never has, and unless you think the developing world is going to placidly return to living in grass huts, won't stay cheap now.
OPEC will split at the seams and break apart first.
The most important metric is EROEI—Energy Return On Energy Invested. EROEI ultimately determines what demand and production will be. Any forecasts that do not account for EROEI are severely flawed.
Plus, the EROEI must account for all energy inputs. For instance, the EROEI for biofuels must take into account the fact that 100% of the fertilizers that dramatically boosted historic crop yields (e.g., the best, pre-ammonia-based fertilizer, yield for corn peaked in 1906 in Iowa at about 30 bushels per acre; today corn crops routinely yield 160-180 bushels per acre) comes exclusively from natural gas! That alone pushes biofuel EROEI into negative returns. If it were not for taxpayer subsidies and government mandated content requirements we would not be burning for transportation fuels. We would be drinking it!
OPEC's, especially Saudi and Saudi, EROEI's approaching if not surpassing 20, and their high prices! were giving direct subsidies to Canada's tar sands (EROEI < 3? Or worse?) and US shale oil and gas (EROEI?). I am not saying that is either good, bad or indifferent. It might be a good policy to use the very high EROEI producers to subsidize the very low EROEI producers. But, that should be part of an explicitly articulated policy.