This page has been archived and commenting is disabled.
Arthur Berman: Why Today's Shale Era Is The Retirement Party For Oil Production
Submitted by Adam Taggart via Peak Prosperity,
As we've written about often here at PeakProsperity.com, much of what's been 'sold' to us about the US shale oil revolution is massively over-hyped. The amount of commercially-recoverable shale oil is much less than touted, returns much less net energy than the petroleum our economy was built around, and is extremely unprofitable to extract for most drillers at today's lower oil price.
To separate the hype from reality, our podcast guest is Arthur Berman, a geological consultant with 34 years of experience in petroleum exploration and production.
Berman sees the recent US oil production boost from shale drilling as short-lived and somewhat desperate; a kind of last hurrah before the lights get turned out:
The EIA looks at the US tight oil plays and they see maybe five years before things start to fall off. I think it is less, but I am not going to split hairs. The point is that what we found is expensive and we have got a few years -- not decades -- of it.
So when we start hearing people pounding the table about how the United States should lift the ban on crude oil exports, well that is another topic if we are just talking about free trade and regulation, but what in the world is a country like ours doing still importing 5+ million barrels of crude oil a day and we have got maybe 2 years of supply from tight oil? What are we thinking about when we claim we're going to export oil? That is just a dumb idea. It is like borrowing money from a bankrupt person.
I'll tell you what they're thinking about: the companies are thinking it is easier for them just to sell the oil directly overseas than it is to go through all the hassle of having to blend it with heavier oil and refine it here in the US and then go sell it overseas, as they have to do today.
Anyways, I think you just have to be realistic. Let’s give ourselves credit for ingenuity. We have done something that a few years ago probably almost no one thought was possible. But let’s also be realistic: this is the most mature petroleum province on earth. We are squeezing blood from a stone and as long as prices are high, we will squeeze a little more. And that’s it.
I like to talk about these shale plays as not a revolution, but a retirement party. I mean, you know, this is the kind of bittersweet celebration you have when you are almost out the door and are going to sit around the house and watch Duck Dynasty whatever for your remaining days. It's not really cause for a celebration. It is cause for some sobering concerns and taking stock about what does the future have in store for us as a country, as a world?
Click the play button below to listen to Chris' interview with Arthur Berman (55m:44s):
»
- 13894 reads
- Printer-friendly version
- Send to friend
- advertisements -
So they're lying to us again, huh?
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
You work in cyber security for Anthum? Fuck you.
Retirement party? Wait until fracking hits Saudi Arabia.
knukles, you know they're lying when their lips are moving.
Gartman "unchained"?...
Tight oil? Americans are way past needing that...
He must be in solar or wind energy... or some other crap he wants to sell
Just had a semi-off topic thought about "the truth"
You know, what we're told, how we're molded, how the propaganda and perceptions management works
So we got Brian Williams, an untrustworthy lying white man.
We're gonna replace him with a believable black man, Lester Holt.
The subliminal message, whether meant to be sent or not, is that it's not good to entrust knowledge to white men, They lie, cheat and steal. In the past (a la The Bammy's speech last week even went so far as to blame shit on Christians, too ... but he does reach out to the Muzzies.... y'all gettin' the picture?) they even had slaves. But all's rectified now. You can believe a black man.
Perceptions Management, Deluxe.
Now, what was somebody saying about the Glory of Shale Oil?
Sorta like that stuff about Ethanol (an energy sink)
And manufactured global warming data
And the war on terror ... well, I'm afraid things are not right. Does that count?
I keep hearing about them, but I havent seen a white person, or a photo of one !
Here's one.
http://www.circusentertainers.co.uk/Images/Mimes/Mime-web.jpg
Well, if I’ve got about 40 to 50 more years to go, I guess I’ll be in for a surprise in the future. We’ll all be.
I just saw a car for sale that gets 75 miles per gallon. There's lots of them now in the over 60 mpg class (just not in the USA) and these are not hybrids. These are small engine turbo diesel fuel injected cars with decent horsepower. Bring it on Saudis.
I fell in love with my 1989 Suzuki Swift back in 2005. Gas prices were climbing and the 48MPG I was averaging sure beat the 15MPG from my other vehicle. I put 100,000 miles on that car commuting to work over the next 5 years and saved a ton of money. Not just in gas, but in parts and maintenance. I decided to do a little research to find out why they stopped making that car in 2001. Turns out they hadn't, they just stopped bringing it in the US. The 2009 model was much more refined than what I had, plus it had a 3 cylinder turbo diesel that was getting 68MPG. Suzuki said it was going to start bringing that car into the US. Never happened. Anybody who has been to Europe or Asia knows what else is out there. Lots of car configurations that we'll never see which outperform our "hybrids" without the extra crap.
Absolutely. For many years I've seen the Toyota Tacoma pickup, called the Hilux everywhere in the world except here come with a 4 cyl. diesel engine not available in this country. I always assumed it had something to do with emission standards but we have these huge Power Stroke, Dura Max, and Cummins diesels in our pickup trucks. Just sayin'.
Not just cars but for nearly everything there is much more variety OUTSIDE of USA. We ditched USA for Singapore and the things that are available to us here are many, many times more than in USA.Same is true for most of Asia and Europe. And this does not even begin to include FINANCIAL SERVICES AND FREEDOMS.
Americanos are brainwashed into thinking that THEIR COUNTRY and only THEIR COUNTRY is the bravest and freest and richest and all that other ca-ca. The truth is that may havebeen the case decades ago but certainly not is now. That is why I always urge Americanos to leave USA even if only for a month or two and see what they are missing. Only then will they realize how much they are being lied to and how little they really have.
According to what we have been taught for decades, the axis of the Earth runs from New York to Los Angeles. Everybody knows that.
imagine if they put 3tillion into increasing energy effiecentcy in existing technologies. instead of just printing it and giving it to bankers.
I would probably be out of a job. Which would be OK. I'm about ready to retire anyway. I'm not a banker, I drill oil wells.
Uh-huh. You're assuming a significant percentagege of the population having the $$$ to pony up for any new car, much less an expensive one with a diesel engine. And we won't even discuss the price of diesel.... I don't know what it costs where you live, but up here in central MN the extra fuel cost completely neuters the mileage savings. These cars are only a game changer in a nation with a large middle class. That horse is out of the barn.
If shale oil is so 'over-hyped' and is going to run out in a few years anyway - then WHY are the Saudis so afraid of it?
Because there are only months left before the crash?
Because Saudi is a fraud, and they may very well not have all those reserves they are supposed to.
Or Saudi is doing American bidding in a last desperate Imperial War to destroy Russia, crashing oil being an economic tactic in that American war.
I'm not sure Saudi fears American tight oil, but taking back market share and killing it can never be a bad thing, sort of Saudi insurance.
The Fracking of oil is proof, if proof be needed that no new oil finds are cheap oil, like saudi has, like Russia has. All new oil is on the margine, deep water, deep under ground, fracked, or mined tar. Face it, we would not frack at all IF there was ANY easily recoverable oil.
http://anticorruptionsociety.com/anatomy-of-a-con-job/con-2-oil-is-not-a...
http://www.amazon.com/The-Deep-Hot-Biosphere-Fossil/dp/0387952535
https://en.wikipedia.org/wiki/Thomas_Gold
So much of what we think is true is a lie, why not this too? Motive - make money off us suckers, the usual reason.
Saudi wells are very old and are under intense water pressure to keep producing. Reduce the pressure to reduce the flow and Gharwar and the other 50 year old elephant fields will never recover to their current levels of production. Saudi must keep pumping or lose its remaining resource.
Correct. Saudi is producing all it can all the time. My information comes from friends working for Aramco 20+ years. They live there. I worked there many years ago when they could ramp up production at will but those days are over. What amazes me is people still believe their bullshit.
Saudi economy is fake just as China's economy is fake and of course the biggest faker is USA. All you have to do is read USA economic statistics to see what a lot of lies and rubbish it all really is.
Even more intesting is WHY is BUFFET's BNSF railraod building another set of tracks between North Dakota and Seattle? You would think Buffet will all his $$ would have that researched before building another set of tracks because the line is so congested with OIL freight traffic.
"WHY is BUFFET's BNSF railraod building another set of tracks between North Dakota and Seattle?"
To accommodate the anticipated inter-FEMA camp traffic?
Because Saudi oil is like American Fort Knox gold . . . . . . . "trust us, it's there".
Bingo!! see above post.
The biggest lie of fracking is that rupturing the sub-strata and pumping in water and chemicals won't cause ground instability nor negatively impact the water supply. You'd have to be a nincompoop to believe that tale.
Hey ebbie.... Didja see the latest one about Dallas? The earth-quakers decided that the earthquakes hand 'nuffin' to do with fracking, etc., but all caused by a Newly Discovered Fault
Tee hee heh
Too fracking funny!
It's not my fault.
"negatively impact the water supply."
Ain't nothing wrong with the water supply. Any fracking chemicals are pumped back out after the fracking is complete. Then they truck it all back to where it came from to recycle and dispose. It's not like they'd just dig a different hole and pump all of the fracking waste down it instead. I mean, that would be bad for the water, but that's not what they do. Oh wait...
did you know fracking is used for some groundwater production wells? groundwater pumping causes subsidence? Did you know creating lakes increases the pore pressure in the underlying strata sometimes causing earthquakes? Did you know our industrial complex has contaminated more drinking water wells than fracking ever will? Massive amounts of shallow groundwater contamination for decades and everyone is in a tizzy over fracking. Talk about a con job.
It pleases me to know there's somebody else here that isn't sucked into the fracking bullshit.
I am not gonna waste my time 55 minutes. Need to do some research on this dood cause I think he is full of shift. Bad attitude or something. Dunno. Greeny weeny using wind mills paid for by tax payers? Dunno. But I am an energy economist with 35 + years experience and wonder about his credentials. We have a couple of mega fields that make SA look like a freaking joke. And for what it is worth - virtually NO one could forsee Shale 7 years ago.
Check out Sprayberry/Wolfcamp with Est reserves of 10 billion barrels. There are several others.
True and you'd know more than me, but the question is getting it out. Getting outside of sweet spots and there's a lot of shitty wells with huge declines and a lot of water.
Yeah they do decline quickly. In some case 50 - 60 % first year. But it is OUR EFFING oil. Not some camel jockys. And we do have lots of it. As does Canada. I rather keep my oil supplies close. 60 bucks to ND or Alberta not SA. Eff OPEC
The decline depends on what the comparison is against. There is usually one month of high production and then 8 or 9 months of production at about 70-80% of that. Then the decline is about 20% from the 70-80% of peak number. Those values are generally in the 100s of barrels per day which are still better than conventional wells IP'd at back in the days when they had to punch 16 per section to get any decent production.
He completely missed the boat on Shale Gas ... here interview with PEAK oil Review.
http://www.theoildrum.com/node/6785
5 years ago. Yeah - That Shale Gas is BS Berman got it right. NOT. Maybe he can explain Natural Gas at barely over 2 $/M in FEBRUARY. phooey
Or the massive growth in production from Marcellus................
10 billion barrels ain't shit at the rate we hoover the stuff up. It's about a 17-18 month supply for just the US. A trillion barrels would be significant.
Answer seems to be no, Art is not regarded as a positive force in the industry. But we'll soldier on despite him.
Go long. The stupid bastads screwed the pooch BIG TIME with renewable energy trying to form carbon markets. Australia is again front and center for this shit as Al Gore et. al. are having, once gain, a bukakki party and the person in the middle is... the rest of us. I can't wait to see how helium 3 works out... When the last banker, crony and lobbyist are found hanging from the end of a rope then, and only then, will real progress be made...
Long Hydro and you can bet your sweet ass that oil will make a very serious comeback. The stalking horses that created this situation (both renewable and the oil problem), are in position to make a killing here. Timing is everything.
Oh, and an observation. During the latest snow storms and serious cold here in New England, I've yet to see a single electric car on the road let alone an electric snowblower. Hell, even mass transit has had one hell of a time with the 3rd rail freezing which effectively shut down the T. A new substation had a massive transformer explode (This was built to accomodate all that Cape Wind offshore fiasco that will never be built even though the crony ownership cashed in on hundreds of millions in stimulus funds), and nearly caused the entire grid to go down in this region.
Congratulations! I just can't get enough of the smartest guys in the room. /s
Renewable energy. Once upon a time out here in the Land of Lunacy and Democrats, wood fires were thought to have been renewable, green, etc.
Now many day a year, there's a ban on wood fires because of the soiling of the skies and in some areas, in fact even considered at state level, the outlawing of wood burning stoves (gasp!)
blah, blah, blah...another peak oil "expert". Show me a link to where this fucker predicted the smash from $100 to $50 per barrel.
Reminds me of 2007, when Jim Puplava and that twilight in the desert cocksucker were predicting oil shortages and rationing by now!
The fucker didn't even know how to use a hot tub properly.
Yes, but according to Jim, gold and the market in general isn't manipulated. That's why I stopped listening to him years ago.
let the fucking markets function. all this keynsian printing after 08 caused oil to stay at 100 for 5 years, hence the fracking bubble. let solar, wind stand on there own against oil. all this shit wouldn't be happening. the fucking government/privatly held fed is the root of all these economic problems. it has affected my life, my sons and millions of other peoples lives, and not in a good way. bubbles wreck havoc like rolling blackouts...
Oil production will remain high....regardless of shale until there are fewer players and then prices skyrocket
Energy Company’s Consolidate…….Oil Price Cut Working
Russia Oil Output Hits Post-Soviet High
Exxon Sees Abundant Oil & Gas Far Into Future
G20 Profits Off Massive Subsidies For Fake Peak Oil
ExxonMobil Joint Venture With Russia’s Rosneft Begins Production Offshore Russia
Louisiana’s LQT Delivers Oil Rig Housing To Sakhalin Russia
We're not running out of oil anytime soon. What we're running out of is cheap easy to get oil. You ain't going drill in deep water for $50 a barrel. Same thing for a 20 stage frac job in a 8000 ft. horizontal.
You would think that the Saudis would just wait it out if Shale is running out soon. Must not be soon enough. They are going to have to keep the price of a barrel low indefinitely or shale/fracking will just pick up where they left off.
That will happen anyway. There's money to be made.
We seem to find oil where ever we look for it. Oil will be affordable for decades to come. Recall a few years ago U.S. ethanol production was using up a good portion of the corn crop, and overseas demand for corn went up. The experts said we would never see low corn prices again.....guess what happened then.
Why can't all the wonderful economic thinkers on ZH do a marginal cost analysis?
Here's something to get you started:
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
Look at new oil fields--does the economics work? If not, you are living off the past and making plans for that retirement party, whether you like it or not.
Good post Hohum. The oil is there. It's everywhere. And new tech brings more oil out at a cheaper price, over time. (inflation adjusted)
See "The Dangerous Economics of Shale Oil/ Zero Hedge December 24, 2104"
www.zerohedge.com/news/2104-12-24/dangerous-economics-shale-oil
Reports of shale wells not being economically viable started to show up fairly often early in 2014, before prices started to fall. On May 20, 2014 the EIA announced that it had downgraded its estimate of recoverable oil from California's Monterey field by a whopping 96% - a real eye-opener. Not only were the economics of shale oil shaky, but the estimates of huge potential reserves of oil were in doubt.
Similarly, the estimates for shale natural gas reserves have suffered severe downgrades, and the economics of shale gas have been called into question.
Then the recent fall in oil prices focused attention on the large debts shale oil and shale gas drillers had been accumulating to keep drilling to maintain some cash flow to service their increasing debts even though ultimate profitability of each well was in doubt, even when prices were higher.
Last year, there were stories of major companies stopping their drill programs in some areas, with the big activity becoming the trading of shale leases and stock-market promotions replacing drilling as the profit-making activity.
As one commenter has asked: If shale oil has such limited prospects, are we to believe the story that Saudi Arabia has crashed the price of oil in order to kill off US shale production? That theory for the Saudis reducing the price of oil and costing themselves so much money in the process sounds weak. Other theories I have read about the Saudis are that: (1) the Saudis are trying to maintain market share in Asia; (2) the Saudis are trying to assert leadership within OPEC and disciplining other OPEC members for cheating on production quotas; (3) the Saudis have been tricked by the CIA into pumping excess amounts of sea water into their aging fields to stimulate falling production, and they dare not slow production since the sea water will then spread through the fields and reduce ultimate recovery; (4) the Saudis were persuaded by John Kerry to lower the price of oil to force Russia to stop fighting the West over Ukraine; (5) the Sunni Muslim Saudis want to reduce Russia's ability to support Shiite Iran because Iran is supporting Shiites in Iraq, Assad in Syria, and Shiites in Lebanon in a grand fight for leadership of the Muslim world and dominance of the Middle East; and (6) to advance the US/EU/Sunni/Israeli project to bring Middle East natural gas to the EU via pipelines, which Russia-backed Syria is blocking.
Here's my preferred explanation for why the Saudis pump like they do:
Population: https://www.google.com.au/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&s...
and
GDP per capita: https://www.google.com.au/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&s...
Norway & Saudi Arabia. Two nations that started out from a similar population level, both had oil and had the chance to become prosperous. One did, one did not. The Saudi regime must pay welfare to its booming populace or it's dead meat; Arab Spring -> Gaddafi style. No amount of US 'protection' will be able to stop the violent revolution. The best the rulers can hope for is to get on a private jet out of there before the mobs come.
Saudi Arabia's past experience with cutting production, in an attempt to boost prices, is that it's a fiscal no-go. They pump, they pay, they keep their heads.
Fracking a 'Golden GimmicK... anyone[?]-- Middle Eastern Oil (adduced): An Historical Perspective and Outlook May 26, 2003 ?!?
and, tyming the rhyming acoustics of anachronistics morrows`ineluctables'[?]...
http://en.wikipedia.org/wiki/Golden_gimmick
http://www.freerepublic.com/focus/f-news/918168/posts
A lot of oil companies trying to hire Art. Not..
But he's been a darling at meetings for a few years. Exciting!
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
In case you were thinking that renewable energy would ride to the rescue:
Renewable energy 'simply won't work': Top Google engineers
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that renewables will never permit the human race to cut CO2 emissions to the levels demanded by climate activists. Whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren't guys who fiddle about with websites or data analytics or "technology" of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company. The duo were employed at Google on the RE<C project, which sought to enhance renewable technology to the point where it could produce energy more cheaply than coal.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
Coal! When oil and natural gas companies lose the easy Wall St. money, coal will make a big come back.