Every week we seem to get news of a huge new shale reserve, the Cline, Monterey, others in Mexico, Australia, on and on.
Do you have any sense about if and when this (supposedly) burgeoning availability will cause the price and the boom to collapse? I see them more as updates on the same dozen or so new plays for the last couple years.
One issue with these tight formations is the drop in production rates is rather severe. For example in the Bakken:
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Source for Graph:
North Dakota Department of Mineral Resources
https://www.dmr.nd.gov/oilgas/presentations/WBPC2011Activity.pdf
With these production rates, you have to keep drilling constantly just to hold the total production rate at a constant. It takes a lot of drilling to make significant increases.
So getting another thousand wells drills isn't going to make the price plummet. It takes a lot of money to drill these deeper formation with long horizontal laterals. And it takes time, once you are working on the second 500, the first 500 are in significant decline of flow.
Good answer thanks.
I had previously seen the production drop-off data for the Bakken and that’s a good point.
We make our livelihood in the area and, as you know, it is impossible not to live the life that is being lived in a boom area, at least to some degree.
I don’t mean that one goes hog-wild...but the entire region is hog-wild and you have to adapt your business & business plan to the incredible pace.
The problem is of course that someday it will end, or at least slow considerably. That’s what booms do. We were all around during the 80s boom and one day the engines were roaring and then next day the crickets were chirping.
But this one...the 80s boom was fun and wild (and we were all young too) but this one is magnitudes larger, richer, scarier, much more prosperous and more perilous in every way.
Life. You gotta...be in awe of it.