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When will the Shale Bubble Burst?
OilPrice.com ^ | 31 October 2013 | Tom Whipple

Posted on 11/01/2013 7:03:46 AM PDT by thackney

Most of us are aware by now that the introduction of widespread hydraulic fracturing into the oil and gas business has resulted in a rapid growth in U.S. production. U.S. crude output is up by nearly 2.5 million barrels a day (b/d) since mid-2007 and natural gas production is up by 25 percent. The key question of course is how long production will continue to grow before it inevitably declines. Optimists maintain that we have just scratched the surface of our shale oil reserves and that production will continue increasing for years, if not decades.

Realists are not so sure, noting that not only is fracked oil very expensive, requiring circa $80 a barrel to cover the costs of extraction, but that production from fracked oil wells drops off quickly so that new wells have to be drilled constantly to maintain production. Until recently information about just how fast our fracked oil wells were depleting was rather hard to come by, so that the hype about the US becoming energy independent and a major oil exporter became conventional wisdom for most.

Last week the US’s Energy Information Administration issued the first in a new series entitled Drilling Productivity Report for key tight oil and shale gas regions. This report analyzes the six onshore oil and gas regions in the U.S. where 90 percent of the growth in oil production and nearly all of the growth in natural gas production has taken place in the last few years. The report tallies the number of drilling rigs at work in these six regions; the amount of new oil and gas they are bringing into production each month; and most importantly, the rate at which production from those wells already in production is falling.

Nearly all.. growth... from NorthDakota's Bakken... Texas’s Eagle Ford.

(Excerpt) Read more at oilprice.com ...


TOPICS: News/Current Events; US: North Dakota; US: Texas
KEYWORDS: bakken; carbontax; eagleford; energy; kenyanbornmuzzie; oil; opec
Drilling Productivity Report
http://www.eia.gov/petroleum/drilling/
October 22, 2013
1 posted on 11/01/2013 7:03:47 AM PDT by thackney
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To: thackney

Peak oil never dies.


2 posted on 11/01/2013 7:06:35 AM PDT by E. Pluribus Unum (Who knew that one day professional wrestling would be less fake than professional journalism?)
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To: thackney
The key question of course is how long production will continue to grow before it inevitably declines.

Hu knows. I guess as long as the geological forces that created our current supply continue.

Once those forces end, all bets are off.

3 posted on 11/01/2013 7:09:13 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: thackney

Since the international bankers rig the price at the New York rate, and it is so much cheaper to get than the muslim oil, even with the barriers that Baraq Hussien has erected, the shale boom will wane only when refineries are built to exploit even cheaper sources.


4 posted on 11/01/2013 7:10:55 AM PDT by PAR35
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To: thackney

When liberals completely take over our government.


5 posted on 11/01/2013 7:10:57 AM PDT by Phillyred
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To: thackney
Optimists maintain that we have just scratched the surface of our shale oil reserves...Realists are not so sure...Ah, yes. The eternal battle. Optimists versus realists. Who will win!? Stay tuned. And, in the meantime, subscribe to...
6 posted on 11/01/2013 7:13:55 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: thackney

Quit exporting and keep it home and we would be truly energy independent. Then stop importing.


7 posted on 11/01/2013 7:16:29 AM PDT by Resolute Conservative
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To: thackney
I'm following the development of the sand mines in Wisconsin.
There appears to be no end in the start-ups.
8 posted on 11/01/2013 7:17:04 AM PDT by Eric in the Ozarks ("Say Not the Struggle Naught Availeth.")
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To: Phillyred

When liberals completely take over our government.

Where you been?


9 posted on 11/01/2013 7:17:33 AM PDT by Vaquero (Don't pick a fight with an old guy. If he is too old to fight, he'll just kill you.)
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To: PAR35
Since the international bankers rig the price at the New York rate, and it is so much cheaper to get than the muslim oil,

You have multiple delusions...

10 posted on 11/01/2013 7:18:21 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
The Green River shale has not been tapped. It is said to have 1000 barrels per acre or square mile, I forgot. The government controlled by current no drill dictates has much oil also. The Denver Post has an article on the oil shale with extraction at $35 a barrel before fracking came along.

I think these stories are fabricated to make it sound like oil supplies are short to rationalize high prices like gas over $3.00 for over 1000 days.

11 posted on 11/01/2013 7:22:02 AM PDT by mountainlion (Live well for those that did not make it back.)
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To: Resolute Conservative
Quit exporting and keep it home and we would be truly energy independent. Then stop importing.

We consume 16.5~16.9 MMBPD of products refined from crude oil.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTPUPUS2&f=M

We produce domestically ~7.5 MMBPD of crude oil.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M

You must have different math than what I use as an engineer.

12 posted on 11/01/2013 7:22:27 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

My grandfather was a petroleum engineer, active in the industry from the mid 1920s right up to his death in the mid 80s. 60 some odd years.

We have known for decades the oil that was easy to pump was like (to borrow an overused metaphor) the part of an iceburg that sicks up out of the sea. There is an order of magnitude more oil to be fracked than there ever was to be brought out of the ground in gushers.


13 posted on 11/01/2013 7:25:08 AM PDT by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: thackney

You must use far different math in your branch of engineering than that compatible with ordinary addition and multiplication.

The rest of us consider increasing production to be the solution - but you can go right ahead with your zero sum gain view of the oil industry.


14 posted on 11/01/2013 7:28:26 AM PDT by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: E. Pluribus Unum

Peak Oil and now Peak Gas Alarmism:

http://www.forbes.com/sites/davidblackmon/2013/05/13/the-illogic-and-folly-of-peak-oil-or-is-it-peak-gas-alarmism/


15 posted on 11/01/2013 7:31:07 AM PDT by SC_Pete
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To: thackney

Personally I hope they soon develop the technology to safely mine the undersea methane ice fields, which are basically giant bombs waiting to go off with little or no warning, and likely with both short and long term destruction on a huge scale.

Even if they were mined just using the energy produced to mine more, it would be worth it. But since mining would likely make available a very large source of energy, we might as well take advantage of it.


16 posted on 11/01/2013 7:33:30 AM PDT by yefragetuwrabrumuy (Welfare is the new euphemism for Eugenics.)
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To: thackney

When Obama outlaws it....by whatever means....


17 posted on 11/01/2013 7:33:34 AM PDT by G Larry (Let his days be few; and let another take his office. Psalms 109:8)
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To: thackney

Drill. Build nuclear and natgas plants to produce electricity. Drill more. Buy from Canada.

BTW, I am an engineer as well. My statement was not based on math, but on desire and necessity.


18 posted on 11/01/2013 7:38:07 AM PDT by Resolute Conservative
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To: thackney

Where do you see oil prices bottoming out? $80? $60? Are the Saudis about to crash oil prices just to make life interesting for fracking operations?


19 posted on 11/01/2013 7:38:11 AM PDT by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: mountainlion
The Green River shale has not been tapped.

The Green River shale does not have crude oil that has been cooked out of the rock like the Bakken or Eagle Ford. It is a less thermally mature formation

It can only be produced by retorting, essentially cooking the shale to release kerogen, which is made into a synthetic crude oil for use in a refinery.

It is significantly more expensive. That $35 number turned out to be far off when Shell did their Mahogany Pilot project and turned the theories into actually flowing wells.

Mahogony Oil Shale Project
http://www.shell.us/aboutshell/projects-locations/mahogany/technology.html

20 posted on 11/01/2013 7:40:30 AM PDT by thackney (life is fragile, handle with prayer)
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To: MrEdd

So you know we are a net importer. And you still think is we stop exporting we would be energy independent?

You changed the method from this post to the last one.

Yes if we grow production enough we could overcome the need to import. That wasn’t what you wrote.


21 posted on 11/01/2013 7:43:18 AM PDT by thackney (life is fragile, handle with prayer)
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To: MrEdd
That wasn’t what you wrote.

Sorry, that wasn't you. But it was the post I was responding to.

22 posted on 11/01/2013 7:45:37 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

They tried a nuclear detonation to get the crude oil out but it left a huge underground cavern and they got little oil.


23 posted on 11/01/2013 7:48:00 AM PDT by mountainlion (Live well for those that did not make it back.)
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To: Resolute Conservative
Quit exporting and keep it home and we would be truly energy independent. Then stop importing.

My statement was not based on math, but on desire and necessity.

So to become energy independent, we stop exporting the surplus refined products that we don't use, wait for the magic to happen, then stop importing?

24 posted on 11/01/2013 7:48:30 AM PDT by thackney (life is fragile, handle with prayer)
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To: mountainlion
They tried a nuclear detonation to get the crude oil out but it left a huge underground cavern and they got little oil.

I believe it was for Natural Gas.

Project Gasbuggy tests Nuclear Fracking
http://aoghs.org/technology/project-gasbuggy/

It did release more gas, but the gas was radioactive. Although a 50-kiloton nuclear explosion to fracture deep oil shale deposits – Project Bronco – was proposed, it never took place.

25 posted on 11/01/2013 7:51:33 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

Shale gas acquisition deals and enthsiasm are down and somnolent due to the very low US price for nat-gas. Oil being 100x more fungible has a better future at the moment.

I hear this stuff from my cuz who is an energy trader.


26 posted on 11/01/2013 7:52:31 AM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: thackney; Republicanprofessor; All

The EFFECTIVE Oil and Gas Reserves are a function of the price a buyer is willing to pay for Oil and Gas.

The lower the price the less profitable will be the production of Oil and Gas, and thus the lower the volume of profitable Oil and Gas Reserves.

At a certain point, the demand for Oil or Gas will cause the price to go up, and then there will be more effective (=profitable) reserves.

Although there is a finite amount of Oil Shale in the World, and thus an even smaller finite amount of Oil and Gas that can be produced from that shale, small amounts of Oil and Gas are being continuously generated in some sedimentary basin “kitchens” with suitable conditions.

Estimates of future supply and demand usually deplete Oil and Gas Reserves in the Hundreds of years range.


27 posted on 11/01/2013 7:53:19 AM PDT by Graewoulf (Traitor John Roberts' Marxist Obama'care' Insurance violates U.S. Constitution AND Anti-Trust Law.)
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To: Zhang Fei
Where do you see oil prices bottoming out? $80? $60?

If I could predict where oil/gas prices were going to move to, I would not have to work for a living. Understanding how the oil industry works is far different than predicting everything that effects the price of oil, like politics, wars and new technology.

Are the Saudis about to crash oil prices just to make life interesting for fracking operations?

I do not believe they have that ability. They are spending more and more dollars themselves for enhanced oil recovery projects. They are no longer doing simple drilling themselves.

28 posted on 11/01/2013 7:54:25 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

If we have a surplus why are we importing? It is not that hard. Use what we have first then buy what we need. Not buy first. Damn economics, I am tired of feeding muzzies missile money.


29 posted on 11/01/2013 7:56:27 AM PDT by Resolute Conservative
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To: PAR35

Where did you hear about this ?


30 posted on 11/01/2013 8:04:58 AM PDT by Eric in the Ozarks ("Say Not the Struggle Naught Availeth.")
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To: thackney
They are spending more and more dollars themselves for enhanced oil recovery projects. They are no longer doing simple drilling themselves.

If true, there will come a day when their domestic gasoline (sold at $0.45 per gallon) subsidies will cost them real money instead of representing opportunity cost.

31 posted on 11/01/2013 8:06:23 AM PDT by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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To: Resolute Conservative
If we have a surplus why are we importing? It is not that hard.

We do not have a surplus of crude oil. We need a lot more crude oil to meet our demand of refined products.

We are exporting some surplus refined products. Since our domestic demand is smaller than our total refinery capacity, we import more crude than we need and export the higher dollar value product. It keeps more jobs in the US, helps keep us a running refinery capacity surplus, and give a bit to help our trade balance.

It is not that hard. Use what we have first then buy what we need.

We are.

Crude oil is not the same as gasoline. It takes refining first.

32 posted on 11/01/2013 8:11:21 AM PDT by thackney (life is fragile, handle with prayer)
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To: Zhang Fei

It cost them real money now. They consume ~3 MMBPD and only refine 2.1 MMBPD. They have to pay someone else to refine the difference, import the product, then give it away in country.

http://www.eia.gov/countries/cab.cfm?fips=SA


33 posted on 11/01/2013 8:18:37 AM PDT by thackney (life is fragile, handle with prayer)
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To: Eric in the Ozarks

I suspect it was while boating on a major river in Egypt.


34 posted on 11/01/2013 8:20:22 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

http://oilshalegas.com/greenriveroilshale.html

Here are some more interesting facts that I will soon forget.


35 posted on 11/01/2013 8:32:34 AM PDT by mountainlion (Live well for those that did not make it back.)
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To: thackney

I still think nat gas is hotter...


36 posted on 11/01/2013 8:34:42 AM PDT by Eric in the Ozarks ("Say Not the Struggle Naught Availeth.")
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To: Graewoulf

Not exactly. If prices fall and profits with it, you can increase revenue by increasing production. The only problem is “cost of production”. As technology advances or regulation declines, “cost of production” will also decline.

Americans are terrific at this. We can do the same with energy and produce giant volumes of low cost energy while protecting the environment. Capitalism works! Unchain the capitalists, set them FREE.


37 posted on 11/01/2013 8:35:51 AM PDT by faucetman ( Just the facts, ma'am, Just the facts)
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To: mountainlion

Yes, but out of date.

They talk about the same Shell project I linked as ending around 2010~2012. So it was written before 2010. The results of the completed test are available.


38 posted on 11/01/2013 8:36:19 AM PDT by thackney (life is fragile, handle with prayer)
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To: Eric in the Ozarks

I don’t know why you think that. Less BTUs, smaller molecule with less atoms to oxidize. Test result show differently.

But hope springs eternal...


39 posted on 11/01/2013 8:38:22 AM PDT by thackney (life is fragile, handle with prayer)
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http://oilprice.com/contributors


40 posted on 11/01/2013 11:15:31 AM PDT by SunkenCiv (http://www.freerepublic.com/~mestamachine/)
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To: thackney

Here you go - heating oil pricing calculated for New York Harbor.

http://www.economagic.com/em-cgi/data.exe/doecrude/day-EER_EPD2F_PF4_Y35NY_DPG

And retail gasoline is calculated off of what it costs at New York harbor, not what it would cost at the local refinery. Big profits to the oil company, bigger profits to the international bankers who rig the market.


41 posted on 11/01/2013 11:58:12 AM PDT by PAR35
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To: thackney
More BTUs per gallon.
Prettier flame !
42 posted on 11/01/2013 12:06:20 PM PDT by Eric in the Ozarks ("Say Not the Struggle Naught Availeth.")
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To: thackney
So we still import half of what we use ?

43 posted on 11/01/2013 1:39:29 PM PDT by American Constitutionalist
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To: American Constitutionalist

It used to be more than that not to long ago. At least we have reversed the trend. The percentage is going down not up.

In 2006, our crude oil production was 27% of our refined product consumption.

U.S. Field Production of Crude Oil
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=a

U.S. Product Supplied of Finished Petroleum Products
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mtpupus2&f=a


44 posted on 11/02/2013 4:48:51 AM PDT by thackney (life is fragile, handle with prayer)
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To: PAR35

Do you think a link of price in some way validated your false claims?

God’s Peace be with You.


45 posted on 11/02/2013 4:54:40 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

You might start here:

http://auto.howstuffworks.com/fuel-efficiency/fuel-consumption/gas-price-quiz.htm

And if you think that supply-and-demand controls the prices, we probably don’t have a place to start a discussion.


46 posted on 11/02/2013 6:28:42 AM PDT by PAR35
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To: PAR35

So which of those ten question had anything to do with your claim? Asking what OPEC stood for? Volumes imported?

None of it was related to your claims.

On the new topic you jumped to, do you understand government regulations, taxes and the liquidity in the market all are part of the supply and demand curves?


47 posted on 11/02/2013 8:49:45 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

Art Behrman’s analysis from last year presents the decline for shale oil. He took all the wells drilled to the end of 2010 and stopped drilling at that time then tracked just the ensuing two years or so of decline. It drops like a rock. Like all “resource” plays shale required drilling like a mad man to keep production going and the drilling pace has to ever increase to keep production growing.

People don’t understand that we will run out of rate long before we run out of reserves. From time-to-time people figure out how to coax some more squeal out of the pig at ecoomic recovery rates. You gotta convert resources to reserves. Lots of resources for conversion by someone who can figure out how.

So it has been, so it is and so it will be.


48 posted on 11/03/2013 6:16:37 PM PST by Sequoyah101
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To: Sequoyah101
People don’t understand that we will run out of rate long before we run out of reserves.

Well said, BTTT

49 posted on 11/04/2013 5:17:35 AM PST by thackney (life is fragile, handle with prayer)
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