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Oil Guru Destroys All Of The Hype About America's Energy Boom
TBI ^ | 1-21-2013 | Rob Wile

Posted on 01/21/2013 7:21:50 PM PST by blam

Oil Guru Destroys All Of The Hype About America's Energy Boom

Rob Wile
Jan. 20, 2013, 10:20 AM

Not everyone believes the U.S. is capable of becoming energy independent thanks to its shale oil and gas reserves, as the International Energy Association suggested recently.

The math just doesn't work out, they say — America consumes too much.

But some are even more skeptical than that.

Arthur Berman, an oil analyst with Labyrinth Consulting Services, says the promise of America's shale reserves have been vastly overstated.

His main argument: shale is too expensive to drill, and shale wells usually don't last longer than a couple of years.

Last year, he laid out his case at a gathering of the Association for the Study of Peak Oil and Gas in Austin Texas.

With his permission, we've reproduced it here.

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


TOPICS: News/Current Events
KEYWORDS: bakken; bhoenergy; economy; energy; oil; peakoil; recovery; shale

1 posted on 01/21/2013 7:21:59 PM PST by blam
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To: blam
Screw the oil.

We have so much natural gas that it dwarfs the oil.

2 posted on 01/21/2013 7:29:31 PM PST by E. Pluribus Unum (TYRANNY: When the people fear the politicians. LIBERTY: When the politicians fear the people.)
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To: blam
laid out his case at a gathering of the Association for the Study of Peak Oil and Gas

Hmmm, a clue.

3 posted on 01/21/2013 7:32:48 PM PST by razorback-bert (I'm in shape. Round is a shape isn't it?)
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To: E. Pluribus Unum

I was also afraid of this. The natural gas play may also suffer the same decline but the shale reserves are vast.


4 posted on 01/21/2013 7:33:43 PM PST by cicero2k
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To: E. Pluribus Unum; All

Oil and Gas reserves are mainly a function of price: the higher the price for feed stock, the greater the reserves, DUH!


5 posted on 01/21/2013 7:37:02 PM PST by Graewoulf ((Traitor John Roberts' Commune Obama"care" violates Anti-Trust Laws, AND the U.S. Constitution.))
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To: All

Business Insider is typically left wing crap.


6 posted on 01/21/2013 7:38:14 PM PST by Rodamala
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To: razorback-bert
Indeed. And what is his explanation for the increase in production from the Permian Basin in West Texas, where we have been pumping oil since al least 1940?
7 posted on 01/21/2013 7:41:47 PM PST by hinckley buzzard
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To: blam

There’s a huge one in Monterey, California. They say it’s MUCH bigger than the Bakken one.

However it’s in a VERY scenic place where there are TONS of total libs.

So....u know what THAT means...


8 posted on 01/21/2013 7:43:40 PM PST by gaijin
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To: blam

Berman is not a climate change nut, but neither is he truly a skeptic. Watch out for any of his proclamations.


9 posted on 01/21/2013 7:53:48 PM PST by Mamzelle
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To: gaijin

and Alaska, and west Texas, and Ohio, and the Gulf, and who knows where the hell else still unexplored. Not to mention natural gas.

By the name of the group alone that he works for he has an agenda.


10 posted on 01/21/2013 8:01:55 PM PST by Free Vulcan (Vote Republican! [You can vote Democrat when you're dead]...)
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To: blam

He’s right. To put it into prospective, Prudhoe Bay (at least 50% depleted) is the largest oil field in America with original reserves of 13 billion barrels. The numbers I have seen from the Eagle Ford are between 4 and 10 billion barrels. At best, it is a five to ten year flattening of the curve. We will still need the Canadians and Mexicans to increase production. Even Hugo Chavez will be sending oil our way for a long time.


11 posted on 01/21/2013 8:28:52 PM PST by crusty old prospector
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To: Free Vulcan

can you imagine what will be found under chiner?


12 posted on 01/21/2013 8:30:37 PM PST by stickywillie
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To: Rodamala
Business Insider is typically left wing crap.

BTTT

13 posted on 01/21/2013 8:38:46 PM PST by vbmoneyspender
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To: blam

Wasn’t there a post a couple of days ago saying that North Dakota production took a big hit from weather in Nov and Dec? That the hot fracking chemicals are moved by truck and lots of delays due to icy roads?


14 posted on 01/21/2013 8:44:10 PM PST by sgtyork (The secret of happiness is freedom, and the secret of freedom, courage. Thucydides)
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To: blam

might be significant if it not there are two and maybe three more three forks and baaken sized tight oil fields out there and a dozen or two smaller tight oil fields. baaken is about the most expensive of the lot.there will be rising production for some time to come.


15 posted on 01/21/2013 8:45:10 PM PST by ckilmer
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To: gaijin
There’s a huge one in Monterey, California. They say it’s MUCH bigger than the Bakken one.

Yeah...a new set of shale layers stretching from San Jose to south of LA...California’s oil shale resource is huge – more than 15 billion barrels in the Monterey formation, according to one estimate. It’s bigger than North Dakota’s oil reserve, where recently, thousands of wells have been drilled, and producing more oil than Alaska at 750,000 barrels a day.

And don't forget the GREEN RIVER FORMATION...weighs in at 3 TRILLION BARRELS..

With 1 Trillion barrels recoverable with today's technology.

Note that 1 Trillion barrels is about equal to the entire world's known reserves of oil.

Peak Oil is another fable invented by the dims ...like global warming.

16 posted on 01/21/2013 9:31:16 PM PST by spokeshave (The only people better off today than 4 years ago are the Prisoners at Guantanamo.)
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To: blam
Ha...that graph ends in october 2011...way out of date...try this one for size:

December 2012 was 750,000 with 900,000 by this time next year.

17 posted on 01/21/2013 9:39:50 PM PST by spokeshave (The only people better off today than 4 years ago are the Prisoners at Guantanamo.)
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To: crusty old prospector

“Prudhoe Bay (at least 50% depleted) is the largest oil field in America with original reserves of 13 billion barrels.”

According to oil execs that I had contact with in the 70s there is a field east of Prudhoe Bay that is 10 times the size of Prudhoe that was drilled and capped by Standard oil in the early 60s.


18 posted on 01/21/2013 9:41:15 PM PST by dalereed
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To: blam

This is a very unpopular subject but Art is most probably correct. Somewhere near the start of all this shale gas and shale oil ruckus he wrote an editorial for World Oil. The hue and cry came from all corners. Especially corners like Aubrey McClendon and Chesapeake whose collective ox is gored by negative press about their promoters paradise that is shale oil / gas. Art offered to debate any and all comers with valid technically supported arguments and if defeated he would write a retraction. That was about 5 years ago and Art is still waiting for the challenger.

For those who have read this far and poo poo’ed Arts illustration of the Baaken decline as only running to 2011 please note if you have read this far that Art has shown the effect of stopping drilling in mid-2010 and holding the number of wells relatively constant for the balance of the period shown. Production falls like a rock. 38% in the first year for the region as a whole with the mix of old and new wells. Point is, hyperbolic decline tight rock reservoirs are a treadmill of drilling investment to keep the rate flat or climbing. The wells do make money, they pay for themselves but it is hard to make them pay for other wells.

The main thesis is simple petroleum engineering / reservoir engineering. Wells decline producing less each day, except for strong water drives which shale ain’t. Tight rock, which shale is, decline faster than high permeability rock since it simply takes more energy to push the product from far away to the well bore. Yup, even if you frac them. There is also a feature of shale and other wells that are stimulated by fracturing... eventually the pressure in the rock declines and the rock sort of collapses and gets tighter. Mostly this happens in very deep high pressure reservoirs but it also happens in shale. There is also the problem of fines migration in shale. It eventually plugs the fracture conduits. The big question has been the shape of the decline curve. Is it exponential, hyperbolic or something else? There has been enough production by now to demonstrate is is probably hyperbolic. Hyperbolic decline falls at an increasing rate all the time. Exponential is a constant rate of decline. Hyperbolic is really fast.

This drilling provides what our society craves most... near instant gratification, style over substance and quick profits but not much in the way of an enduring asset. Everybody is flocking to it because it is the flavor of the day and if you don’t your stock will suffer. Production departments sell oil. Boardrooms sell stock, make big bonuses and get the hell out of Dodge.

The wells are a promoters paradise. High probability of finding oil, “factory drilling” meaning pretty much just cookie cutter processes requiring limited skill set (not that it is easy mind you but that it is highly repetitive once you get the formula down and keep screw ups to a minimum), high flush or early production providing rapid payout followed by a long and unspectacular production tail. If you can pay the operating expense for low productivity wells you will see low amounts of oil production from a well for decades. If you promote on a 1/3 for a 1/4 basis or are using other investor money you have no reason to stop drilling until you run out of OPM (Other People’s Money).

Don’t get me wrong, it is a nice story to see production improving and lots of jobs, very nice royalty checks for mineral owners. Huge amounts of money are injected into local economies. Long as the deal can keep going it is fat city.

We could get a lot of oil from these wells but we will likely have to be very very patient to get it. I’ve said for years we run out of economic production rate long before we run out of oil which is why leaving 65% of the original oil in place is considered being very successful by some.

Art is probably right.


19 posted on 01/21/2013 10:54:48 PM PST by Sequoyah101
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To: Sequoyah101
If Berman is right, why has production at Bakken been increasing?
20 posted on 01/21/2013 11:14:28 PM PST 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: Sequoyah101
Thanks for the insight.

Once again, posters here are confusing Shale Oil (trapped oil - Baaken) with Oil Shale (Kerogen - Green River) and oil sands (Bitumen - Alberta).

An excellent description of the differences is here.

The bottom line is that only Oil Sands is going to have a significant impact on North American energy independence, by adding another million or so barrels a day to Canadian oil exports by 2020.

Long term, Thorium is the answer.

21 posted on 01/21/2013 11:57:05 PM PST by Kennard
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To: Zhang Fei
why has production at Bakken been increasing?

Your link shows Baaken oil production of 660,000 barrels per day in late 2012, versus U.S. consumption of 20 million barrels per day.

22 posted on 01/22/2013 12:02:53 AM PST by Kennard
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To: blam

He is right. We drill locally but also conserve at the same time.


23 posted on 01/22/2013 1:17:43 AM PST by Cronos (Middle English prest, priest, Old English pruost, Late Latin presbyter, Latin presbuteros)
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To: blam

avoid both OPEC and oil companies...

the electric car


24 posted on 01/22/2013 3:23:28 AM PST by RockyTx
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To: crusty old prospector
Even Hugo Chavez will be sending oil our way for a long time.

Maybe Venezuela, but Hugo isn't going to be doing anything on this earth for a long time.

25 posted on 01/22/2013 3:27:38 AM PST by thackney (life is fragile, handle with prayer)
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To: spokeshave

Thanks, what a liar he is . Maybe title should be “oily guru.”


26 posted on 01/22/2013 3:35:36 AM PST by gusopol3
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To: blam
"Association for the Study of Peak Oil and Gas"

Why study when you've already made up your minds?

27 posted on 01/22/2013 3:39:00 AM PST by Fresh Wind (The last remnants of the Old Republic have been swept away.)
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To: Kennard
U.S. consumption of 20 million barrels per day.

The US does not consume 20 MMBPD of oil.

US Petroleum Product Supplied
http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_m.htm

While the total liquids is 18~19 MMBPD, that includes natural gas liquids, ethanol and the like. The products refined from oil are around 16 MMBPD.

Texas and other locations are also increasing in production. We are not dependent only on one or two fields. Texas has increased by a million barrels per day in about 2 1/2 years.

Texas Field Production of Crude Oil
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPTX2&f=M

28 posted on 01/22/2013 3:44:48 AM PST by thackney (life is fragile, handle with prayer)
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To: sgtyork

Weather whether summer or winter is a big player no matter where your at but more so up nth. Even down here in the Permian basin ice and snow can shut us down due to bad road conditions. While they thaw out pretty quick we then have to deal with the mud. I had to shut in 72 wells this summer due to heavy rains, roads were so bad my tanks were getting full and I couldn’t get the oil haulers in. Thats just the way it is in the patch.


29 posted on 01/22/2013 3:50:15 AM PST by Dusty Road
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To: hinckley buzzard

I’ve got some Wolfcamp wells over by Forsan TX that have been producing longer than that.


30 posted on 01/22/2013 3:54:28 AM PST by Dusty Road
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To: Graewoulf
We may not be past the point of "peak oil".

But it's difficult to deny that we are past the point of peak cheap oil.

The days of $1.50 gasoline are gone forever.

31 posted on 01/22/2013 4:49:04 AM PST by Notary Sojac (Ut veniant omnes)
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To: blam

The oil companies have over played their hand and kept gas prices too high and for too long. Usually they drop after a couple of years of profit taking so the SUV drivers feel safe in replacing their behemoths.. Now I see many are giving up low mileage vehicles forever. Look for consumption to level off and/or go down.


32 posted on 01/22/2013 5:10:42 AM PST by central_va ( I won't be reconstructed and I do not give a damn.)
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To: Notary Sojac

“The days of $1.50 gasoline are gone forever.”

If this are any future admin would step up and simply say we are going to open up all available resources both onshore and off and started doing it, we would see prices plummit over night. When the price went up over 4 bucks what did Bush do and what was the reaction?


33 posted on 01/22/2013 5:25:30 AM PST by Dusty Road
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To: central_va

“The oil companies have over played their hand and kept gas prices too high and for too long.”

And how have they done that?


34 posted on 01/22/2013 5:34:45 AM PST by Dusty Road
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To: Notary Sojac

The peak of global cheap oil occurred in 1972-3.

Then as now, it is all about supply and demand.

The amount of Oil and Gas in the Earth is finite, and the demand is infinite - - -, do the Math.

BTW, it takes a minimum of 1 Million years to create crude oil. Tick-tock - - - .


35 posted on 01/22/2013 5:42:17 AM PST by Graewoulf ((Traitor John Roberts' Commune Obama"care" violates Anti-Trust Laws, AND the U.S. Constitution.))
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To: blam
1. The shale play is more Natural Gas than oil, but oil is a part of it. 2. With horizontal drilling the vertical part of the well can be used multiple times to go horizontal in different directions, adding to the life and economies of each well. 3. Natural gas is so cheap now many wells are just being capped until the price goes up. 4. Hydrocarbons only need to get us by until we have a better (working, not green fantasy) solution. By all reasonable accounts we have 100 years or more supply. Think of how technology has changed in the last 100 years and how fast it is changing now.
36 posted on 01/22/2013 6:03:09 AM PST by jdsteel (Give me freedom, not more government.)
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To: Graewoulf

“Oil and Gas reserves are mainly a function of price”

Exactly. The price of natural gas is barely above $3 per Mcf. The producers are taking rigs offline to reduce supply and increase prices.


37 posted on 01/22/2013 6:27:09 AM PST by sergeantdave (The FBI has declared war on the Marine Corps)
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To: hinckley buzzard

and which is now a beehive of activity with new wells being drilled sometimes along side an existing well.


38 posted on 01/22/2013 6:33:23 AM PST by bert ((K.E. N.P. N.C. +12 .....The fairest Deduction to be reduced is the Standard Deduction)
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To: hinckley buzzard

Indeed. And what is his explanation for the increase in production from the Permian Basin in West Texas, where we have been pumping oil since al least 1940?

.....

Shale fields that were not economic to produce with last century’s technology.

Horizontal Steerable Drilling combined with Hydraulic Fracturing makes the shale plays economic to produce when combined with today’s oil prices.


39 posted on 01/22/2013 7:04:39 AM PST by thackney (life is fragile, handle with prayer)
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To: Graewoulf

“BTW, it takes a minimum of 1 Million (sic) years to create crude oil. Tick-tock” - GW

That is perhaps the biggest crock I have ever read on FR.

Have you ever taken a Chemistry course? Do you know what oil is?

I think the Nazi chemists were making synthetic oil during WWII. If I am not mistaken WWII lasted slightly less than 1 million years.


40 posted on 01/22/2013 7:16:59 AM PST by Triple (Socialism denies people the right to the fruits of their labor, and is as abhorrent as slavery)
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To: dalereed
“Prudhoe Bay (at least 50% depleted) is the largest oil field in America with original reserves of 13 billion barrels.” According to oil execs that I had contact with in the 70s there is a field east of Prudhoe Bay that is 10 times the size of Prudhoe that was drilled and capped by Standard oil in the early 60s.

East of Prudhoe Bay is ANWR which was originally set aside as an oil preserve. There is also an even larger oil preserve west of Prudhoe. There are know fields offshore from Prudhoe. If you believe rumor, ground penetrating radar from orbit says there is a much larger field further down at Prudhoe itself. Current projections are for forty to fifty more years of oil production at Prudhoe itself using current wells at a slowly declining rate followed by about the same for gas production.

I worked most of the last four years in Prudhoe. Peak oil is laughable...

41 posted on 01/22/2013 8:55:42 AM PST by El Laton Caliente (NRA Life Member & www.Gunsnet.net Moderator)
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To: Triple

” - - - synthetic oil - - - “ is not the same as CRUDE OIL.

BTW, what is the youngest known CRUDE OIL, World-wide?


42 posted on 01/23/2013 5:54:18 AM PST by Graewoulf ((Traitor John Roberts' Commune Obama"care" violates Anti-Trust Laws, AND the U.S. Constitution.))
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To: sergeantdave

“The producers are taking rigs offline to reduce supply and increase prices.”

Or maybe it’s as simple as not being profitable when the prices are that low.


43 posted on 01/23/2013 5:56:53 AM PST by Dusty Road
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