Category: Energy

Some moderately technical background on drilling history in Bakken

Geo ExPro has good background on drilling in the Bakken field in their article From Trickle to Gusher: the Bakken Oil Story, by Thomas Smith.

Some historical data:

North Dakota’s Bakken Formation oil production was just 1,500 bpd in 2004…

The increase of Bakken oil production in North Dakota has come within the past five years. In the beginning of 2007, North Dakota had 303 wells producing 12,000 bopd. By early 2009, that number had risen to 904 wells producing 106,000 bopd. Jump to November of 2011 (the most recent date published for North Dakota) where 3,118 wells were producing 443,425 bopd.

Continue reading “Some moderately technical background on drilling history in Bakken”

Back of the envelope calculations for drilling one well in the Bakken and value of annual production

Update: Bottom line on the back of the envelope – 1.9 year breakeven point.

I’ve been wanting to do some math on the economics of drilling. Now’s the time.

UPDATE – Revised for higher productivity of Bakken wells of 142 barrels per day.

Previous post provided some data from an article in the Chicago Tribune for Occidental Petroleum – Insight: Peak, pause or plummet? Shale oil costs at crossroads

Continue reading “Back of the envelope calculations for drilling one well in the Bakken and value of annual production”

One set of data points for the cost of drilling in Bakken and the beauty of pricing signals

The Chicago Tribune provides a few pieces of info for drilling costs in their aricle Insight: Peak, pause or plummet? Shale oil costs at crossroads

The article, by Selam Gebrekidan, gives some pricing data from Occidental Petroleum.

The cost of bringing one Bakken well into production has grown from an average $6.5 million in 2010 to $8.5 million in the first quarter this year, data from company reports and the state regulator show.

Break even point:

Efficient forms of fracking are also helping companies extract more oil from each well, lowering the break-even cost of production, now estimated between $55 and $70 a barrel.

For the economics of drilling, here is some market data: Continue reading “One set of data points for the cost of drilling in Bakken and the beauty of pricing signals”

Where did this peak oil concept come from? Peak oil #2

I started a discussion of the silly concept of ‘peak oil’ here.

That is the concept that we will soon hit a peak of oil production at which point production will fall.  Furthermore, we will run out of oil very soon.

I’ve started off with a recap of a superb article by Daniel Yergin in a Wall Street Journal article There Will Be Oil.

Where did this idea come from?

Continue reading “Where did this peak oil concept come from? Peak oil #2”

We will never run out of oil. Peak oil #1

I’ve come across a term that struck me as silly as soon as I read it – peak oil – That’s the idea that we’ve hit the maximum production and we will soon see production levels fall and then run out of oil.

The definition of proven reserves and a minimal knowledge of supply and demand makes it so obvious that we will never run out of oil.  A glance at this blog or the blogs I cite should make the concept of peak oil laughable.

I need to explain this across several posts.

The whole concept of peak oil becomes more astoundingly ignorant with every additional paragraph I read on the issue. Conceptually, there is a big problem. Practially, developments in the last couple of years should kill off the concept permanently.  Continue reading “We will never run out of oil. Peak oil #1”

Sand boom from oil boom – and some of the economics of fracking

The boom in oil is creating a boom in mining sand.

The Wall Street Journal reports in Midwest Sees a Sand Rush that the huge amount of oil and gas exploration is creating a boom time in pulling sand out of the ground. Continue reading “Sand boom from oil boom – and some of the economics of fracking”

Introduction to the Bakken field, drilling in general, and the economic impact

North Dakota Oil is an introduction to the amazing oil boom in the Bakken field.  The Bakken spreads across North Dakota, Montana, and Saskatchewan and is the source of the economic boom in western North Dakota.

The report is a 21 page overview of the Bakken field, oil drilling in general, fracking in particular, and  the astounding opportunities for jobs and oil production.  It was produced by Oppidan.

Continue reading “Introduction to the Bakken field, drilling in general, and the economic impact”

Recoverable oil in Green River under Colorado and Utah might be equal to the current worldwide proven reserves

The astounding news just keeps on rolling in.  Here is another name to remember for energy issues – Green River.

Testimony to Congress this week from OMB’s Anu K. Mittal, Director, Natural Resources and Environment, indicates there are tremendous opportunities and challenges from oil shale underneath western Colorado and eastern Utah.

The written testimony is in UNCONVENTIONAL OIL AND GAS PRODUCTION – Opportunities and Challenges of Oil Shale Development

The Green River Formation has an astounding amount of oil shale.  From the report’s summary:

Tapping the vast amounts of oil locked within U.S. oil shale formations could go a long way toward satisfying the nation’s future oil demands. Oil shale deposits in the Green River Formation are estimated to contain up to 3 trillion barrels of oil, half of which may be recoverable, which is about equal to the entire world’s proven oil reserves.

Continue reading “Recoverable oil in Green River under Colorado and Utah might be equal to the current worldwide proven reserves”

Looks like the amazing UT San Antonio report on Eagle Ford Shale is already obsolete, or did you know it is already 2017?

Discussed a superb report from UT San Antonio about the economic impact of the Eagle Ford Shale play here. That new field with very  new drilling is having a huge impact on the regional economy.

Update 10-13-12:  I have dramatically revised the analysis presented here. I don’t understand the amounts mentioned in the EIA report, particularly when compared to actual production data reported for July. In another post located here, I’ve revised my analysis to show that the July production is generally on track with the moderate scenario forecast.  Etiquette rules for blogging and the rules I follow on my blog call for leaving the original comments in place and noting corrections. (That means I don’t do the memory hole routine.) Instead of doing a massive rewrite of this post, I have another post for an update:  What’s the production level in Eagle Ford and how does it compare to some recent forecasts?

Update 2:  Just in case it isn’t obvious, I continue to be amazed at the Eagle Ford field.  It is a game changer nationally and internationally. You really ought to check out the research report.  It is superb.

The report has great analysis of the impact on jobs, payroll, and sales tax revenue in the region.  The authors have forecasts of production in 2021 and lots of data for the last few years. The report is  Economic Impact of the Eagle Ford Shale. I’m neither an economist nor academician, so I can’t appreciate some of the details they have present, but they sure did ‘show their work’ as your high school algebra teacher would say, through footnotes and listing assumptions & formulas for their calculations.

As I wrote my previous post though, I realized something didn’t look right.

Here’s the fantastically wonderful problem.  Expected production in April 2012 for gas & condensate is at the level they forecasted for 2014.  Expected gas production is at the level projected in 2017.

Let me explain –

Continue reading “Looks like the amazing UT San Antonio report on Eagle Ford Shale is already obsolete, or did you know it is already 2017?”

Eagle Ford shale field production – economic impact report

The University of Texas at San Antonio released a report describing the Economic Impact of the Eagle Ford Shale.

The study describes the same boom-time problems in the Eagle Ford field as exist in the Bakken area – restaurants struggling to hire enough staff to stay open, hotels fully booked, RV parks going up everywhere, and a crush of school children arriving for classes whose parents are living in an RV & not paying property taxes to fund the schools.

The report describes in detail that production increased dramatically from 2010 to 2011.  It makes projections for 10 years out. Continue reading “Eagle Ford shale field production – economic impact report”

Energy boom isn’t limited to the U.S.

I’ve mentioned the potential to see huge increase in oil and gas production in the U.S. in several posts. Start looking here, here, and here.

It’s not just the U.S. that could see huge increases in production. Check out these articles, courtesy of Carpe Diem:

Reuters:  Exclusive: UK has vast shale gas reserves, geologists say

New technology from the U.S. (that means fracking) could make large volumes of shale gas off the coast of UK economically viable, pushing England to the top of reserves worldwide.

Here’s the potential: Continue reading “Energy boom isn’t limited to the U.S.”

“An Energy Primer”

Fantastic primer on energy in the U.S. and world:

Hard Facts – An Energy Primer from the Institute for Energy Research.

I’ve just started reading it.  Superb stuff.  The first few tidbits that  jump out at me:

Estimates that there is more recoverable oil in the U.S. than in Saudi Arabia:

The United States is home to the richest oil shale deposits in the world—estimates are there are about 1 trillion barrels of recoverable oil in U.S. oil shale deposits, nearly four times that of Saudi Arabia’s proved oil reserves.5

Vastly improved energy efficiency in the U.S. even with expansion in the per capita GDP:

• Energy use per person in the United States fell 12 percent between 1979 and 2010 from 359 million BTUs to 317 million BTUs per person.19

• Energy intensity—energy consumption per dollar of GDP—fell by 52 percent between 1973 and 2011.20

Are we running out of oil and gas we know about and can get to at economical price?

Continue reading ““An Energy Primer””

How big a play is Eagle Ford? Huge.

ConocoPhillips is planning to focus on Eagle Ford.

FuelFix reports in their article Shale gas “a blessing” for U.S. Mulva says:

Mulva {who is the retiring CEO of ConocoPhillips} said the company this year plans to drill 160 wells in the Eagle Ford shale in South Texas, 300 wells in the Permian Basin in West Texas and up to 30 wells in North Texas’ Barnett shale.

Continue reading “How big a play is Eagle Ford? Huge.”