Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

Archive for the tag “oil exploration”

If you like having gas for your car, food in the stores, and turning lights on after dark, here’s good news: Outlook for energy looking brighter.

Gonna' be seeing more of those in North Dakota soon. Photo by James Ulvog.

Gonna’ be seeing more of those in North Dakota soon. Photo by James Ulvog.

Outlook for energy production in the US is getting better and better. Might want to get out your sunglasses.

  • Low oil prices have spurred innovation amongst US drillers; file this under unintended consequences for OPEC.
  • Breakeven prices in US shale approaching that of OPEC producers; ponder that the breakeven price for Saudi Aramco is not the same as breakeven price for the Saudi government.
  • Overview of news in 2016 for oil & gas; good news for companies that survived the year.

12/2 – Tyler Morning Telegraph – Saudis awakened a sleeping giant when they declared war on fracking – Editorial says the Saudis made a serious mistake waking up the slumbering giant of fracking land. The artificially high prices allowed the frackers to get started. The artificially low prices forced them to innovate, cut costs, and start producing at breakeven points competitive to the OPEC giants. Not a good move.

Wouldn’t it be grand if that paragraph was the four-sentence history of fracking?

Production costs are half what they were two years ago.

Read more…

Possible new technology to extract oil shale – Peak Oil #50

In a decade or so, will we get to see thousands of these above the Green River Formation? Photo of Bakken pump jack by James Ulvog.

In a decade or so, will we get to see thousands of these above the Green River Formation? Photo of Bakken pump jack by James Ulvog.

Here’s another brain stretcher for you in the realm of the open frontier in energy – how about using microwave to tease oil shale out of the ground?

11/4 – Oxy – Move Over Fracking, There’s a New Technology in Town – First, keep in mind that oil shale is not the same as shale oil. I have to wrap my brain around that every time the topic of oil shale comes up.

Shale oil is crude oil that is trapped in rocks. Fracking is the way to get shale oil out of the ground.

Oil shale is sort-of-like crude oil stuff (actually kerogen, but that label doesn’t register for me) that has to be heated, or cooked, out of the rock. Usually done by strip mining then cooking the stuff. Other option is steam injection to liquefy the oil shale which then can be pulled out of the well. Fracking won’t do the trick.

Try this on for size: Using microwaves comparable to the power of 500 household machines to heat the rock turning the oil shale liquid. The water, which is mixed in with the kerogen will be converted to steam, which in turn will help pull the liquefied oil to the wellbore.

So where could this be used?

Read more…

Another 20 billion barrels of oil. What Peak Oil? – #49

We are gonna' see a whole lot more of those things in Texas over the next few decades. Photo by James Ulvog.

We’re gonna’ see a whole lot more of those things in Texas over the next few decades. Photo by James Ulvog.

Oh, by the way, the geology wizards just discovered another twenty billion barrels of recoverable oil where the wizards knew something existed but had no idea how much.

Twenty billion barrels. Billion, with a B.

11/15 – Star-Telegram – Permian’s Wolfcamp formation called biggest shale oil field in US – Estimate from USGS is the Wolfcamp formation in the Permian Basin holds 20 billion barrels of oil. There are four layers of shale that make up Wolfcamp. That puts this find somewhere in the range of three times the size of the entire Bakken formation in North Dakota.

Read more…

Two new fields found where the energy wizards didn’t realize there were billions of barrels of oil in the ground. Oh, what Peak Oil? #48

Smith Bay drilling site. Image courtesy Caelus Energy LLC, used with permission.

Smith Bay drilling site. Image courtesy Caelus Energy LLC, used with permission.

There are two big finds in the last few weeks of fields with a few billion barrels of recoverable oil each where the petroleum engineers didn’t realize there were billions of barrels of oil.

Still needs to be a lot of work to develop the fields, but major point is the wizards know today there is somewhere around 5 billion more barrels of oil “we” can use to power our comfortable industrialized life than the wizards knew about a month ago.

Not that it is really necessary, but those two big finds prove yet again that Peak Oil is a busted, bankrupt, invalid theory.

10/5 – New York Times – Oil Glut? Here Comes Some More! Author spends the first one-fifth of the article bemoaning the discovery of two new oil fields (yeah, I eye-balled the amount of pixels allocated to bemoaning).

The last thing the world needs is more oil and gas he points out, while typing at his coal-powered computer, which was constructed with plastic made from cracked natural gas, his words stored on a server farm powered by natural gas, his article delivered around the world at the speed of light, visible to me on my nuclear power driven monitor, which I read in my natural gas warmed office.

After the lamenting, he provides more detail.

Read more…

More followup on multi-well pad drilling. Links for a couple of superb photos.

Multi-well pad being drilled. Photo by James Ulvog.

Multi-well pad being drilled in Williston. Photo by James Ulvog.

Yesterday’s post on multi-well pad drilling saw lots of visitors from The Million Dollar Way. Bruce Oksol linked to the post in his discussion, Multi-Well Pad Drilling In The Bakken.

He has discussed this pad before. See his post for links.

Mr. Oksol links to a photo of the site taken by Vern Whitten: Vern Whitten Fall Portfolio. Since I try really hard to avoid copyright violations, you won’t see his photo on this blog. Instead you can see Mr. Whitten’s photo at this link. It is photo 28 of 39.

Incredible view from an incredible photographer.

Read more…

More on the foolish Malthusian mindset that we’re gonna’ run out of everything

Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

Here are three more stories in just the last week proving yet again the foolish of Malthusian thinking. The experts in a field have no clue, absolutely no clue, of the total amount of any resource available on this amazing planet. Whether it is water, crude oil, or helium, the experts don’t know what previously unknown field they will find next.

7/1 – The Million Dollar Way – Peak Oil? What Peak Oil? Huge Discovery For Hess, Exxon; $70 Billion at Current Prices – This post points to an article at Yahoo: Exxon Might Have Just Made The Largest Oil Find In Two Years ExxonMobil and Hess Corp are in a joint venture that just discovered a huge field in deep water 120 miles off the coast of Guyana.

The new field, called Liza, likely has somewhere between 800M and 1.4B oil-equivalent barrels. Yeah, that’s somewhere in the range of one and a half billion barrels of oil. That nobody knew about. Until now.

To put this in context, there have been only five brand-new discoveries in the last four years with recoverable amounts of over 500M barrels. Only five? ONLY? To my little brain that is astounding.

Read more…

Continued drop in count of working oil rigs in North Dakota

Photo by James Ulvog.

Photo by James Ulvog.

Here is a recap of the North Dakota rig count, all from Million Dollar Way. Also, an article quantifying the impact on employment from the drop in rig count.

Some older data repeated for recent context: Read more…

Bakken entering ‘manufacturing’ stage? Also, count of oil rigs in field.

Out of focus photo by James Ulvog (yeah, yeah, don't give up my day job)

Out of focus photo of drilling rig and four not-yet-in-production wells by James Ulvog (yeah, yeah, I know – don’t give up my day job.)

Bruce Oksol wonders whether Bakken  oil production is entering the manufacturing phase after a frantic construction phase.

2/3 – The Million Dollar Way – Idle Chatter on DUCs and Related Data Points – Before a big factory or electrical plant or other major project begins production there is a massive construction effort. The number of jobs to run the facility is a fraction of the number of workers needed to construct the thing. When completed, the number of jobs at the facility drops off.

Mr. Oksol uses the illustration of a natural gas plant being built. During construction there will be around 2,000 temporary jobs. When that gas is turned into electricity, the plant will employ 45. That’s 2,000 temporary and 45 permanent jobs.

He wonders if Bakken is like that, having finished the ‘construction’ and now moving into manufacturing.

Read more…

Oil prices – Trends don’t continue in a straight line forever

Thousands of wells can come on line when prices edge up. Photo of two wells about to start production by James Ulvog.

Thousands of wells can quickly be drilled and come on line when prices edge up. Three wells in 9/15 about to start production. Photo by James Ulvog.

Here are three very different articles on the future of crude oil prices.

One of the memorable things I learned in grad school was the idea that you can’t project the current trend of something into the future forever.

Keep in mind that West Texas Intermediate price was somewhere in the region of $100 a barrel in mid ’14. WTI is now about $26. Let me round off some calculations for simplicity. Let’s call that a current price of $30. Let’s call that a year and a half.

So we see a drop of about $70 in 1.5 years. A straight line projection would calculate out as another $45/bbl in another year. Thus, by 12/31/16 WTI price will be  $30 minus $45, or a negative $15. Yes, you read that right. A straight line projection means that oil producers will be paying refineries $15 for every barrel the refiners agree to take off the producer’s hands. Gas prices will consist only of the refining costs, a humongous list of taxes, with an offset for the negative cost of raw material.

You can’t do straight line projections forever.

Here are three superb articles that help me understand what is going on in the world of crude oil…

  • After the Carnage, Shale Will Rise Again
  • Helms predicts oil prices to rise again in foreseeable future
  • Rumors Swirl Around the Saudi Throne

1/18 – Mark P. Mills at The Wall Street Journal – After the Carnage, Shale Will Rise Again / Vast swaths of shale will be profitable with oil at about $40 a barrel, and the nimble industry is ready – If you actually pay attention to my blog, Mr. Mills’ article is a must-read.

Oil prices are quite cyclical. He points out there have been six extremes since the’73-’74 oil embargo. The extremes create turmoil. At the moment we are in the carnage stage of the cyclical extremes.

Read more…

Illustration of the foolishness of calculating how many years of a resource is left by using the amount of currently known reserves

Those 6 wells will soon start producing. Twenty years ago it was impossible to reach that oil. Technological innovation makes recoverable oil that was previously untouchable. Photo by James Ulvog.

Those 6 wells in North Dakota will soon start pulling huge amounts of oil out of the ground. Twenty years ago it was impossible to reach that oil. Technological innovation makes oil recoverable that was previously untouchable. Photo by James Ulvog.

Robert Bryce dives deep into the astounding technological and economic advances of the last 200 years as he ponders Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong.

Innovation leading to technological advances creates wealth, improves health, and makes everyone better off. Some people in some places have been left behind by the dramatic economic improvements of the last two centuries. The best way to make life better for those folks is to continue innovating and make cheap, small, fast, highly economical tools and resources available to them.

The book as so many explanations and illustrations. I’d love to describe dozens of things that caught my eye. I will mention merely a few.

You will often see the foolish and erroneous statement that we only have X years of some resource left on the planet. When you look at the built-in calculation you see the presence of the silly fallacy of dividing known reserves by current consumption.

The reason that calculation is so foolish is it completely ignores exploration that finds new fields, innovation in recovering more resources, and economic changes that make it worthwhile to gather something that was uneconomical before.

Consider for a moment the idea that we are going to run out of oil because at current consumption rates will use up all the proven reserves in however many years. The formula is

  • proven reserves
  • divided by current consumption
  • equals years until we completely, totally exhaust all of that item on the entire planet

Read more…

More great things to learn about Bakken – part 2

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Four pumps pulling up oil that was untouchable 20 years ago. Photos by James Ulvog.

Prof. Mark Perry did a heap of learnin’ on his trip to Williston in May. He wraps up comments at his post, Top ten things I learned on my summer trip to the Bakken oil fields, Part II

My comments on part I here.

If you are looking for a primer on the oil revolution or Bakken or fracking, check out his articles.

A few highlights from his 3,000+ word post and a few of my thoughts. Read more…

The energy future is so bright we may have to trade in our sunglasses for welder’s goggles

Here are two resources I came across on the same day that point to why the future is so incredibly bright that regular sunglasses might not be enough:

Shale 2.0 – Technology and the Coming Big-Data Revolution in America’s Shale Oil Fields, by Mark Mills, of the Manhattan Institute

Economic Impact and Legal Analysis of the Shale Oil and Gas Activities in Mexico, preliminary report – by University of Texas San Antonio and others. Prof Thomas Tunstall is the principal investigator and Javier Oyakawa is the lead investigator at UTSA.

I have just started reading both of the reports. Plan to finish them in the next few days and will have more to say then.

A couple of initial thoughts:

The Manhattan Institute study suggests the shale revolution of the last five or seven years is barely getting started. The technological innovations in the last couple of years are going to accelerate.

Read more…

More good stuff on the energy revolution – 3/30

A few articles on the shale revolution: scale of layoffs, improving efficiencies by drilling companies, and China scraps a shale gas project.

3/16 – Forbes – Itemizing the Oil Bust: 75,000 Layoffs and CountingArticle reports on a tally given the author by an insider of the known layoffs in the oil & gas industry. Insiders tell him that stacking a rig costs 40 jobs. Based on the rest of the article, I think that is direct jobs.

Total estimated job loss is 75,000 in an industry with 600,000 jobs. By sector that is estimated at Read more…

Impact of oil and gas industry on North Dakota economy. General insights on energy in the state.

cost to drill bakken well graph

Petroleum Industry’s Economic Contribution to North Dakota in 2013 is the current update to a bi-annual analysis of how much the oil and gas industry contributes to the state’s economy. You can find the report at the previous link or here. The research was conducted by Dean A. Bangsund and Nancy M. Hodur, profs at North Dakota State University.

The executive summary provides a great overview of the petroleum industry and the economic activity in the state. Worth reading for the overall background, a general intro to the energy industry, and what’s going on in Bakken.

I read most of the report. In addition to historical information on average cost to drill and complete a well which is summarized in the graph above, here are some of the highlights that caught my eye:

Read more…

About those dropping oil prices – #13

More articles on the drop in oil prices I found interesting.

Huge news Wednesday, 2/4, as oil collapsed big time dropping from about 53.50 to 48.50. Oh my, a $5 drop in just one day. Obviously gonna’ break the $40 mark this month, huh?

Oh wait.

Up 2.50 yesterday and another dollar as I write this morning.

Reminds me of the old joke on the days’ news about the stock market:  Stock market was off 500 points today before rallying and closing up 1 and a quarter.

1/24 – The Economist – The tough get going – Companies in the energy field are working to improve their economics.

Read more…

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