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”

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…

Graph of the certainty level of estimates for oil and gas reserves

Million Dollar Way pointed me to a great visual illustration of this idea, explained by the US EIA:

For many purposes, oil and natural gas resources are usefully classified into four categories:

  • Remaining oil and gas in-place (original oil and gas in-place minus cumulative production at a specific date)
  • Technically recoverable resources
  • Economically recoverable resources
  • Proved reserves

Check out this illustration, which is obviously not to scale:

reserves illustration

Illustration tells the story better than my words could.

Source: U.S. Energy Information Administration Oil and natural gas resource categories reflect varying degrees of certainty.

 

About those dropping oil prices #7 – two must-read articles

Here are two major, must-read articles on oil production and pricing for your consideration. One I’ve been holding a while and the other ran just this week.

First a few quick tidbits to keep in mind – 12/23 – Dickinson Press – Oil prices will affect fringe areas most: Break-even mark lower in heart of Bakken – Drilling at the margins of Bakken will be sharply reduced. In the four core counties, not so much.

For active wells, a price of $15 a barrel is sufficient to keep operating. Ponder that – $15 a barrel.

Keep that in the back of your mind as you read of Saudi officials who want to see current production in Bakken and Eagle Ford drop far enough to balance supply and demand of world oil.

The first big article:

12-22 – Wall Street Journal – Behind OPEC Decision, A Saudi Fear of U.S. Shale

Saudi Arabia’s surprise move to maintain production and let oil prices collapse

… is a story of a budding rivalry, driven by what Saudi Arabia views as a threat posed by American energy firm …

according to the deeply reported article.

Read more…

Peak Oil debunked over and over and over again – #37

The Wall Street Journal has a delightful editorial today on Peak Oil. That prompted me to pull together several articles I’ve been wanting to talk about.

Just in case you wondered, the devotees of Peak Oil are alive and well. Many of the big names are reportedly in hiding. Do a few minute search on the ‘net and you can still find a lot of them.  I’ve had a dialogue over the last few days with one gentleman on my blog.

Haven’t pointed out the foolishness of Peak Oil doctrine since July, so it’s time to look again. Here we go…

12/5 – Wall Street Journal – ‘Peak Oil’ Debunked, Again – And again. And again.

Gotta’ love the opening paragraph:

It has been 216 years since Thomas Malthus gave birth to the idea that mankind’s appetite for natural resources would outstrip nature’s capacity to supply them. There have since been regular warnings that the world is running out of soybeans, helium, chocolate, tunsgsten, you name it—and that population growth has become unsustainable. The warnings create a political or social panic for a while, only to be proved wrong.

Peak Oil is the current fad of ‘we will run out by the day after tomorrow.’

The run up in oil over the last several years to a high of around $112 this past summer has encouraged entreprenuers, or perhaps we should call them petroprenuers, to figure out how to get massive amount of shale oil out of the ground. Read more…

Editorial hit piece on Bakken presented as front page reporting

The New York Times ran an entertaining hit piece on the entire Bakken oil field with particular focus on the intentionally lackadaisical enforcement effort from the state. I learned of the front page article from some complimentary twitter comments, from which I guessed this was a major attack before even reading the first paragraph.

Check out The Downside of the Boom.

As I’ve expanded the horizons of my reading over the last four years, I’ve learned how to see the slant on articles. It’s easy to pick up on agendas if you read carefully, watch the choice of words, and assess the point of view. The goal in this report from the NYT is oh so obvious.

Million Dollar Way’s read is the same:

It was clearly an editorial which will be used by movers and shakers in Washington to support their case that the environment is too important to leave it up to state regulators.

Having said that, I believe my point of view is just as visible – since I’m not a professional journalist, I don’t try to hide my worldview when writing about an issue on which I have an opinion. You may thus filter my comments and the NYT article as you wish.

On to the article…

At a simple level, the adjectives and adverbs are slanted. The oil service roads “slash” through the landscape. That description is in a caption for a photo showing a peaceful farm in the foreground, pump jacks on the hill at the horizon, and not a service road in sight. The farmer with those slashed wheat fields is likely depositing checks for twenty or fifty thousand dollars each month.

Leaks in pipelines which are under federal and not state supervision are the fault of the previously mentioned lackadaisical state regulators. Keep in mind a federal agency is responsible for most pipelines and all the big pipes.

Read more…

Another month of record production in North Dakota – up 4.6% for the month

 

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(Photo by James Ulvog)

Oil production in North Dakota increased to average of 1,184,635 bopd in September, up 4.63% from August. Bakken only production was 1,120,031 bopd average.

That is a 26.8% increase from 9/13 to 9/14. Very cool.

Flared percentage was down to 24% from 28% in August and 26% in July.

Here are some updated graphs:

Bakken and state-wide production since ’08:

9-14 since 08

More graphs –

Statewide since 2004: Read more…

About those dropping oil prices – 3

A global game of chicken is underway. Will falling oil prices slow or shut down the rapid expansion in shale oil production in the US before the budgets of Saudi Arabia, Venezuela, and Russia are devastated? Which will happen first?

I think it isn’t a smart bet to go against the human ingenuity that has driven the shale revolution.

10/30 – American Interest – OPEC Makes Shaky Bet on Fragility of US Shale Boom – Article quotes a Bloomberg report which in turn quotes the OPEC Secretary General saying that 50% of tight oil (read shale in US) is uneconomical at current prices. That means he believes a lot of projects will get shut down at current pricing. AI article calls that a game of chicken. I agree.

11/3 – Wall Street Journal – Saudi Price Cut Upends Oil Market – Saudi Arabia dropped the price they are asking for crude oil shipped to the U.S. and increased their asking price for oil shipped to Asia.

A graph in the article helps explain why.

Read more…

About those dropping oil prices – 2

 

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(Photo by James Ulvog; five more reasons why gas prices are going down.)

This is second of several posts on the drop in oil prices. Not to worry – human ingenuity will kick in again as prices drop.

10/31 – Bakken.com – Fracking is saving Americans billions of dollars – The American Petroleum Institute estimates that without fracking, crude oil prices would be somewhere between $12 and $40 a barrel higher. That means Americans would otherwise be paying around $250 billion a year more in energy costs.

10/30 – Wall Street Journal – Energy Boom Can Withstand Steeper Oil-Price Drop – Some drillers in the U.S. will have trouble as prices drop and some locations may not be economical, but there are huge numbers of drillers who own huge numbers of sites that will be profitable at lower prices that we see today.

Check out the range at which drilling is still profitable; data from the article and a cool chart: Read more…

About those dropping oil prices – 1

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(Photo by James Ulvog; 4 teeny tiny slivers of explanation for why gas prices are going down.)

This is first of several posts on the drop in oil prices. What will that do to U.S. production? Amount of new drilling?

10/9 – The Feed – When Should U.S. Shale Producers Worry?

Read more…

Hiring in North Dakota to pick up – “blitz” in ‘14

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Lots of production companies around Bakken are going to expand hiring in ’14. Bismarck Tribune reports Oil service companies on hiring blitz.

The rapidly increasing number of wells is creating permanent jobs to service the wells. Each well requires attention. I’ve read elsewhere that each well creates the need for one full-time position. That would be about 8,000 permanent jobs for the existing wells, with 2,000 new positions a year.

Two key comments, for me at least: Read more…

Superb primer on fracking – Down Deep

WPX Energy produced a 25 minute video giving background on fracking and what the industry is doing to drill safely while providing us the energy we need to live a comfortable, modern life.

The video is  Down Deep: Unearthing the Truth About Hydraulic Fracturing.

The website is Down Deep.

The discussion is educational. The video is excellent. The production quality is really high. They did a good job.

A few key ideas from the video and some thoughts after watching it:

Read more…

I’d be worried about Peak Oil if… (#30)

If exploration of the third shelf of Three Forks had been completed instead of just started,

if exploration of fourth shelf were done instead of *not* started,

if price increases didn’t make economically unrecoverable oil economically recoverable,

if new technology didn’t make technically unrecoverable oil technically recoverable,

Read more…

New tech is changing undersea drilling too – peak oil #27

Amazing technology developments are making drilling in the ocean easier, reducing cost, and revealing the locations of hard-to-find oil.

Six Tech Advancements Changing the Fossil Fuels Game at Rigzone outlines the changes.

I like this sentence that points out what everyone knows (specifically that a particular well or field only so much oil and will eventually run dry) with what the peak oilers refuse to believe (that there is another field to drill which is now reachable with new technology):

Rig advancements are coming online in tandem with the significantly increased momentum to drill in deeper waters as shallower reserves run out. 

Oh, and advancement in technology is just one of several fatal flaws to the “peak oil” foolishness.

Here’s some of the new tech. One of the 6 applies to drilling on land – at least I think it doesn’t apply to deep-sea drilling.

Read more…

Another Bakken’s worth of oil discovered. And it’s underneath the current Bakken. Oh, and what Peak Oil?

The USGS updated their estimate of the amount of oil that is undiscovered, technically recoverable in the Bakken field. Second paragraph of their press release says:

The USGS assessment found that the Bakken Formation has an estimated mean oil resource of 3.65 BBO and the Three Forks Formation has an estimated mean resource of 3.73 BBO, for a total of 7.38 BBO, with a range of 4.42 (95 percent chance) to 11.43 BBO (5 percent chance). This assessment of both formations represents a significant increase over the estimated mean resource of 3.65 billion barrels of undiscovered oil in the Bakken Formation that was estimated in the 2008 assessment.

This means the mid-point (statistically correct phrase: mean) of the total oil that is technically recoverable with current technology is 7.4 billion barrels of oil. Their assessment is that the probability is 95% that there will be at least 4.4B and the probability is 5% that there could be as much as 11.4B.

Read more…

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