Four of the reasons oil prices are *not* completely crazy after the attack on Saudi Arabia’s processing facilities this past weekend. Photo by James Ulvog.
In July, the state energy wizards set four record levels of production:
Crude oil
Gas
Barrels of oil equivalent (converting gas into equivalent amount of oil and combining with crude production)
Number of producing wells
Breaking production records in North Dakota, New Mexico, and Texas is something to celebrate if you like being able to get gasoline for your car whenever you feel like doing so, or if you like having gas available at reasonable prices in spite of when, oh, say, someone drops a bunch of bombs on Saudi production facilities.
Latest guess, from someone who has a clue about such issues, on where production is going in North Dakota is somewhere around 1.5M or 1.6M barrels a day late this year or early next year.
Huge finds off coast of Guyana and in New Mexico/Texas.
Question needs to be asked again: What Peak Oil?
The Million Dollar Way – 7/7/19 – ND Oil Production to Surge – Lynn Helms. Citing another source, the article says Lynn Helms, director of DMR, thinks production in North Dakota will surge later this year after gas infrastructure construction is done.
16 reasons US has been moving towards a net exporter of energy and finally hit that point. Well visible right of center with Missouri river in background. Williston, North Dakota. Photo by James Ulvog.
The changes in energy production over recent years is astounding.
My blogging has dropped off a lot over the last year or so due to distractions. Have a huge backlog of things to discuss, such as:
The US is a net oil exporter
Oil production in US is at all time record high
Sometime later this year the US will be exporting more oil product than Saudia Arabia
Record high level of oil production in the state was 1,403,844 barrels of oil per day (bopd) in January 2019. April production averaged 1,391,188 bopd (preliminary).
Before the slump in prices and drilling, the record high was 1,229.572 bopd in December 2014.
Since production bottomed out at an average of 942,322 bopd in December 2016, production has been climbing.
Production in June 2018 and every month since then has been above the December 2014 level. Even with winter weather, production has been in the neighborhood of the 1.4M bopd level for the last eight months, apart from small drop in February.
Graph of average production in the state and Bakken formation since 2008:
Five more reasons Saudi Arabia is in a jam and American pipelines are overfull. There will be many more reasons on that site before all the drilling is done. Oh, check out that gorgeous sky. Photo by James Ulvog.
A few articles that caught my interest over the last months on energy issues:
Another new field with one and half or two billion barrels of oil that not even the energy wizards were sure was there – Oh yeah, what Peak Oil?
Saudi Arabia cracks down
Two billion a year is consumed for lifestyle support stipends paid to every descendant of the house of Saud
Pipeline capacity is constraint for otherwise expanding shale production
US hit crude export level of 1 million barrels a day this past summer
What Peak Oil?
7/12/17 – Houston Chronicle – Houston’s Talos Energy makes ‘significant’ find in Mexico’s waters – Two years ago the Mexican government allowed private companies to start exploring for oil in the country. The improved freedom for private companies to do what private companies do is paying off.
On 7/12 Talos Energy announced the “Zama-1” exploratory well has confirmed a new find which is estimated to hold between 1.4 billion and 2.0 billion barrels of oil-in-place.
Oil that can now be pulled from under the ocean to provide energy to a fuel-hungry world.
Wells being drilled by that rig have long since gone into operation and contributed their share to increased US production.
The impact of fracking is massive. Large increases in production of natural gas and crude oil has created a long list of favorable economic and environment impacts.
7/6/17 – Victor Davis Hanson at National Review – The Fracking Industry Deserves Our Gratitude– Prof. Hanson provides a fast survey of how much fracking has improved the American economy. Fracking is the combination of horizontal drilling with hydraulic fracturing.
The impact of fracking is staggering.
Ten years ago eeeeeeverybody knew for an absolute certainty that Peak Oil was here and we were about to run out of oil. The Secretary of Energy was wishfully musing that gasoline would rise from $4 to $10 a gallon.
In the last five years, gasoline prices are down about $1.50 a gallon, surge in natural gas production displaced coal consumption which has reduced our CO2 output by 12% in the last decade (surpassing the EU in cuts), and reduced our oil imports by five million barrels a day.
Photo of oil refinery courtesy of Dollar Photo Club prior to their merger into Adobe Stock.
Will demand for oil decline in the next decade or two? Or will demand continue to grow? Sorting out questions like that makes my brain hurt.
The Wall Street Journal had an extra report section 5/22/17 called Innovations in Energy. Some interesting comments:
5/22/17 – Wall Street Journal – Get Ready for Peak Oil Demand– In yet another complete repudiation of the foolish forecasts of Dr. M. King Hubert, there is a gathering consensus that instead of Peak Oil, meaning we will use up all the oil someday, we may be facing Peak Oil Demand, which is the idea that oil consumption may fall because of various factors such as improved efficiency in vehicles, electric/hybrid cars, and reliance on solar/wind power.
There are a lot of implications of Peak Demand, if that actually turns out to be a real thing.
For starters, there is massive impact on oil companies and the impact on oil prices. One additional factor is there would be an end to the severe pressure to always be finding more oil.
Article provides guesses from 7 major players in the energy world as to when we will see peak oil demand:
15 wells on 1 pad. Notice a drilling rig on right edge of view. September 2015 photo by James Ulvog.
Yeah, I’m still new to this effort of watching the energy field. One of the things that still amazes me is the frequency with which the geology wizards find another billion or so barrels of recoverable oil that ‘we’ didn’t know about and a decade ago couldn’t get out of the ground profitably even if the wizards had known for sure it was there.
First production is expected in 2021, four years from now. Production level expected to hit 120,000 bopd, or 43.8M barrels a year.
Oh, what Peak Oil?
By the way, I’m having a hard time keeping track of all these massive new finds of oil which either nobody knew about a decade ago or it would have been technically impossible to ever get any of it out of the ground.
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.
Out of focus photo by James Ulvog. (Yeah, yeah, I know – don’t give up my day job.)
First article below says that predicting oil prices is a fool’s errand. The payoff of trying to do so, it seems to me, is it requires diving into the dynamics and trying to understand the production and demand aspects underlying the price of oil. Second article below delves into the dynamics.
Mr. Oksol agrees with the major points: OPEC’s effort (meaning Saudi Arabia) to shut down shale producers has been unsuccessful. They tried this once before back in the 1980s.
On the second point, he agrees shale producers will respond fast to any rise in prices.
Author agrees that the phrase “big bet” is an acceptable way to describe the Saudi strategy to take out shale producers but thinks a more accurate description would be “trillion dollar mistake.” As for me, either description works well.
How much damage has Saudi Arabia caused the shale drillers? In other words will they be able to respond to any change in prices are they out of the game.
If the answer is yes, how fast will shale drillers be able to respond?
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.
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.
For long-term archive purposes, here is a timeframe for the Bakken boom.
6/28 – The Million Dollar Way – The Bakken Is In Its Manufacturing Stage – Bruce Oksol provides a useful long-term perspective on how Bakken production has developed:
2000: the Bakken boom begins in Montana
2007: the Bakken boom begins in North Dakota
2012: the Bakken hits its stride
early 2014: the Bakken setting new records, almost every month
late 2014: the Saudi Surge
2015: the Bakken re-trenches
1Q16 taxable sales 50% greater than 1Q10
mid-2016: the Bakken bottoms out — at least that is what the tea leaves suggest
For more perspective, here is the average daily production for each of the above years. I calculated the following from data pulled from the state website: Continue reading “Timeline of Bakken oil production”
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.
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.
My rough graph above shows the lousy accuracy of Dr. King’s 1956 projections of natural gas production in the US.
Dr. M. King Hubbert fell in with a fellow named Howard Scott, whom Prof. Priest calls
a magnetic charlatan.
Mr. Scott dreamed of a glorious time in which scientists and engineers would run the world through a powerful Technate or Technocracy Inc. As I havementioned before, I’m not sure if this authoritarian system was more fond of fascism or communism, but it certainly was authoritarian. My inclination is this tended toward fascist, meaning our betters would let us peons own private property but they would tell us what we can do with our property and how we can live.
Dr. King was apparently not a very nice person. The review highlights Dr. King’s approach to knowledge:
It was not enough for him to be right. Someone had to be humiliated in the process. Mr. Inman appears uninterested in pondering the mixture of arrogance and resentment that shaped Hubbert’s personal interactions.
That Dr. King had an overabundance of arrogance is visible if you read through his 1949 and 1956 papers.
