Monday, December 26, 2011

A New Energy Future is Emerging From Tight Oil and It Holds the Promise of Ending Oil Imports

From the Globe and Mail

"The Bakken is an oil play that has erupted across a forgotten corner of the U.S. It is a frenzy of drilling and pumping and moneymaking. It is also a place where a new energy future is emerging, one that holds the promise of ending U.S. dependence on overseas oil and kick-starting the country’s stagnant economy. Government estimates suggest it could yield 4.3 billion barrels of oil. One industry estimate is five times higher, which would mean the Bakken alone could hold as much recoverable oil as the rest of the country. And it’s just the beginning.

The flares lit in the Bakken, a so-called “tight oil” play enabled by a revolution in drilling technology, are spreading rapidly across the continent. Suddenly, geologists and drillers are discovering that what works in the Bakken works in a lot of other places, too, bringing forth sudden new volumes of oil – and optimism that there will be much more – in Texas, in Utah, in Ohio, in Saskatchewan and in Alberta. In all, 14 places are being explored for tight oil.

All those drills turning in all those places have sweeping ramifications for North America.

The Bakken and its followers have fundamentally altered the energy outlook for the continent. If energy consultant IHS CERA is right, in the span of merely one decade, tight oil wells will pump more oil than the entire oil sands. The growth is so globally significant that the firm has reduced its 2020 world oil price estimate down from $120 to $100 a barrel. And it’s begun contemplating possibilities that would have been considered insane only a few years ago.

Tight oil also stands to have a substantial economic impact. The enormous cost of drilling tens of thousands of wells – which can run $10 million each, not including the cost of acquiring land – will pour hundreds of billions into domestic wages and manufacturing. The fact that Americans will be buying U.S. gas at the pumps will also have a meaningful impact on the dollars the country sends abroad every year.

“There might be some possibility that we could ... pretty much reduce our oil imports to zero,” said Leta Smith, director of oil and gas supply outlooks with IHS CERA. “That’s a really optimistic case. And that’s not what we’re forecasting right now. But still, it’s an interesting question to postulate.”

The sun that shines on the Bakken, it seems, is shining on America itself."

32 Comments:

At 12/26/2011 9:27 PM, Blogger OBloodyHell said...

Don't worry, the Great Big 0's EPA is all over this. They should wrestle it to the ground and stomp on it in no time using wholly manufactured concerns over its effects on the environment.

Don't worry, folks, President Downgrade and his cronies are on the case. They'll keep the obscene threat of runaway riches under control, and keep the filthy plebes and the illiterate hoi-polloi properly in their place as Democratic dependents.

 
At 12/26/2011 11:03 PM, Blogger Rufus II said...

les'see, we import almost 9 Million Barrels/Day.

These wells produce, on average, 150 bbl/day after one year.

9,000,000/150 = 60,000

But, then, in the next year there's another large drop. And, in the next year, another.

They end up, after a few years at, what, 15 or 20 bbl/day?

9,000,000/20 = 450,000?

That's a whole lotta "frackin'."

Actually, that's a whole lot of something else (but, hey, it's Christmas, we'll be nice.) :)

 
At 12/26/2011 11:43 PM, Blogger Benjamin said...

People will get even better at drilling for oil---and globally. We could see fossil fuel gluts in five to 10 years.

 
At 12/27/2011 12:37 AM, Blogger Rufus II said...

Right now, we're seeing the highest gasoline prices in History, and they're on their way back up.

Fairey tales won't move the Ginny, Benji. And, the stuff that will is getting ever more expensive.

 
At 12/27/2011 1:07 AM, Blogger juandos said...

"These wells produce, on average, 150 bbl/day after one yea"...

Gee rufus these people are tossing a completely different number out for public consumption...

 
At 12/27/2011 1:27 AM, Blogger Rufus II said...

Yeah, it looks like those well, all total, were producing about 72 bbls/day in June.

At max., 350 rigs drilling. The last I read they were having a hard time finding qualified people to work on them.

 
At 12/27/2011 1:42 AM, Blogger juandos said...

"Yeah, it looks like those well, all total, were producing about 72 bbls/day in June"...

Actually rufus according to my Win 7 calculator I get 82 bbls per well per day but the point is, its been climbing steadily...

Will continue to the point where we can replace say 15% of what we import?

I don't know...

 
At 12/27/2011 1:47 AM, Blogger Rufus II said...

I guess 15% might be possible, Juandos. I wouldn't bet on it, but, maybe.

:) I would sure as heck bet against much more than that, though. I'd bet the Grandkids against All of it.

 
At 12/27/2011 2:04 AM, Blogger juandos said...

"I wouldn't bet on it, but, maybe"...

Yeah, I hear you...

rufus you might find this short Bloomberg article (including 6 min video clip of Harold Hamm of Continental Resources) entertaining or informative or both: North Dakota Oil Output Approaching OPEC Level: Chart of the Day

North Dakota pumped a record 464,129 barrels of crude oil a day in September, approaching the output in OPEC member Ecuador.

 
At 12/27/2011 2:09 AM, Blogger Rufus II said...

Or, a little less than Half the Liquid fuels we got from Biofuels.

 
At 12/27/2011 2:31 AM, Blogger juandos said...

"little less than Half the Liquid fuels we got from Biofuel"...

Yeah but look at the total costs of biofuels versus that of crude oil: 'That does not mean demand for biofuels will not rise. In fact, demand is expected to almost triple this decade, not on free-market principles, but largely because of government policies that mandate a certain percentage of biofuel blending in transport fuel'...

 
At 12/27/2011 2:51 AM, Blogger Rufus II said...

Just keep on drinkin' that koolaid, son. Just ignore that big old Trillion Dollar War Bill behind the curtain. I's All good. :)

 
At 12/27/2011 3:05 AM, Blogger kmg said...

Rufus is one of those Dumbocrats who gets rage blackouts from events that occurred a decade ago, and Democrats voted in favor of.

What is funny is that Rufus says the Iraq War was 'for oil' but at the same time wants Middle East Oil not to be replaced, since the EPA and OPEC are one and the same.

 
At 12/27/2011 3:05 AM, Blogger kmg said...

Remember that if leftists could do math, they would not be leftists.

 
At 12/27/2011 3:27 AM, Blogger Rufus II said...

That didn't make a lick of sense, kmg. I'm just telling you that "fracking" ND ain't gonna save you. You're going to needitall.

Here's a really tuff math problem. You add 90,000 bpd, every year; how long does it take you to get to 9,000,000 bpd?

 
At 12/27/2011 8:06 AM, Blogger Jim said...

Subsidies/tariffs U.S. ethanol industry ended?


Wishful thinking by a lobby group?

"For the first time in more than three decades of generous US government subsidies for the domestic ethanol industry, coupled with a steep tariff on imports, the United States market will be open to imported ethanol as of January 1st, 2012, without protectionist measures. The adjournment of the 112th Congress means both the US$0,54 per gallon tax on imported ethanol and a corresponding tax credit of US$0,45 per gallon for blenders, the VEETC (Volumetric Ethanol Excise Tax Credit), will expire as expected on December 31st."

http://tinyurl.com/6ptlm6r

 
At 12/27/2011 10:04 AM, Blogger Rufus II said...

Not to worry, though; all the oil and gas tax breaks remain in place.

 
At 12/27/2011 10:04 AM, Blogger Jet Beagle said...

Rufus Ii: "Just ignore that big old Trillion Dollar War Bill behind the curtain. I's All good."

Do you believe we invaded both Afghanistan in 2002 and Iraq in 2003 because of oil? Why would the U.S. do that?

 
At 12/27/2011 10:05 AM, Blogger Rufus II said...

As do our two Carrier Task Forces guarding the Straits of Hormuz, and Persian Gulf/Indian Ocean.

 
At 12/27/2011 10:26 AM, Blogger FloridaSteve said...

OBloodyHell nailed it on the first comment. This will not be allowed to continue. This administration has too much invested in a corrupt "green energy" sector to allow the price of energy to be reduced. All those new radicalized appointees will be sharpening their pencils in order to bring this to a grinding halt.

 
At 12/27/2011 10:28 AM, Blogger FloridaSteve said...

Imagine if we could actually go back to using our farmland for food production and improve THOSE exports as well? Oops.. can't hurt those phony ethanol / farm subsidies now can we?

Exporting oil AND food to china to help balance trade? Hey a guy can dream..

 
At 12/27/2011 10:48 AM, Blogger Jet Beagle said...

Rufus II: "As do our two Carrier Task Forces guarding the Straits of Hormuz, and Persian Gulf/Indian Ocean."

Is that supposed to be an answer to my question? Can you answer "yes" or "no"?

Do you believe we invaded both Afghanistan in 2002 and Iraq in 2003 because of oil? Do you know how much oil the U.S. consumes daily? how much of that comes from Afghanistan? from Iraq?

 
At 12/27/2011 11:32 AM, Blogger Rufus II said...

Iraq, I believe, exports about 2 Million Barrels/Day, mostly to the U.S.

Iraq was to secure the Persian Gulf oil from a "loose" cannon named Saddam.

Afghanistan, originally, was to "chase down, and kill" Osama, and his Al Queda cohorts.

We Export a Lot of Soybeans, and Corn to China, even though we Pay Landowners Not to Plant 30 Million Acres (more than we use for ethanol - once you consider the co-product DDGS.)

 
At 12/27/2011 11:52 AM, Blogger Jet Beagle said...

rufus II: "Iraq, I believe, exports about 2 Million Barrels/Day, mostly to the U.S."

The U.S. imports about 400 thousand barrels per day from Iraq. That's about 2.6% of the oil consumed by the U.S. each day.

The U.S. imports no oil, of course, from Afghanistan.


Do you honestly believe that the U.S. invaded Iraq in 2003 in order to protect the flow of 2.6% of the oil it uses?

Rufus Ii: "Iraq was to secure the Persian Gulf oil from a "loose" cannon named Saddam."

Saddam Hussein had been a loose cannon for at least two decades before 2003. After 1991, he posed no credible threat to the flow of oil from the Persian Gulf.

The U.S. invasion of Iraq in 2003 had nothing to do with protecting the flow of oil. It had everything to do with global terrorism. The U.S. Congress was incorrectly informed that Iraq had weapons of mass destruction which it was going to provide to terrorists.

The threat of terrorism, rufus, not oil, was the cause for the wars in Afghanistan and Iraq.

 
At 12/27/2011 12:39 PM, Blogger Ed R said...

Saudi Arabia has many dozens of wells that produce 5,000 or more bbls/day.

It will be quite a while (if ever) before the Bakken wells can be taken seriously as displacing any significant S. A. production.

 
At 12/27/2011 12:42 PM, Blogger juandos said...

"Just keep on drinkin' that koolaid, son. Just ignore that big old Trillion Dollar War Bill behind the curtain"...

What are you talking about rufus?

 
At 12/27/2011 5:44 PM, Blogger Rufus II said...

The Trillion Dollars we spent protecting the Iraqi/Kuwaiti, Saudi, UAE, Omani oil over the last ten years, Juandos.

 
At 12/27/2011 6:39 PM, Blogger VangelV said...

If energy consultant IHS CERA is right,...

Is this the same CERA that was saying that depletion rates in conventional fields were running at 3.5% not all that long ago only to admit that the reality was twice as high?

I am with Rufus on this one. These wells are very expensive but yield around 150 bpd on average. You have to keep drilling and drilling just to stay even with depletion from conventional fields even if we forget about the 75%-90% per year depletion of the shale wells.

Note that there isn't any mention of how profitable all these shale plays have been? There is a good reason for that; the shale industry has been and continues to be a destroyer of capital and that is no path to wealth and security.

 
At 12/27/2011 6:45 PM, Blogger juandos said...

"The Trillion Dollars we spent protecting the Iraqi/Kuwaiti, Saudi, UAE, Omani oil over the last ten years, Juandos"...

Well I could take issue with the number you've tossed out there rufus but its probbly close enough anyway not to matter...

Still you don't think protecting that terrorist infested area, eh?

 
At 12/27/2011 7:06 PM, Blogger juandos said...

"The U.S. Congress was incorrectly informed that Iraq had weapons of mass destruction which it was going to provide to terrorists"...

They were?!?!

Who misinformed them?

The Democrats?

Specifically the Clinton administration?

 
At 12/27/2011 9:36 PM, Blogger Rufus II said...

Juandos, I've always been against sanctions, embargoes, barricades, boycotts, etc, of all shapes, sizes, and colors.

We've been beating that dead mule for 50+ years with Cuba; how has that worked out?

All that stuff is counterproductive, inefficient, and all-around nonsensical. The elites use it to their own advantage, and the average people suffer.

Iran is a sovereign nation of 78,000,000 people that comprises an area 2 1/2 Times the size of Texas. Their Border along the Persian Gulf is 600 + miles. They export, net, a little less than 3 Million Barrels/day of Oil, and Products. They will have Nukes. We might as well go on to something else.

As for Iraq: We really could have put that money to better use. For ex: 1/3 of that amount could have put a cellulosic ethanol refinery in every county in the United States. Goodbye imported oil, and a nice little refund for all the proles. :)

In short, we been had. But, we don't have to make a habit of it.

 
At 12/28/2011 4:15 PM, Blogger juandos said...

"I've always been against sanctions, embargoes, barricades, boycotts, etc, of all shapes, sizes, and colors"...

You know rufus I'm with you on that...

All it does is create a guaranteed smuggling operation and who knows what else could be in that pipeline?

I remember back in '66 when I was a high school sopomore and a recruiter came to civics class...

Back then according to the local rag the Vietnam war was costing the country the unfathomable amount of a million bucks an hour...

I asked the recruiter if it wouldn't be cheaper (poor guy needed a smart ass like he needed another tour in the Nam) if it wouldn't be cheaper to give the Vietnamese air conditioners, washers, dryers, and stoves (I had yet to be educated on what a hooch was) and then sell them the electric plants and all the replacement parts...

Then we would've had the Vietnamese their hearts and minds via their creature comforts and we would be making money instead of spending it...

The recruiter thought I was nutz...

 

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