Monday, January 02, 2012

A New Age of Energy Abundance in the U.S.

Thanks to the shale revolution....
From the WSJ article "Oil and Gas Bubble Up All Over":

"You'll know the U.S. energy industry is really on the rebound when North Dakota's newfangled Bakken oil field starts pumping more crude than Alaska's stalwart Prudhoe Bay. Energy experts expect it to happen in 2012 (see chart above).

Dwindling production from the once-mighty Alaskan field has been a symbol of what was once seen as the slow, inexorable decline of U.S. oil. But new technologies have turned that overall decline into an increase, led by the Bakken shale, which in July produced 424,000 barrels a day, to Alaska's 453,000.

Rising oil production from the Bakken and other nontraditional fields is expected to add 250,000 barrels of oil a day to U.S. production, according to the International Energy Agency, even as conventional oil production falls. If overall trends continue, daily U.S. oil output could be up by 1 million barrels a day by 2016, to 6.6 million.

"I didn't see it, and I don't know anyone else who saw it coming," said James L. Williams of WTRG Economics, an energy consultancy in London, Ark.

Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. Moreover, the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.

The Bakken wasn't discovered so much as unlocked. The energy industry figured out that a combination of technologies—hydraulic fracturing and vertical wells that turn underground to run horizontally through oil-rich rock—could free petroleum and natural gas trapped in dense rock formations.

New technologies are now being applied to the Eagle Ford oil field in South Texas. In August, the field produced about 109,000 barrels a day, according to state records, compared with 3,100 barrels two years earlier. Output is expected to quadruple over the next five years.

Next up: The Utica oil field in eastern Ohio and Pennsylvania. Its existence was disclosed last July, and activity is just starting to ramp up. Chesapeake Energy Corp.'s chief executive, Aubrey McClendon, said last summer that "pound for pound, foot for foot, the Utica rock is going to be better than the Eagle Ford." As more wells are drilled in 2012, this boast will be tested."

2 Comments:

At 1/03/2012 7:40 PM, Blogger VangelV said...

Once again we do not get any information about the negative cash flows, funding gaps, and large losses encountered by the shale gas players, the fact that the average shale oil well, which costs $5 million to drill, is down to less than 100 bpd in production by the second year.

For there to be a true age of energy abundance you have to make the math work. So far, it doesn't.

 
At 1/03/2012 10:17 PM, Blogger Buddy R Pacifico said...

"For there to be a true age of energy abundance you have to make the math work. So far, it doesn't."

Here's a couple of shale gas equity propositions:

Oasis Petroleum (OAS) in the Williston Basin: 0 secured debt and 143.5 million in cash. Pad Drilling to reduce cost.

Triangle Petroleum (TPLM)in the Bakken Shale; 0 secured debt and 100 million in cash. Pad Drilling with up to 8 wells drilled from each.

Magnum Hunter Resources (MHR) in the Eagle Ford, Williston and Marcellus Shale; 20% debt/equity.

Chesapeake Resources (CHK): Over 1 million acres leased in the Utica Shale. Total Petroleum (TOT) of France pays for half.

These companies drive down natural gas prices, and make their money on the liquids from fracking.

Hmm,

Abundant energy -> abundant petroleum liquids -> abundant capital -> a stronger U.S. economy

 

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