Wednesday, March 07, 2012

Shale Gale: Energy Equivalent of Berlin Wall Falling


"Energy self-sufficiency is now in sight," says energy economist Phil Verleger. He believes that within a decade, the U.S. will no longer need to import crude oil and will be a natural gas exporter. Verleger says all of the previous presidents fighting for energy independence would be quite surprised by how this came about: It's not the result of government policy or drilling by big oil. "This is really the classic success of American entrepreneurs," he says. "These were people who saw this coming, managed to assemble the capital and go ahead."

Small energy companies using such controversial techniques as hydraulic fracturing, along with horizontal drilling, are unlocking vast oil and natural gas deposits trapped in shale in places like Pennsylvania, North Dakota and Texas. North Dakota, for instance, now produces a half-million barrels a day of crude oil, and production is rising.

 "This shale gale, I describe it as the energy equivalent of the Berlin Wall coming down. This is a big deal," says Robin West, chairman and CEO of PFC Energy, who has been in the energy consulting business for decades. "We estimate that by 2020, the U.S. overall will be the largest hydrocarbon producer in the world; bigger than Russia or Saudi Arabia," he says."

25 Comments:

At 3/07/2012 9:15 AM, Blogger cynick86 said...

I'm not a geologist or an engineer, but this just sounds like so much hyperbole/energy compnay PR. Is this article even remotely fact based?

 
At 3/07/2012 9:33 AM, Blogger Krishnan Chittur said...

Three words "Julian Simon Lives".

 
At 3/07/2012 9:44 AM, Blogger hal said...

we'll never have energy independence because a lot of this energy will be exported. So there will be an equilibrium where we export a lot and also import some as well.

 
At 3/07/2012 10:19 AM, Blogger drj said...

we would need 8 to 10 North Dakota Bakken shales to be energy independant .dreams......

 
At 3/07/2012 10:19 AM, Blogger drj said...

we would need 8 to 10 North Dakota Bakken shales to be energy independant .dreams......

 
At 3/07/2012 10:47 AM, Blogger Richard Lewis said...

Eagle Ford; Permian Basin; Granite Wash; Haynesville; Marcellus; Utica; ... just straight out of the memory bank. Pretty good start on that list of 8 to 10, I'd say.

 
At 3/07/2012 11:06 AM, Blogger Rufus II said...

At our Peak we Imported, Net, just shy of 14 Million Barrels of Oil, and Products per day.

Our latest number was just shy of 8 Million Barrels/Day.

That's a Decrease of 6 Million Barrels/Day.

Increased Oil Production can account for about 0.7 mbpd of this.

The Rest is all Demand Destruction (changing behavior, buying more efficient vehicles, etc.)

Oh, and a Million Barrels/Day of Biofuels.

 
At 3/07/2012 11:09 AM, Blogger morganovich said...

be careful with these comparisons.

it's not apples to apples.

Saudi oil is easy to drill and extract.

shale is not.

the drilling is much more expensive, the wells yield far less oil, and the maintenance requirements to keep them producing are very high.

it's not clear that shale oil is profitable in most cases, even at current prices.

do not mistake equity market capital gluts based on rosy reserve estimates with a sustainable business. pets.com got lots of capital for a while too and appeared to be growing.

is "energy independent at $175 oil" really better than importing at $105?

if we really want energy independence, anwr, the gulf, and the CA costs are better bets (and cheaper).

 
At 3/07/2012 11:34 AM, Blogger Rufus II said...

The Bakken production has continued its parabolic expansion because the inflow of drilling rigs has been parabolic.

However, as more and more wells fail to hit the "sweet spot" (Chesapeake just had to shut down two wells at Williston due to no production,) the influx of rigs to the Bakken will abate. At that time N. Dakota will start to plateau, and, within probably a year, start to decline.

 
At 3/07/2012 11:36 AM, Blogger Rufus II said...

As for frackin' nat gas, that is "The Widow-maker on Steroids."

The price swings are going to be breathtaking.

 
At 3/07/2012 12:44 PM, Blogger Che is dead said...

"we'll never have energy independence because a lot of this energy will be exported." -- hal

If you have enough energy to export you are by definition "energy independent".

Thanks for playing.

 
At 3/07/2012 1:09 PM, Blogger Ron H. said...

"At that time N. Dakota will start to plateau, and, within probably a year, start to decline."

Do you hear that Bunny?

At that time those farmers will be glad they have only 3 trailers each on their property, as they will only have 3 squatters to evict and 3 worthless trailers to demolish and haul off.

Perhaps the all knowing county planners knew what was best for those short sighted farmers all along.

 
At 3/07/2012 1:23 PM, Blogger Ron H. said...

Hal: " we'll never have energy independence because a lot of this energy will be exported. So there will be an equilibrium where we export a lot and also import some as well."

Although he didn't say so, I'm pretty sure Che is referring to NET energy

Actually, we are always at that equilibrium you mention. The mechanism that maintains it is called "price".

That price thingy is a function of global supply and demand.

 
At 3/07/2012 1:26 PM, Blogger Ken said...

It's not the result of government policy

You sure about this? According to Joe Biden everything is the result of government policy.

 
At 3/07/2012 2:23 PM, Blogger NormanB said...

Obama acknowledged fracking but he put his barrier in, 'safe'. Nothing is ever safe enough for the liberals when it comes to energy other than if its 'green'. So, look for more government roadblocks.

This antipathy is so deep Obama is consciously missing the chance of a Presidential lifetime in being able to say that he finally was responsible for our 'energy independence'.

If ever we had an example of governmental dysfunctionality this is it.

 
At 3/07/2012 2:36 PM, Blogger morganovich said...

ken-

i thought the current white house view was "good things are caused by government. bad things are caused by markets."

 
At 3/07/2012 2:46 PM, Blogger Ron H. said...

morganovich: ken-

i thought the current white house view was "good things are caused by government. bad things are caused by markets."
"

As is typical with him, Biden only got half the message.

 
At 3/07/2012 3:01 PM, Blogger morganovich said...

ron-

if he got half a message, at least that would be somehting.

alas, it seems to me he got 2 bad ones.

 
At 3/07/2012 3:15 PM, Blogger Ron H. said...

morganovich: if he got half a message, at least that would be somehting.

alas, it seems to me he got 2 bad ones.
"

Oh, surely you aren't suggesting that Foot-In-Mouth Biden is clueless!

 
At 3/07/2012 4:13 PM, Blogger Paul said...

Ron H,

"Oh, surely you aren't suggesting that Foot-In-Mouth Biden is clueless!"


Joe Biden voted against the Trans-Alaska pipeline. 15 billion barrels of oil later, his boss cancelled Keystone.

 
At 3/07/2012 5:10 PM, Blogger morganovich said...

the only nice thing i can say about biden is he's too stupid to be terribly evil.

 
At 3/07/2012 5:34 PM, Blogger VangelV said...

it's not clear that shale oil is profitable in most cases, even at current prices.

Actually, the economics are clear to anyone who bothers actually looking at the 10-Ks or listening in on the conference calls. Shale gas has been a huge loser for most investors on the production side.

 
At 3/07/2012 5:44 PM, Blogger morganovich said...

v-

i know that gas has been a big loser.

my comment was about oil.

at $106, i think a few of those finds make money, but i think that is more the exception than the rule and as output tails off and constant "re-stimulation" becomes required, i'm not even sure that will hold.

i think you are misinterpreting my comment.

 
At 3/07/2012 5:45 PM, Blogger juandos said...

"That price thingy is a function of global supply and demand"...

Yeah ron h but its also a reflection of the
real value of the dollar...

 
At 3/07/2012 11:13 PM, Blogger Ron H. said...

juandos: "Yeah ron h but its also a reflection of the
real value of the dollar...
"

That's a good one. Those bears sure know their stuff.

 

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