Floating On An Ocean of Shale Oil?

January 29, 2018

 

If you want to read this article help yourself by clicking on the photo. It speaks  of the American shale oil revolution and the same "resilience" hooey  we've  all heard before, and are getting tired of hearing,  about how OPEC tried to put the American shale oil industry out of business and all that did was make the shale oil industry smarter and more "determined" to grow production. It has a sprinkling of "new technology" stuff in it too, naturally.  The article does not mention the $285,000,000,000 of long term debt the shale industry is in, that servicing that debt requires 18-41% of total revenue,  depending on the company. Nor does it speak to the fact that the shale oil industry has outspent its revenue by a wide margin since its inception and has never in its  entire existence been profitable.

 

I posted the image of this article because I like the very cool  animation and  I thought that it would get your attention. I also am pretty sure that the image above  epitomizes  how most American's view the  shale oil phenomena, that we are literally floating on the Atlantic Ocean of the stuff.

 

This is actually what I think folks should read. It offers a different perspective on how much shale oil America actually has. Please click on the image below and take some time to read  David Hughes work at the Post Carbon Institute, here:

 

EIA's STEO for Jan. 2018 projects United States consumption of crude oil and condensate for 2018 to be in the order of 16,000,000 barrels per day. That means America is currently consuming around 5,800,000,000 (5.8GBO) of C+C every year.

 

There is, of course, low decline- low cost conventional C+C production to rely on in America that helps meet our hydrocarbon needs but as to unconventional shale oil that has everyone hyperventilating, total projected ultimate recovery from both the Bakken (18.7 GBO) and Eagle Ford (9.3GBO) shale basins  would only be sufficient to satisfy America's oil needs for 5-6 years. If you believe the always exuberant EIA. David Hughes has a different take on it and believes there is even less than 28.0 GBO UR from two of the three major shale oil basins mentioned above. The truth is somewhere in the middle. Either way, it isn't all that much, and not near as much as people are being led to believe. 

 

Is there then enough unconventional oil in the Permian Basin to make America hydrocarbon independent, and KEEP us independent for decades to come? Is there enough oil in the Permian Basin to exert our new found "energy dominance" on the entire rest of the world by  increasing light tight oil exports? 

 

I think not. I think its a bad bet made by gullible politicians that need tax dollars and the votes those dollars buy in order to keep being politicians. The shale oil industry is addicted to money, its going to do what its going to do, and, according to one big shale oil CEO,  it isn't even it's fault. It is trapped by debt and decline rates that if you were standing by them would suck you plum off your feet. Most of the folks borrowing all this money to grow shale oil production will be long gone in a few years; they have nothing to lose.

 

To ensure our long term energy security in America we need to slow down the fiscally irresponsible, wild-ass rate of unconventional shale oil and shale gas extraction and re-implement conservation efforts with well spacing and well densities rules that already exist. Those boys can go back and fill in the gaps as we need the stuff.  We should stop exporting LTO now and focus on heavier crude markets and refinery updates that will allow America to use America's oil. 

 

 

 

 

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