"Bad Estimates Cause Problems"
Tom Loughrey, FLOW Partners, LLC
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Yeah they do. BIG problems.
Exaggerated EUR's, phony reserve bookings, horrible predictions by the Energy Inaccuracy Agency (EIA), even worse guesses by Rystad, changes in standard accounting practices, new definitions of old, standardized metrics, use of BOE at 6 to 1, "Double Premium" dog dookey, wild-ass guesses about "technically" recoverable resources per square mile of Permian Basin, like the article above...all distort the truth and create a false sense of energy security among masses of people who do not understand hydrocarbon extraction,
All of these bad estimates suicked the life blood out of the entire rest of the domestic oil industry in America, including exploration in the Gulf of Mexico, led directly, or indirectly, to loan failures and upstream E&P bankruptcies exceeding 140 billion dollars, and counting, (Haynes and Boone), loss of jobs (careers!), harm to our environment and to our nation's long term energy security. Grandmas by the tens of thousands lost big chunks of their investment portfolios and the general public now thinks the oil and natural gas business is a bunch of lying, deceitful scumbags that blew through hundreds of billions of dollars of borrowed, low interest fiscal stimulus, and still couldn't make any profit. The tight oil sector pissed away all of its good locations using other people's money, now it has completely lost the trust of future investors.
The lies about shale oil and shale gas abundance have also led to energy policy disasters, both domestically and internationally.
What responsible adult leading the country would say to concerned citizens they "will never have to worry about affordable oil supply again?" Who, in a time of war and constant threats on our nation by China, drains the Strategic Petroleum Reserve down to a 45 year low for political reasons? Both idiots did so entirely on the false premise of abundance.
Left, the US has 4% of the world's proven oil reserves, below, the SPR is still being drained...
So, here is a very cool little flurry of Twitter activity from a fella named Tom Loughrey, with FLOW Partners, LLC, a pretty good oil and gas analytical service. They tend to shoot very square with folks...
In 2021 the EIA was betting the farm that tight oil and gas production would grow 760,000 BOPD by the end 0f 2022. Rystad, in its infinite, pay-per-view wisdom, said closer to 850,000 BOPD and I assure you, none of this 2022 growth was going to come anywhere other than the Permian Basin.
Actual growth in 2022 from the Permian, from FLOW Partners, LLC, was only 436,000 BOPD.
If this comment below is true, and of course it IS true as it comes straight from the White House transcripts... then all this lying about future production growth affected the administration's decision to start draining the SPR. It thought that the Permian would replace every barrel it released from the SPR and as fast as they were letting it go out the back door... the Permian would push it in the front door. The Biden administration, because it doesn't know shit about oil and gas, similar to any other administration in recent history, thought what is was doing was temporarily "bridging" the gap to lower gasoline prices and in the process, helping Democrats win the midterm elections.
All staunch defenders of Biden will excuse this ignorance in the name of politics and owning the intellectual high ground. Most will, in fact, scoff at the notion we even need an SPR anymore, because of abundant tight oil. They will say there is nothing to see here, move on.
For the record, all price windows to re-fill the SPR have been ignored by this administration and it still, in the 3rd week of May 2023, is still taking oil out of our savings account where it is being...exported.
I say we are at a time of war in Europe, with Russia the primary aggressor player, China is a real threat to our national energy security (a lot of these SPR releases are actually exported to China!) and our nation needs an oil savings account the same as YOU need, or will need, social security.
Bad estimates do indeed lead to problems.
Before bed last night I caught the tail end of Lone Survivor, with Mark Wahlberg, the remarkable story of Marcus Luttrell and other Navy Seals in Pakistan.
Its painful, but watch it. The book is amazing.
Remember, please, Kuwait, Iraq, Syria, Afghanistan and Pakistan, that those battles were fought away from American soil for oil and to control regions of the world where oil IS abundant. Thousands of good American sons, brothers, dads and husbands died in those battles... essentially over oil and the geopolitics of oil. Sons of friends of mine died in those battles.
Now close your eyes, take a deep breath, and remember our great nation is now exporting the last of its hydrocarbon resources, while burning the associated gas from those exports up flare stacks, all of that developed on credit... for corporate dividends. All of that is pretty much based on the lie of shale abundance, that it will last 50 more years. Those are bad estimates, malicious in context, and they will ultimately hurt our country.