Shale Oil Fiasco

[Mike Shellman + 548]

On 12/10/2019 at 6:14 AM, D Coyne said:

In an earlier comment you mentioned 10 to 11.5 million for some wells you are familiar with in the Permian

 

 

Edited January 1, 2020 by Mike Shellman

[Gerry Maddoux + 3,627]

I've read all this and one's position sort of depends on which side his bread is buttered. 

But one thing bothers me: If the shale is all a sham, where are we going to get America's oil?

From Saudi Arabia? Russia? Guyana? Vaca Meurta? Offshore?

Surely you jest.

[Douglas Buckland + 6,308]

On 12/8/2019 at 10:51 AM, Boat said:

The production of new wells in the Permian jumped by a multiple of 8 between 2013 and 2019. Hundreds of billions of dollars now stay in the US that used to go to importers. The US is now energy independent. All this with 700 odd less rigs. Let’s throw in the matching nat gas story. The US is now a net nat gas exporter instead of a fairly large importer in 2013.

To call fracking and its results for billions of humans getting cheaper energy might be a climate change travesty but a victory for the best widget winning. It has also been a huge geopolitical US winner as it stopped nefarious countries stacking their piggy bank and draining the world’s economies. You Russian? Then I would understand.

Once again you have managed to avoid defining any new technologies which are somehow going to transform the shale oil game in the future. Hydraulic fracturing, horizontal wells, multi-lateral wells, etc...have been around for several decades.

No, I am not Russian, simply a rational adult.

[Douglas Buckland + 6,308]

On 12/7/2019 at 10:05 PM, Jabbar said:

Halliburton closed an Oklahoma Office that employed 800 people.  They didn't lay off  800.  Many were moved to another location in Oklahoma.

Oklahoma Anadarko/Stack was supposed to be "The Next Big Play" .  Halliburton geared up for all the new business to come this year.

But .  .  .  it turned out to be a big dud. 

Just the way it is.  Everyone benefits from your expertise , but please get ALL the facts straight . 

This isn't your grandfather's oil industry. 

So Halliburton, in an effort to save money, closed one office in Oklahoma, kept most of the people, and simply relocated them elsewhere in Oklahoma?

Bullshit!

[Jan van Eck + 7,558]

3 minutes ago, Douglas Buckland said:

No, I am not Russian, simply a rational adult.

I think I better leave this one alone.  This fellow is a lot bigger, and a heckuva lot tougher, than I am! 

[Jan van Eck + 7,558]

22 minutes ago, Gerry Maddoux said:

But one thing bothers me: If the shale is all a sham, where are we going to get America's oil?

From Saudi Arabia? Russia? Guyana? Vaca Meurta? Offshore?

Try coal.  

[Douglas Buckland + 6,308]

On 12/7/2019 at 2:09 PM, markslawson said:

Douglas - of course, but I don't see what the problem is.. the shale oil industry, and its employees,  should be use to cycles by now .. the mobile oil rigs the industry uses are always being mothballed then brought back depending on conditions. If conditions improve then workers will be found from somewhere. You will find that the most easily replaceable have been let go .. again its what happens in the shale industry, the rest of us should soldier on.. leave it with you..  

Bullshit!

The most experienced people are generally the older people, when a persistent slump hits...they retire and that wealth of experience is lost to the industry.

The middle arena workers need to support their families, put food on the table, put something away for the kids college, etc... These folks move to other industries with more security than the ‘cycling’ oil industry and are very hard to attract back into the business due to financial security issues.

The people entering the job market shun the oilfield as it is presently in a slump and they can see that there is no long term security.

Universities can not attract kids to oil related fields as the kids see no future in the industry.

So, you might be able to utilize mothballed rigs which have been stacked, not a problem....now try to crew them up with people that know how to drill or have any idea of well control. Worse than that, try to find, and attract back to the industry, experienced drilling managers, drilling engineers, superintendents, supervisors, geologists, fluid engineers, etc....

I now leave it with YOU...

[Douglas Buckland + 6,308]

1 hour ago, Gerry Maddoux said:

I've read all this and one's position sort of depends on which side his bread is buttered. 

But one thing bothers me: If the shale is all a sham, where are we going to get America's oil?

From Saudi Arabia? Russia? Guyana? Vaca Meurta? Offshore?

Surely you jest.

The same places we were getting it before the shale oil fiasco, I would presume.

[Douglas Buckland + 6,308]

1 hour ago, Jan van Eck said:

I think I better leave this one alone.  This fellow is a lot bigger, and a heckuva lot tougher, than I am! 

Not a matter of size or toughness Jan, this is a common sense issue more than anything else.

[Douglas Buckland + 6,308]

“...the incredible tech that changed US oil production.“

Here we go again! What ‘incredible tech’? Please list this tech.

[Ward Smith + 6,615]

4 hours ago, Jan van Eck said:

Even as late as 1956 crude oil cost about $3 a bbl to pull out of the ground. 

Let's examine this a bit closer shall we? In 1956 the dollar was exchanged for gold at the rate of $35/ounce. To guesstimate how much the $3 has devalued over the years, we should look at today's $1500/oz price for gold (approximate price, I'm not bothering to look it up) and figuring gold equivalency, the lifting cost is $128.57 in today's "money".

Puts a whole new twist on things doesn't it? 

[remake it + 288]

29 minutes ago, Ward Smith said:

Let's examine this a bit closer shall we? In 1956 the dollar was exchanged for gold at the rate of $35/ounce. To guesstimate how much the $3 has devalued over the years, we should look at today's $1500/oz price for gold (approximate price, I'm not bothering to look it up) and figuring gold equivalency, the lifting cost is $128.57 in today's "money".

Puts a whole new twist on things doesn't it? 

In 1935 the inflation adjusted price of gold was over $650/oz and some 80 years later it had not trebled (very unusual for any commodity class) so all you have really done is abuse basic economic principles... again!

[Boat + 1,324]

3 hours ago, Douglas Buckland said:

Once again you have managed to avoid defining any new technologies which are somehow going to transform the shale oil game in the future. Hydraulic fracturing, horizontal wells, multi-lateral wells, etc...have been around for several decades.

No, I am not Russian, simply a rational adult.

A quick google of the history of fracking would be a lot more comprehensive but for fun let’s look back at early tech. Early reports of fracking was using left over shells from the Civil War in a poor producing well. It’s claimed the shell explosion loosened the soil and a better flow was a result.

Fast forward to today’s fracking sites and very little old tech is used. Now your an oil guy so look at fracking sites through the decades and check to see if anything has changed in your view.

I would dare to suggest drilling systems, delivery systems, refining systems and even the home office has had tech upgrades since those early days.

 

[Boat + 1,324]

A few years back there were over 1700 drilling crews pumping much less oil and nat gas than the under 800 working in the US. That was tech at work. Just like land lines will disappear because of satellites and tech why waste time worrying where the phone booth went. Just say it was tech and you will be correct.

[Douglas Buckland + 6,308]

1 hour ago, Boat said:

A quick google of the history of fracking would be a lot more comprehensive but for fun let’s look back at early tech. Early reports of fracking was using left over shells from the Civil War in a poor producing well. It’s claimed the shell explosion loosened the soil and a better flow was a result.

Fast forward to today’s fracking sites and very little old tech is used. Now your an oil guy so look at fracking sites through the decades and check to see if anything has changed in your view.

I would dare to suggest drilling systems, delivery systems, refining systems and even the home office has had tech upgrades since those early days.

 

You are looking historically far past when the shale oil industry originated, looking at technology from the Civil War era is irrelevent.

Take a look back around the late 1970’s and early 1980’s at the MSF’s (Massive Hydraulic Fracturing) operations in Cotton Valley, Texas and elsewhere and tell me that these operations have been significantly improved upon since the shale oil industry blossomed. They haven’t been.

Granted, the significant increase in computing power has made operations easier to design and monitor, the actual prosecution of creating fractures from wellbores has not changed at all.

But you are still avoiding the question, what NEW technologies are the shale oil operators going to introduce that will significantly boost their production?

Nobody on this forum, which foresee the shale oil industry prospering, have been able, to date, to identify these miraculous NEW technologies, which will allow the shale oil industry to flourish.

You seem to be like the Democrats in the impeachment circus, creating scenarios to advance your agenda without a shred of proof/evidence.

If you can list 5 new, pertinent, proven technologies which will significantly improve production from these LTO wells for more than 2 years, I will gladly ‘eat crow’ and apologize.

[Jan van Eck + 7,558]

5 hours ago, Douglas Buckland said:

Not a matter of size or toughness Jan, this is a common sense issue more than anything else.

It was strictly tongue in cheek, Douglas   🥰

[PE Scott + 563]

On 12/9/2019 at 2:00 PM, James Gautreau said:

It is this paradox that is leading so many newspapers and oil industry journals to report that this show can’t continue.

It's interesting because I've done work with some of the big guys, heavily in debt and who are already struggling with this paradox, who seem to keep plugging away in hopes of higher prices or gusher wells, I guess.

Just today though, I talked with several smaller firms backed by private equity that operate off cash flow. Every single one of them had plans to increase the modest numbers of wells they complete next year. In part, I think this us a result of favorable vendor cost during these slower times helping to decrease overall drilling and completion cost. In the other side of it, all the wells I completed for them last couple years seem to be doing well and generating positive cash flow. 

Part of the difference is the smaller independents operate on a shoestring budget and don't get fancy most of the time. They do a better job minimizing risk, in my experience, and are able to operate on thinner margins with less overhead. 

From my position, and I'm an engineer not an economist, it seems like the shale industry is doing better than the media let's on. There will definately be some losers. I think some acreage and assets will be sold off at substantial discounts to repay or maintain debts. For the operator with cash though, this allows an opportunity to acquire an asset at a profitable price point. 

Then there are the real big boys like Chevron and Exxon. They'll change the game up in the Permian and put way more R&D into maximizing that acreage. Eventually, it will all trickle down to the little guys and everyone will benefit. 

[PE Scott + 563]

1 hour ago, Douglas Buckland said:

Nobody on this forum, which foresee the shale oil industry prospering, have been able, to date, to identify these miraculous NEW technologies, which will allow the shale oil industry to flourish.

You seem to be like the Democrats in the impeachment circus, creating scenarios to advance your agenda without a shred of proof/evidence.

If you can list 5 new, pertinent, proven technologies which will significantly improve production from these LTO wells for more than 2 years, I will gladly ‘eat crow’ and apologize.

 I tend to agree with you based on current technology I've seen employed. It's a physical limitation in the rock itself. The poor permeability, heterogeneity, lithology, etc.

I have seen improvements in well spacing, cluster size and spacing, proppant per ft, types of proppant, etc. Design aspects. I have seen rates increase from 60 bpm to 100 bpm on average. Chemicals like High Viscosity Friction Reducers that replace gels. None of these things are really new technology but refinement on existing technology. The gains in overall production have been minimal when normalized to account for longer horizontal etc. The profitability of all these new techniques has more often been realised in the cost savings to complete a well. That is the real focus. How quickly and inexpensively can we drill, complete, and place production equipment. Everything else is secondary....often including the fac design.

[Douglas Buckland + 6,308]

“Then there are the real big boys like Chevron and Exxon. They'll change the game up in the Permian and put way more R&D into maximizing that acreage. Eventually, it will all trickle down to the little guys and everyone will benefit. “

 

Are you saying that the ‘little boys’, utilizing borrowed money, did not have access to leading edge R&D from the likes of Halliburton, Schlumberger or any of the other top third party service companies who are heavily into R&D? I strongly disagree.

But again you allude to unnamed, unidentified R&D/technology which will “change the game”. Unless you can actually identify the game changing technology, this is simply wishful thinking.

[James Regan + 1,776]

On 12/9/2019 at 12:18 PM, John Foote said:

Argentina is a strange one. In theory should be very successful. Wonderful resources, and to blame the left is crazy because the right has also decimated the country, famously having a missing generation. Once corruption takes deep hold it matters little if it's left or right. They still do beef well.

Not crazy, a fact of South American business and the fact that some of the worlds largest oil reserves are grossly under exploited due to corruption and protectionism, popularisation  the right wing capitalisation is the paradox. Until we weed out this poison ivy potential first world economies will never emerge, Brasil is a perfect example, a right wing president strangled by a left wing communist majority. Communism and in general left wing politics are responsible for the placing the hobbles holding back societies, lose the hobble and its very possible you will walk just fine. With thus reserves being available for exploitation for an international clientele who are willing to invest will assist said countries to distribute the wealth, but isn't that a communist doctrine, seems to be a bit of an oxymoron....

Edited December 11, 2019 by James Regan
Agreed beef is top notch

[Boat + 1,324]

3 hours ago, Douglas Buckland said:

You are looking historically far past when the shale oil industry originated, looking at technology from the Civil War era is irrelevent.

Take a look back around the late 1970’s and early 1980’s at the MSF’s (Massive Hydraulic Fracturing) operations in Cotton Valley, Texas and elsewhere and tell me that these operations have been significantly improved upon since the shale oil industry blossomed. They haven’t been.

Granted, the significant increase in computing power has made operations easier to design and monitor, the actual prosecution of creating fractures from wellbores has not changed at all.

But you are still avoiding the question, what NEW technologies are the shale oil operators going to introduce that will significantly boost their production?

Nobody on this forum, which foresee the shale oil industry prospering, have been able, to date, to identify these miraculous NEW technologies, which will allow the shale oil industry to flourish.

You seem to be like the Democrats in the impeachment circus, creating scenarios to advance your agenda without a shred of proof/evidence.

If you can list 5 new, pertinent, proven technologies which will significantly improve production from these LTO wells for more than 2 years, I will gladly ‘eat crow’ and apologize.

If all that fracking was possible in the 70’s why did it take until around 2013 for the production to jump rapidly and then continue to do so. 

Incramental gains in all aspects of tech just keep happening in all aspects of most businesses. But how fast they emerge and when is a crystal ball I don’t own. Or the Middle East could explode and oil goes to $150 per barrel and LTO is rolling in money. 

One thing about future tech. It rarely happens like we think it will. Some explodes and other improves slowly over decades. But to your point I never made any claim that LTO oil has a future that tech can solve. For that the world would need control of its oligarchs. Lol

 

[Jabbar + 465]

14 hours ago, D Coyne said:

They seem to be moving in the wrong direction, they have very productive wells, but the number of wells is pretty small.

I will be convinced of Conoco's hype when I see performance 3 or 4 years out.

 

Do yourself a favor, go to Conoco website listen to their November Investor Presentation.  Fast forward to the section labeled "Lower 48" .  Then listen to the Q&A section.  

They detail their very sophisticated process as to number rigs deployed on their 10.8 million shale acres in the lower 48, production, tech overview (don't get into detail of latest developments, competitive advantage) , and how they will generate $50 Billion cash over next 10 years (that number$ does not even include their increasing recovery from 10% to 20% at major acreage ) 

Can't debate with Shale Haters. They are dug in.  

* Conventional land based oil production jobs are not going to increase.  You know the majors can now drill/steer wells with real-time monitoring from an air conditioned office in Houston. Occidental is hiring in Oman and Columbia. 

* Those that invested in small shale companies years ago won't see their stock go back to 2013 levels.

* We won't see oil prices back to $100 as an OilPrice article today foolishly proclaims (unless their is major war/conflict in Mideast, which is possible)

Debating with closed minded Shale Haters goes nowhere.  They're a broken record. 

There is one thing I do agree with the Shale Naysayers about .  .  .  .  .  .  

.  .  .  .  The World is Flat .  

If it were round we would all fall off and end up in outer space with no food to eat

 

Edited December 11, 2019 by Jabbar

[Jabbar + 465]

12 hours ago, D Coyne said:

Jabbar,

Conoco in 2017 Eagle Ford average 12 month cumulative output for 97 wells was 220 kbo.

For 2018 Eagle Ford wells completed by Conoco 12 month cumulative output for 105 wells is 205 kbo.

They seem to be moving in the wrong direction, they have very productive wells, but the number of wells is pretty small.

I will be convinced of Conoco's hype when I see performance 3 or 4 years out.

 

Do yourself a favor, go to Conoco website listen to their November Investor Presentation.  Fadt forward to the section labeled "Lower 48" .  Then listen to the Q&A section.  They detail their very sophisticated process as to number rigs deployed on their 10.8 million acres, tech overview (don't get into detail of latest developments, competitive advantage) , and how they will generate $50 Billion cash over next 10 years (that number$ does not even include their increasing recovery from 10% to 20% at major acreage ) 

Can't debate with Shale Haters.  They are dug in.  

* Conventional land based oil production jobs are not going to increase.  You know the majors can now drill/steer wells with real-time monitoring from an air conditioned office in Houston.

* Those that invested in small shale companies years ago won't see their stock go back to 2013 levels.

* We won't see oil prices back to $100 as an OilPrice article today foolishly proclaims (unless their is major war/conflict in Mideast, which is possible)

Debating with closed minded Shale Haters goes nowhere.  They're a broken record. 

There is one thing I do agree with the Shale Naysayers about .  .  .  .  .  .  

.  .  .  .  The World is Flat 

If it were round we would all fall off and end up in outer space with no food to eat

Edited December 11, 2019 by Jabbar

[Jabbar + 465]

14 hours ago, Douglas Buckland said:

So Halliburton, in an effort to save money, closed one office in Oklahoma, kept most of the people, and simply relocated them elsewhere in Oklahoma?

 

Quote

Bullshit! 

 

 

 

 

 

Typical response. No reason to get so angry. It's a discussion .  .  .  an exchange of ideas and opinions.

 

I didn't say most   . . . I said many.  That's what Halliburton said.  I guess they lie like every other oil company that doesnt agree with your obsession.

If you want an honest debate stick to the fact  . . . You sound like Democrat Intelligence committee chairman Adam Schiff.

Oklahoma was a bust.  Everyone downsized .  This isn't oil utopia.

Come to grips with the the current industry.  We're not going back to the "glory days".  This is not your grandfather's oil industry

* traveling the world to exotic countries,

* working hard and playing hard, partying at your favorite cantina, or fly to world vacation destination on your off weeks

* enjoying the local working girls and

* coming home with a pant load of cash. 

Cherish the memories and move on. Talk to Occidental if you want work in conventional oil. They're hiring in Columbia and Oman. Send them your CV

Edited December 11, 2019 by Jabbar

[James Gautreau + 86]

13 hours ago, D Coyne said:

Here is the Productivity distribution of 2018 Permian Wolfcamp wells, based on 12 month cumulative output, 2312 wells, with 56% of wells less than 150k cumulative after 12 months and the rest more than that, when an Arps hyperbolic is fit to the early data for 2017 wells the EUR is about 380 kb for the average well, the well profile for 2018 looks similar after 16 months, the first 16 months has about 15 kb higher cumulative so a rough estimate might be 395 kb for the average 2018 well.  Lateral length on average increased from 7500 feet in 2016 to 9000 feet in 2018, but it may decrease in the future as different counties tend to have different average lateral lengths and as sweet spots get full drilled lateral length could decrease as production might move to counties with shorter average lateral lengths.  Chart from advanced insights productivity distribution (slide to right).

https://shaleprofile.com/2019/11/21/permian-update-through-august-2019/

Do the simple math boys and girls. If the average well is 400,000 EUR that's $20,000,000 on a well that costs $10,000,000 to drill. How can these companies be $250 billion in the red? Actually I think the average price for a barrel of oil over the last 10 years is $75, so $30,000,000 in revenues on a $10,000,000 well. IT AIN'T SO.

Edited December 11, 2019 by James Gautreau