Shale Oil Fiasco

[Ward Smith + 6,615]

8 minutes ago, James Gautreau said:

And the parent/child wells worked out as well as with real people. Lousy.

Thanks for making me spew coffee all over the keyboard  

[Jan van Eck + 7,558]

57 minutes ago, D Coyne said:

Jan,

Cost?

Figure  bit over one. fifteen /gallon.  Cheap enough.

[James Benjamin Oppenheim + 1]

The oil and gas industry might be equally befuddled and confused right now by an abundance of drilled but uncompleted (DUC) wells. When commodity prices more fully recover, completion crews could move in, do their work and those DUCs will take flight. That could bring a quick uptick in output, according to an S&P Global Platts analyst.

[PE Scott + 563]

7 hours ago, Douglas Buckland said:

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.

No, not so much that.....all though I do think they have slightly better access to their own internal R&D. I think they have an advantage in terms of contiguous acreage and reservoir management, surface facilities, that kind of thing. Not to mention owning upstream, midstream, and downstream assets has got to help your bottom line. None of that is better technology though, as you've mentioned, it's just a better position to do profitable business. 

When I say they will change the game, I mean more in terms of dominating that area and market. I don't think theyll have substantially higher EUR or anything like that. I do think theyll nail down the best well spacing and frac designs to be profitable in the areas they're developing; something that's been a struggle for operators like CHK. I also think they have the midstream assets and capability to get their oil to market more cost effectively than the small guys. 

Perhaps it would be good to specify the kinds of technology that improve too. Zipper wells, using produced water, cheaper proppants, better FR/HVFR, and other things that save cost in operations have been a huge benefit and made drilling and completing wells much faster with less manpower. None of those things have made a big difference in EUR, but all of those things have made a huge difference in overall cost and thereby profitability of those wells.

Speaking of SLB, I have sat several jobs with 6-8 mans frac crews with SLB and not a hiccup. The same type of job with other companies using more conventional blenders and such usually have 12-15 guys to a crew. The technology SLB has developed with their "Process Trailer" and everything controlled from the frac van is pretty cool. I don't think those wells will produce any more oil when completed by SLB, but they can certainly cut some cost.

[Rob Kramer + 696]

34 minutes ago, James Gautreau said:

It doubled for 2 reasons. They had a better idea where to drill, and the lateral lengths of the horizontal fracks doubled. But they can no longer extend any further because the results get worse, not better. And the parent/child wells worked out as well as with real people. Lousy. So EUR for the average well is in decline. And once the EUR for the average well is declining, production can no longer grow. So the myth of the Permian as a near infinite energy resource is finished. That will become clear by next summer. All the above reasons did not increase the EUR of the field, it exhausted the field quicker. 

Well they can still out drill and frack more than current wells decline  but you need the prices. 16th is coming fast 275+ duc drop. 

[James Gautreau + 86]

Again, this chart is only showing the production for 2017, 2018, and 2019.  Each color represents the production added each year.  For example, the 7,636 wells brought online in these top four fields in 2017 peaked at 2,769,316 bopd in December and then declined to 727,795 bopd by August 2019.  Thus, 2017’s shale oil production lost 2 million barrels per day in 20 months.

The 9,953 wells added in 2018 had peak production in December at 3,818,141 bopd and declined to 1,828,641 bopd by August 2019. What took 2017’s production 20 months to lose 2 million barrels per day, only took eight months for 2018’s production to lose the same amount.

This is the nasty side-effect of the COMPOUNDED ANNUAL DECLINE RATE.

 

Here is the whole article. 

https://srsroccoreport.com/the-u-s-shale-industry-hit-a-brick-wall-in-2019/

 

[D Coyne + 305]

13 minutes ago, Jabbar said:

Claim doubling since 2012 . I AGREE 

The yield in the Bakkens 2012 to 2013 was 3% .  THEY DOUBLED THAT AND DOUBLED AGAIN .  

I SUPPOSE YOU ARE SAYING CONOCO IS LYING ON THEIR INVESTOR CALL .  BETTER CALL THE SEC  .  .  .  .  THEY WILL LEVEY A HEFTY FINE ON THEM.   

LOL

I do agree with on one point THE WORLD IS FLAT .  We should meet up at the next "Flat World" conference.  

Do you agree with the Oil Price article today that repeats the fslsehood that Saudi Arabia really cut production and it's the first step to a return to $100 oil ?

.   .   .   .   Now THERE'S GROUP THAT WILL "SWALLOW ANY CRAP"

Can't live in the past.  I bet you still listen to your 8-Track tapes.

LOL

Average well productivity for average 2008 Bakken well was roughly 330 kb, by 2019 it had increased to perhaps 400 kbo.

See well quality tab at link below

https://shaleprofile.com/2019/12/09/north-dakota-update-through-october-2019/

You might be assuming higher IP can be translated to same increase in EUR, that is incorrect.  So 400/330=1.21, so about a 21% increase, this is not likely to continue in the future.  Much of this is due to high grading where the best areas only are being drilled, at some point operators run out of room and have to start drilling in less productive areas.

Check out the fine print in investor presentations, it says in fancy legal language, if we are wrong it is because the future is unknowable, the implication is that they can exaggerate and even lie with impunity as they are "forward looking statements".

For Bakken/Three Forks the URR is likely to be 10-15 Gb, we will call it 12.5 Gb (optimistic in my view).  OOIP is 300 to 600 Gb, we will call it 450 Gb, recovery factor is 12.5/450=2.8%.  Claims that it is much higher than this are specious.

The claims of a recovery factor of 10 or 20% are absurd.  Perhaps there are pockets in the sweet spots where the recovery factor is higher, but the area of the sweet spots is probably 25 % of the prospective acres of the various plays (and probably less than 25%.)

Lets say in the sweet spots the OOIP is 300 Gb and 75% of the URR comes from sweet spots so 9.4/300=3.1%.

[D Coyne + 305]

1 hour ago, Rob Kramer said:

According to the chart above the ultimate recovery per well has doubled from years 10' to 16'. I'm still middle of the road . I dont think shale is a 50$ business or rigs wouldn't be dropping like flies. But is see 60$ with good gas prices or 70$ with low gas prices. Is that ultimate recovery shown above include gas barrels and what's the gas/oil ratio. Also what is the average ammount of gas that is flared or is that not included in ultimate recovery. 

Edit mid 60 and mid 70 ... as we had those prices last year but too short to tell if it was sustainable at the time .

Edit 2 : good NG prices are 3$ on the low side 4$ mid. It's an amazing price for the energy content as 3$ would be 18/boe. 

Rob,

In Permian basin output per well has increased, due to longer laterals and defining the sweet spots. When normalized for lateral length EUR per foot of lateral, there has been little increase in Permian productivity since 2016. Development in Bakken started earlier, from 2012 to 2019 about a 21% increase in EUR.  Doubtful the doubling in productivity implied by Jabbar from current productivity level is likely.  A case of wishful thinking.

[James Gautreau + 86]

2017 2,769,316/7636=362 bpd average.

2018 3,818,141/9953=384 bpd average

Output per well holding steady or it would be even worse.

Edited December 11, 2019 by James Gautreau

[James Gautreau + 86]

2017 2,000,000/20=100,000 bpd per month

2018 2,000,000/8=250000 bpd per month

Decline rates have more than doubled per month

If they 2.5 X again next year 2019 production will be gone in 6 months. SUMMERTIME!!!!!!

 2019 estimate 625,0000 bpd per month

Edited December 11, 2019 by James Gautreau

[James Gautreau + 86]

2017 800,000/7636=105 bpd 2019 production

2018 1,800,000/9953=181 bpd 2019 production

2020 estimate  0/9000=0 bpd 2019 production

[D Coyne + 305]

1 hour ago, Rob Kramer said:

According to the chart above the ultimate recovery per well has doubled from years 10' to 16'. I'm still middle of the road . I dont think shale is a 50$ business or rigs wouldn't be dropping like flies. But is see 60$ with good gas prices or 70$ with low gas prices. Is that ultimate recovery shown above include gas barrels and what's the gas/oil ratio. Also what is the average ammount of gas that is flared or is that not included in ultimate recovery. 

Edit mid 60 and mid 70 ... as we had those prices last year but too short to tell if it was sustainable at the time .

Edit 2 : good NG prices are 3$ on the low side 4$ mid. It's an amazing price for the energy content as 3$ would be 18/boe. 

Rob,

In Permian basin output per well has increased, due to longer laterals and defining the sweet spots. When normalized for lateral length EUR per foot of lateral, there has been little increase in Permian productivity since 2016. Development in Bakken started earlier, from 2012 to 2019 about a 21% increase in EUR.  Doubtful the doubling in productivity implied by Jabbar from current productivity level is likely.  A case of wishful thinking.

[Rob Kramer + 696]

1 hour ago, D Coyne said:

Rob,

In Permian basin output per well has increased, due to longer laterals and defining the sweet spots. When normalized for lateral length EUR per foot of lateral, there has been little increase in Permian productivity since 2016. Development in Bakken started earlier, from 2012 to 2019 about a 21% increase in EUR.  Doubtful the doubling in productivity implied by Jabbar from current productivity level is likely.  A case of wishful thinking.

I was just saying it happened. So I gave the years.  I had originally typed that I think wells might get a bit more efficient still but I didnt want to define that so I erased it lol. But as time goes on theres always gains in efficiency.  But the early years are always the easiest.  It's all about prices in my opinion so as long as 50$ wti sticks around rigs will drop. It's the old equal and opposite reaction thing.

Plus lag in time due to yearly business plans.

Edited December 11, 2019 by Rob Kramer

[remake it + 288]

5 hours ago, Ward Smith said:

I eschew obfuscation. You live there. Nuff said. 

Who says what constitutes "inflation adjusted"? You claim gold is a commodity (it's not BTW). You further say gold "had not trebled". Oh really? Gold has never been $2000 per ounce? Sure about that? Better get that ALU unit checked

Gold is definitely a commodity  and its price over recent years has been significantly less than 3 times its 1935 inflation adjusted price of $650

and sorry for disrupting a great thread on oil but Mr Smith has proved himself inept on so many topics relating to what is "economic" so his comments here should be treated with caution.

[Jabbar + 465]

4 hours ago, James Benjamin Oppenheim said:

The oil and gas industry might be equally befuddled and confused right now by an abundance of drilled but uncompleted (DUC) wells. When commodity prices more fully recover, completion crews could move in, do their work and those DUCs will take flight. That could bring a quick uptick in output, according to an S&P Global Platts analyst.

What does Platts analyst say will happen if commodity prices DON'T fully recover ? 

Does it get to a point of panic selling ? 

 

Edited December 11, 2019 by Jabbar

[Marcin + 519]

On 12/5/2019 at 12:13 PM, Douglas Buckland said:

Anybody else seeing the shale oil ‘house of cards’ collapsing as we speak?

Many of us saw this coming, but were continually shouted down by the shale oil cheerleaders.

With rig count plummeting and lack of financing, the DUC’s being completed (finally) is the only reason production is still up. Once the DUC backlog is completed it is going to be a whole new ballgame!

Douglas,

As always I will attack the issue from the demand side. Developed world demand is flat but the rest of the pack want decent lives. And decent lives means central heating (natural gas), cars (crude oil) and consumer goods. Countries populated by 3 billion people are fast approaching this point in their development (China, SE Asia, Eastern&South Eastern Europe, Latin America, Middle East, some countries in Africa). This means strong growth of demand.

So in my opinion even if shale oil will be commercially "killed" in the 5 even 10 years perspective, it will rise as Phoenix when the price of oil will be sufficient. In the meantime I think majors wilt their strong balances and low capital cost, will prepare for long-term expansion. I think that as in every industry having hurdles there would be victims and consolidation of industry, only fittest would survive to profit from high oil prices.

Well I do not know whether I should write this generic bullshit at the forum populated by experts.

Edited December 11, 2019 by Marcin
typo

[D Coyne + 305]

6 hours ago, Jabbar said:

Claim doubling since 2012 . I AGREE 

The yield in the Bakkens 2012 to 2013 was 3% .  THEY DOUBLED THAT AND DOUBLED AGAIN .  

I SUPPOSE YOU ARE SAYING CONOCO IS LYING ON THEIR INVESTOR CALL .  BETTER CALL THE SEC  .  .  .  .  THEY WILL LEVEY A HEFTY FINE ON THEM.   

LOL

I do agree with on one point THE WORLD IS FLAT .  We should meet up at the next "Flat World" conference.  

Do you agree with the Oil Price article today that repeats the fslsehood that Saudi Arabia really cut production and it's the first step to a return to $100 oil ?

.   .   .   .   Now THERE'S GROUP THAT WILL "SWALLOW ANY CRAP"

Can't live in the past.  I bet you still listen to your 8-Track tapes.

LOL

You seem to lack an understanding of what recovery factor means.  Basically you confuse EUR and recovery factor.

Based on actual data for average well output from the NDIC, the EUR in the North Dakota Bakken/Three Forks increased from about 330 kbo in 2012 to about 400 kbo in 2019, you are suggesting EUR has increased by a factor of 4.

Any evidence to back that up?   For easy access to NDIC data see well quality tab at

https://shaleprofile.com/2019/12/09/north-dakota-update-through-october-2019/

A claim that EUR has increased by a factor of 4 in the North Dakota Bakken is clearly nonsense, in 2014 the average well was 327 kbo, in 2012 the EUR was about 307 kbo.  In 2019 North Dakota Bakken EUR is about 400 kbo, a 30% increase, had EUR increased by a factor of 4 as you claim from 2012 to 2019, EUR would be 1230 kbo in 2019, the fact is you are off by a factor of 3 (1200/400=3).  Bakken URR is likely to be less than 13 Gb, but we will be generous and suggest 15 Gb and that OOIP is at the low end of estimates at 300 Gb, that would suggest a recovery factor of no more than 5%, if we use the high end of the OOIP range of estimates (600 Gb), the recovery factor is 2.5%, the middle OOIP estimate (450 Gb) gives a recovery factor estimate of 3.3%.

The claims of a 13% recovery factor are based on investor presentation hype from Continental Resources and suggests a North Dakota Bakken /Three Forks URR of 58 Gb.  That URR estimate is likely to be 4 times too high.

[Douglas Buckland + 6,308]

13 hours ago, Jabbar said:

 

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

You obviously do not have a clue concerning the ‘glory days’, as shown by your bullet points.

Perhaps you should limit your comments to issues you have actually experienced or have first hand knowledge of.

[Douglas Buckland + 6,308]

15 hours ago, Boat said:

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

 

So, essentially, nobody can identify and define these miraculous ‘game changing’ technologies being spouted...

[Jabbar + 465]

4 hours ago, D Coyne said:

You seem to lack an understanding of what recovery factor means.  Basically you confuse EUR and recovery factor.

Based on actual data for average well output from the NDIC, the EUR in the North Dakota Bakken/Three Forks increased from about 330 kbo in 2012 to about 400 kbo in 2019, you are suggesting EUR has increased by a factor of 4.

 

Yea, right. 

Call it whatever you want , bottom line is for a given section or acreage thru the use of techologicsl advancements, efficiencies and processes Conoco (others follow) will double # barrels yield.

If you don't believe Conoco fine. Find something better to do with your time.  Unless you're getting paid to trash shale ?

At least you don't have a visceral hatred for shale because it ruined your life like others. 

Go to Conoco website.

Shale haters are all about statistics and white lies 

Buy the way Brokerage Merrill Lynch just named there #1 Best stock pick for 2020 as EXXON based on their aggressive investment in Permian to ramping up production (current 300k/day) to over 1 million barrels/day by 2023,  as well as their investment in Guyana that has added over 6 Billion to their reserves and will start production at 120,000 barrels/day next month and grow to over 750,000 barrels/day by 2025.

" No shale cheerleader can name one technology , wah, wah wah "😪

I do agree with the "Never Shalers"  the World is Flat 

LOL

Edited December 12, 2019 by Jabbar

[Jabbar + 465]

1 hour ago, Douglas Buckland said:

You obviously do not have a clue concerning the ‘glory days’, as shown by your bullet points.

Perhaps you should limit your comments to issues you have actually experienced or have first hand knowledge of.

LOL

Glory days are not coming back.

Cherish the memories and move on.

[Jabbar + 465]

1 hour ago, Douglas Buckland said:

So, essentially, nobody can identify and define these miraculous ‘game changing’ technologies being spouted...

I wouldn't call Conoco a nobody. Open your eyes (and your mind)

"Denial is a defense mechanism in which a person, faced with a painful fact, rejects the reality of that fact. ... When a person is in denial, they engage in distractive or escapist strategies to reduce stress and help them cope."

I agree THE WORLD IS FLAT . Technological advancements in the oil industry ceased back in 1998 .  .  .  .  NOT

Edited December 12, 2019 by Jabbar

[Ward Smith + 6,615]

7 hours ago, remake it said:

Gold is definitely a commodity  and its price over recent years has been significantly less than 3 times its 1935 inflation adjusted price of $650

and sorry for disrupting a great thread on oil but Mr Smith has proved himself inept on so many topics relating to what is "economic" so his comments here should be treated with caution.

Hey dipstick, can't you read your own graph? Right there in the middle see that peak price? $2674 since you want to use "funny money" in 2018 dollars? That graph is a bit nonsensical because it shows the "absolute" peak price of $1895 in 2011 dollars. $650x3=1950 

Now, since you're exceptionally stupid I'll help you some more. Just since 2011 inflation has gone up over 14%. A little math and that peak was $2160.5 in 2018 money. Any way you slice it, > 3X that "supposed" value from 1935.

Why the tangent? Beats the hell out of me, you're so bound and determined to demonstrate "intelligence" you keep looking for nits to pick, and failing miserably. If you were human it would be sad and pathetic. 

Edited December 12, 2019 by Ward Smith

[remake it + 288]

1 hour ago, Ward Smith said:

Hey dipstick, can't you read your own graph? Right there in the middle see that peak price? $2674 since you want to use "funny money" in 2018 dollars? That graph is a bit nonsensical because it shows the "absolute" peak price of $1895 in 2011 dollars. $650x3=1950 

Now, since you're exceptionally stupid I'll help you some more. Just since 2011 inflation has gone up over 14%. A little math and that peak was $2160.5 in 2018 money. Any way you slice it, > 3X that "supposed" value from 1935.

Why the tangent? Beats the hell out of me, you're so bound and determined to demonstrate "intelligence" you keep looking for nits to pick, and failing miserably. If you were human it would be sad and pathetic. 

80 years after 1935 is 2015 and clearly gold's inflation adjusted price had not trebled as was originally spelled out despite your protestations and this is relevant because what you failed to do was adjust the $3/bbl lifting price for inflation on sound principles.

[Douglas Buckland + 6,308]

3 hours ago, Jabbar said:

I wouldn't call Conoco a nobody. Open your eyes (and your mind)

"Denial is a defense mechanism in which a person, faced with a painful fact, rejects the reality of that fact. ... When a person is in denial, they engage in distractive or escapist strategies to reduce stress and help them cope."

I agree THE WORLD IS FLAT . Technological advancements in the oil industry ceased back in 1998 .  .  .  .  NOT

THEN IDENTIFY THE TECHNOLOGY!!!

You brought it up but have repeatedly failed to identify it! If you are incapable of doing this, just admit it!

Regarding the ‘glory days’, I suppose that it will come as a surprise to you that in the late 70’s or early 80’s, just after the Piper Alpha Disaster, working on an offshore drilling rig was considered the second most dangerous job to have, the first being a soldier in combat.

That said, although they were definitely ‘glory days’ for some of us, and without actually knowing you and making assumptions from your posts, I seriously doubt that you would have had the cajones to work offshore during the ‘glory days’, let alone survive and prosper during them.

I am thankful to have been involved in the drilling arena back in the ‘glory days’...you, on the other hand, will never know what you missed.

Carry on with your discussions regarding the ‘glory days, those of us who were there understand that you have absolutely no idea what you are taking about.