Shale Oil Fiasco

[James Gautreau + 86]

Edited December 11, 2019 by James Gautreau

[James Gautreau + 86]

Finally found it. There you go boys and girls. Ultimate recovery for the average Permian well peaked in 2016, which means that's when all the sweet spots were drilled. So 200,000 EUR means $10,000,000 revenue on a well that costs $10,000,000 to drill. So they break even one single year. Best ever year 3 years ago. 

Edited December 11, 2019 by James Gautreau

[wrs + 893]

22 minutes ago, James Gautreau said:

Finally found it. There you go boys and girls. Ultimate recovery for the average Permian well peaked in 2016, which means that's when all the sweet spots were drilled. So 200,000 EUR means $10,000,000 revenue on a well that costs $10,000,000 to drill. So they break even one single year. Best ever year 3 years ago. 

Uh, no, that's not what the graph says.  That only tracks cumulative production to date.  EUR is the total life of the well.  That graph suggests to me that EUR is rising still.

For example, if I extrapolate the line for 2018 wells to 200kbbl cumulative production, the daily production will still be at 150bbl or so whereas the 2016 wells were only at 100bbl daily production when they reached 200kbbl cumulative production.  Now if the decline curves are consistent, the 2018 wells have a greater EUR over time unless something changes in the decline rate.

Edited December 11, 2019 by wrs

[James Gautreau + 86]

2018 is the worst year ever for shale decline and ultimate recovery. 

https://srsroccoreport.com/more-than-50-of-the-mighty-permians-2018-oil-production-has-vaporized

[wrs + 893]

25 minutes ago, James Gautreau said:

2018 is the worst year ever for shale decline and ultimate recovery. 

https://srsroccoreport.com/more-than-50-of-the-mighty-permians-2018-oil-production-has-vaporized

Your article is from a site that promotes doom and gloom, sells gold and is generally not knowledgeable about much of anything and certainly not the oil business.  These people seem to think no one got paid for all that oil that was produced before the wells declined, I mean look at this hype from the article.

Just think about this for a minute. Of the 5,132 wells drilled, completed and brought online in 2018, 50.5% of that production has VAPORIZED in just seven months.  This is CAPITAL DESTRUCTION at its finest.

How is it capital destruction?  It's a depleting resource, they got paid money for the oil that was produced, notice they seem to omit that fact.  So nothing has vaporized except the oil that was produced because that is exactly the intent of producing oil.  These are not factories that turn out a fixed amount of production for many years, they are oil wells with a known decline rate and so when people focus on that instead of the cumulative production, you know they are IDIOTS.  The capital has been returned in the price paid for the many millions of barrels produced but they fail to mention that.  

Your article also doesn't support your claim about 2018 being the worst year ever for the shale decline and ultimate recovery but the graph you posted earlier says the opposite. Perhaps I am misreading it though, can you explain how you think 2016 was the peak year for EUR in the Permian?  Actually I don't see where that data comes from so it may include all shale in the US, it doesn't say.

 

Edited December 11, 2019 by wrs

[Joseph Hall 0]

Let me help everyone here out – in a few very short years the world’s entire fossil fuels industry will be out of business.

Yep, a few very short years.

Solar, wind and battery storage is running wild around the globe. Every day the percentage of energy derived from them goes up and up and up. Every day the percentage derived from fossil fuels goes down, down, down. There’s no stopping that trend.

Tesla is selling hundreds of thousands of EVs with millions more on the way. The other major car manufactures are right behind them. In a few years the thought to owning an ICE vehicle will seem odd - like buying a typewriter or going to Blockbuster video.

The world’s “Kodak moment” is rapidly approaching.  In 1999 Kodak had a market cap of $44 billion – today it’s worthless. This will be the story of Exxon-Mobil, the entire fracking industry and any other entity tied to the fossil fuels industry.

One day in the not so distant future the whole oil, coal and gas industry is going to topple over. Coal is already gone. Oil only subsidized by a desperate Saudi Arabia(who sees the writing on the wall), and NG will soon follow.

The age of fossil fuels is over. The age of renewable energy is here. That’s all there is to it…
 

[Guest]

LOL

[ceo_energemsier + 1,818]

Just now, DayTrader said:

LOL

Yes LOL LOL and more LOL

I raise you 1000 LOLs

LOL

 

Age of fossil fuel over, then the human race will turn into fossils soon enough without the basic amenities and luxuries that have been made affordable and available  by OIL.

 

I guess the happy smiles of JH will be turned upside down LOL

[James Gautreau + 86]

12 minutes ago, Joseph Hall said:

Let me help everyone here out – in a few very short years the world’s entire fossil fuels industry will be out of business.

Yep, a few very short years.

Solar, wind and battery storage is running wild around the globe. Every day the percentage of energy derived from them goes up and up and up. Every day the percentage derived from fossil fuels goes down, down, down. There’s no stopping that trend.

Tesla is selling hundreds of thousands of EVs with millions more on the way. The other major car manufactures are right behind them. In a few years the thought to owning an ICE vehicle will seem odd - like buying a typewriter or going to Blockbuster video.

The world’s “Kodak moment” is rapidly approaching.  In 1999 Kodak had a market cap of $44 billion – today it’s worthless. This will be the story of Exxon-Mobil, the entire fracking industry and any other entity tied to the fossil fuels industry.

One day in the not so distant future the whole oil, coal and gas industry is going to topple over. Coal is already gone. Oil only subsidized by a desperate Saudi Arabia(who sees the writing on the wall), and NG will soon follow.

The age of fossil fuels is over. The age of renewable energy is here. That’s all there is to it…
 

While I agree with most of what you said, it's not going to be a barely noticeable transition from film to digital. I read that article too, and a lot of what he said would come to pass in the time frame of 7 or 8 years has not happened. Not even close. Oil will have a huge uptick in price and remain volatile for years to come. NG generates way too much electricity to be going away anytime soon. And coal will be turned into liquids in the not so distant future. You need an awful lot of fossil fuel to manufacture renewable devices like solar panels and windmills. EV's are limited by the known reserves of cobalt, which aren't much maybe 50 million EV's, and that's absolute tops. There's nearly a billion cars in the world today. And worse half of cobalt reserves are in DRC, Democratic Republic of the Congo, not exactly a stable country. The only other place to find more cobalt is 20,000 feet deep into the ocean, and as such won't come cheap. 

Edited December 11, 2019 by James Gautreau

[Guest]

30 minutes ago, ceo_energemsier said:

Yes LOL LOL and more LOL

I raise you 1000 LOLs

LOL

Haha ''coal is already gone''. Hmm, been to China recently?

''The age of fossil fuels is over''    .... he states on OILPrice  🤣

Look around your home or office right now .... look for oil based objects .... get back to me an hour later when you're still making a list. 

Edited December 11, 2019 by Guest

[James Gautreau + 86]

29 minutes ago, wrs said:

Your article is from a site that promotes doom and gloom, sells gold and is generally not knowledgeable about much of anything and certainly not the oil business.  These people seem to think no one got paid for all that oil that was produced before the wells declined, I mean look at this hype from the article.

Just think about this for a minute. Of the 5,132 wells drilled, completed and brought online in 2018, 50.5% of that production has VAPORIZED in just seven months.  This is CAPITAL DESTRUCTION at its finest.

How is it capital destruction?  It's a depleting resource, they got paid money for the oil that was produced, notice they seem to omit that fact.  So nothing has vaporized except the oil that was produced because that is exactly the intent of producing oil.  These are not factories that turn out a fixed amount of production for many years, they are oil wells with a known decline rate and so when people focus on that instead of the cumulative production, you know they are IDIOTS.  The capital has been returned in the price paid for the many millions of barrels produced but they fail to mention that.  

Your article also doesn't support your claim about 2018 being the worst year ever for the shale decline and ultimate recovery but the graph you posted earlier says the opposite. Perhaps I am misreading it though, can you explain how you think 2016 was the peak year for EUR in the Permian?  Actually I don't see where that data comes from so it may include all shale in the US, it doesn't say.

 

He gets his data from shaleprofile.com which is like Y Charts, a pay for data service that would not be able to stay in business if its number were junk. The most basic service in Y Charts is $200 a month, not chump change, so for you to suggest it is without providing any proof is comical. 

When fracking began energy companies were 13% of the S&P 500. today they're at 4%. I'd say that's capitol destruction at its finest.

Typically shale wells decline 50-70% their first year. 2018 saw 50% in 7 months. It could be 70-90% by year end. That means after year 1 it's pretty much nada after that. If an investor was expecting payouts for 6 years or more, the capitol he invested in the well was destroyed. 

This is evidenced by the slope on the right hand side of the colored plot and the thickness of the band today. Actually I was wrong. It looks like 2017 was the peak year for shale oil wells. It will pass 2016 this year and that will be that. Declines from here on out.

 

[Tom Kirkman + 8,860]

31 minutes ago, Joseph Hall said:

The age of fossil fuels is over. The age of renewable energy is here. That’s all there is to it…

Well then, I better throw in the towel. 🤔

[Guest]

3 minutes ago, Tom Kirkman said:

Well then, I better throw in the towel.

Yep, time to send those CVs to Tesla as they will clearly save us all.

[D Coyne + 305]

14 hours ago, Jan van Eck said:

Try coal.  

Jan,

Cost?

[ceo_energemsier + 1,818]

22 minutes ago, DayTrader said:

Haha ''coal is already gone''. Hmm, been to China recently?

''The age of fossil fuels is over''    .... he states on OILPrice  🤣

Look around your home or office right now .... look for oil based objects .... get back to me an hour later when you're still making a list. 

Exactly, if any one can live without oil and natgas in today's day and age , well then... you can cross off all those modern amenities, conveniences and luxuries of living a good  life good bye. No smart phones for smart A$$ dumb people, no ipods, ipads, pcs. macs, no easy, fast , comfortable travel, no running hot and cold water on demand, no light, no power no deliciously cooked food easily without burning cow dung or rubbing 2 sticks together to try to cook food.

De-evolution will be a sight to watch from a distance LOL

Yes and you can forget about the longevity and health , no modern medicine, surgeries, diagnostics, which will lead to a sharp decline in population. Rampant epidemics.

 

Edited December 11, 2019 by ceo_energemsier
addition

[Ward Smith + 6,615]

11 hours ago, remake it said:

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!

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

[ceo_energemsier + 1,818]

7 minutes ago, Tom Kirkman said:

Well then, I better throw in the towel. 🤔

LOL

[ceo_energemsier + 1,818]

8 minutes ago, Tom Kirkman said:

Well then, I better throw in the towel. 🤔

How are you Tom, hope you are having a good time back home.

Do you have any experience working in the Philippines and Singapore in the O&G?

[D Coyne + 305]

4 hours ago, Jabbar said:

 

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

 

Jabbar,

The doubling of recovery in tight oil plays is a claim that has been made since 2012 and so far there is little evidence to back it up.  Investor presentations make lots of claims, very few that get backed up over time.

But there is no convincing shale cheerleaders. 

They will swallow any crap they read in an investor presentation. LOL.

I'll trust oil producers who have run successful businesses for 40 years (thank you Mr. Shellman and others for sharing your extensive knowledge) over the slide charts in an investor presentation every time.  I assume you have read the fine print included with every investor presentation, it says in short, don't believe a word.

I do not.

Edited December 11, 2019 by D Coyne

[D Coyne + 305]

1 hour ago, wrs said:

Uh, no, that's not what the graph says.  That only tracks cumulative production to date.  EUR is the total life of the well.  That graph suggests to me that EUR is rising still.

For example, if I extrapolate the line for 2018 wells to 200kbbl cumulative production, the daily production will still be at 150bbl or so whereas the 2016 wells were only at 100bbl daily production when they reached 200kbbl cumulative production.  Now if the decline curves are consistent, the 2018 wells have a greater EUR over time unless something changes in the decline rate.

WRS,

A very rough approximation of EUR extends the straightline part of those plots out to where they intersect 7 to 10 bo/d.  That tends to overestimate because the tail of production tends to follow an exponential decline curve at around 10% per year and results in lower EUR than simply extrapolating as I have suggested.  For example an extrapolation of the average 2017 Permian well suggests 500 kb for EUR, but the reality is likely to be about 400 kb.  The blue part of the plot is the part of the well decline curve where exponential decline at 10%/year is reached.

Edited December 11, 2019 by D Coyne

[Rob Kramer + 696]

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. 

Edited December 11, 2019 by Rob Kramer
Add details.2nd edit

[Tom Kirkman + 8,860]

33 minutes ago, ceo_energemsier said:

How are you Tom, hope you are having a good time back home.

Do you have any experience working in the Philippines and Singapore in the O&G?

Thanks : )  a bit colder here than the Tropics.

Yes for Singapore, no for Philippines.

How are your O&G businesses doing these days?

[Jabbar + 465]

31 minutes ago, D Coyne said:

Jabbar,

The doubling of recovery in tight oil plays is a claim that has been made since 2012 and so far there is little evidence to back it up.  Investor presentations make lots of claims, very few that get backed up over time.

But there is no convincing shale cheerleaders. 

They will swallow any crap they read in an investor presentation. LOL.

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

Edited December 11, 2019 by Jabbar

[James Gautreau + 86]

7 minutes 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. 

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. 

[Jabbar + 465]

8 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. 

Glad you agree.  Doubled twice already since 2012.

Conoco's data is real.  Believe it.

This is like arguing with a tree stump.

See ya

Edited December 11, 2019 by Jabbar