Posted on 03/07/2014 5:00:13 PM PST by ckilmer
More peak oil nonsense.
There’s a lot to take in with this article. Does anyone have any prior run in with Berman that would shed light on his point of view?
Berman doesn’t think that the Permian Basin will produce much more than its doing now. He agrees with the IEA projections that production increases will level off after 2015. He says while there are lots of oil resources in the ground, actual reserves are a tiny fraction of that. He thinks the oil industry is at the end of its era rather than at the beginning of a new one. He seems to generally have a big oil outlook rather than that of the midsize companies that are doing most of the work & reaping the benefit. He claims the balance sheet of many of the oil/gas companies are not as good as they claim. He was being very general here. It was true of Chesapeake and other gas companies because the bottom fell out from under natural gas. But not so true of oil companies where the price has remained high.
He’s not making the case for peak oil.
All I can say is that I know some people that have miniscule royalty interests in the Permian Basin and they are bringing in a very decent investment income from them.
One of them, a friend of mine, was offered almost $900K for a tenth of one percent interest in one section. To me that sound like the Oil company operators and others are very serious about what they think the prospects are for horizontal drilling and multiple wells through the various shale formations that lie under the Permian basin.
As for Mr. Berman, I don’t know, but I would guess he has a financial stake in talking down Oil drilling and production.
I think Berman is trying to build the case to show that the Obama administration is a drug on the oil and gas market. They prohibit exploration on Federal lands and are producing regulations in abundant strength that weaken the efforts of the oil industry.
I've been instinctively skeptical about the USA energy boom, but I had very little data to back up my feelings.
A year ago, I barely knew what fracking was.
Then suddenly, the USA is going to be the new Saudi Arabia, because of fracking!
How did all this wonderful news avoid me for the last 40 years?
The first thing that had me scratching my head was that oil had to stay above $80 a barrel for most fracking wells to be profitable.
The break even for many wells in Saudi Arabia is $10.
Next, I learned that the productive life time of most fracking wells is one year.
Well, that explained the $80/barrel break even figure.
Then, during the last cold spell, the price of natural gas and natural gas liquids went up 50%-100%.
Just a couple months before that I was reading articles that foreign manufacturers were moving to the USA because of cheap natural gas, that coal power generators were being converted to natural gas, and trucking companies were actively converting their trucks to natural gas.
So, maybe that price surge was just an infrastructure issue, but it still made me uneasy.
Now, this author rips the whole energy boom idea to pieces.
One bright note - the author “fears” climate change, which is still completely within historical norms, so perhaps his judgment on USA energy issues should be questioned, too.
When so much money is in play nobody gives out information for free. Everybody has an agenda.
Oil booms have different meanings.
It takes 2000 truck trips in North Dakota from day 1 of drilling to 365 days later to drill, frack and carry oil from a well in the Bakken. 2000 separate trips, and average distance of the trip is 15 miles, so that’s 4000 segments to and fro.
These trips are mostly because the wells die so fast that pipelines can’t be put into place fast enough to carry the oil before the flow rate is too low to pay . . . for the effort to put in a pipeline.
Note that about 140 wells are brought online PER MONTH there. So that is 140 X 12 X 2000 = 3360000 truck trips (X2 for segments) to service a year of Bakken new wells. Additional tanker truck trips go out to fill up on the wells 2 or 3 or 4 or 5 years old (and of course past 5 years the wells aren’t flowing much so one truck can service multiple wells). All this truck traffic is in an area of 4 counties of North Dakota. So it’s certainly a boom for truck drivers.
Think about that cost . . . not in terms of dollars . . . in terms of effort . . . just to get 900K bpd out of the ground. Contrast it with the early 1900s when you took some lumber out into a field, threw up a 20 foot high structure, drilled a hole and got 15,000 bpd to flow from just that one hole, it it would flow for decades. Contrast those two “booms” — today’s versus then’s.
Think of that difference in effort level and then try to re-convince yourself everything is fine.
Now, this author rips the whole energy boom idea to pieces.
One bright note - the author “fears” climate change, which is still completely within historical norms, so perhaps his judgment on USA energy issues should be questioned, too.
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Yeah, there’s several point on which I disagree with the guy. He says the Permian basin is not so hot. I think it is. But it won’t be much before the end of 2015 that it really takes off. Berman is right that reserves are just a small fraction of resources. But what he doesn’t say is that even that small fraction represents an enormous amount of oil. That is since the beginning of the oil age, oil men have extracted only about 10% of the oil in the ground. The fracking revolution enables them to only get at the next 10-20%. But that’s still an enormous amount of oil.
Natural gas production will go up when natural gas gets above $6. That’s going to happen in the next year or two.
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There is currently a parallel revolution in electricity. but it won’t affect oil for another five years or so.
I agree on the Permian basin. I don’t think Berman has that right at all..
I buried the lead.
The typical Bakken brand new well flows at 400-600 bpd. Contrasted with 15K bpd from a new well in days of yore.
Think of that difference in effort level and then try to re-convince yourself everything is fine.
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true the easy oil is done. But there’s still plenty of the harder oil.
That said I agree with berman that the end is in sight for the oil age. I think that electric cars are going to win out.
And they won’t come a moment too soon because the demand for oil around the world is rising as more people enter the middle class and drive cars.
This guy is part of the Peak Oil cult. All his predictions so far have been big time wrong, he just keeps moving out the target date.
Fascinating pathological view of the matter.
Yes.
Natural gas prices are unsustainably low.
BECAUSE THE US HAS A LAW BANNING THE EXPORT OF NATURAL GAS.
This creates a super abundance of natural gas in the US that this fake expert pretends proves that natural gas is doomed.
If the ban on export was lifted, US prices would rise as would the profits of gas extraction.
US natural gas reserves dwarf those of Russia and would mean the imminent demise of Russian hegemony.
This article is silly.
Berman was spouting this nonsense four years ago and unfortunately some investment bankers listened to him.
He’s Mr. Negative and I guess someday he will be right. Just not in his lifetime.
He’s just a peak oil broken record.
http://www.postcarbon.org/audio/704641-arthur-e-berman-petroleum-geologist-magical
I’m over 7 decades old and have been hearing “we’re running out of oil” for as long as I can remember. I don’t believe any of these guys. We’ll never know the truth until we have “real” science and less government involvement.
No need to re-convince myself, I've been posting "the world is awash with oil' since I signed up at FR. It just took a little while for the truth about Peak Oil BS to come out.
If electric is going to “win out” it’s going to have to be running on something besides lithium...
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