Posted on 05/02/2010 9:58:16 AM PDT by Whenifhow
that article on shell is two years old.
the US government put that in situ shale cooking in colorado on hold.
permits won’t be forthcoming until oil hits 200@ barrel or when the current admin leaves—whichever comes first. I think the latter. because the world economy will choke when oil gets over 100@barrel—as it did in the summer of 2008—& collapse world oil prices.
I don't think I made my point clear enough; I agree, the Bakken field is much ado about nothing. The 260+ years of oil we have is in oil shale, and that IS recoverable at significantly lower prices than we pay for oil today.
Bakken is irrelevant; oil shale is not.
I don’t necessary disagree that there are massive deposits of shale in North America. The product there is kerogen, which has to be refined to extract oil. As I explained in my previous example about honey, you have to heat it to get it up the straw (pipe). It’s not like a reservoir of oil in West Texas in 1950 (which would be the case of a straw in a glass of water.
A lot of heat is required, and a tremendous volume of water is required. The water alone rules out a lot of locations. The energy rate of return is 3 to 1. That sounds good until you work it out and realize you have to be very correct about all your assumptions and not have a string of failed locations. By comparison, West Texas wells were 100 to 1 energy rate of return.
Shell and other oil companies are experimenting with the process, and it may eventually prove sufficient to be a transition from oil to something else 50 years from now. It is not, however, some magic bullet that is going to give us cheap and abundant energy for 200 years. There is going to have to be a dramatic change in our development patterns, a reduction in miles driven, more hybrid or electric vehicles (which have their own problems), and major investment in many different types of energy research and concepts.
We really are not disagreeing with the fact that hydrocarbons in the form of shale are out there. We just don’t agree on the cost, scaleability, and time to ramp up.
I would love to blame all this on the tree-huggers and the Democrats, but I would also like to deal in reality - before it deals with me.
It won’t bring down prices but will be a steady supply for many years to come. Three Forks and Sanish formations are looking quite prolific also.
Oil companies are not slow rolling this to keep prices high. Any time lag is more a function of land consolidation, rig availablity and permitting time. You can however, see it slow down when crude drops to around $40. Not economical to drill at those prices.
And the usual green suspects come trolling along when they smell something good. You’re right
I’m 100% with your feedback.
Got a question for you.
SUppose you are an oil company CEO, and you could:
Limit supply by limiting oil field development. That would keep the price of oil near $80 per barrel.
Or, you could aggressively develop the new fields, floodinmg the oil market with a glut of oil, driving the prices down to $30 barrel.
DO you make more money producing oil at $30 or at $80?
All right, suppose I am the CEO of BP. I have decided to engage in this massive cover-up with all my fellow CEOs to keep the price of oil up, even though it benefits OPEC more than it does my own company. What have I achieved with this massive conspiracy? I have 11 dead employees, an extremely expensive rig destroyed, plunging stock value, and enough liability to destroy my company. Yeah, that’s the ticket.
I’d love to keep up this discussion, but unfortunately my community is in a state of emergency with 15 inches of rain. Also, there’s a black helicopter outside my house right now.
Most of the land in North Dakota is privately held, so it is difficult for the Feds to stop drilling activity. Between the Bakken and the Three Forks/Sanish, it is estimated that there will be roughly one well per square mile in the active areas, and the hotspots are being drilled first.
These are horizontal wells, capable of draining the oil form two square miles of reservoir. (Keep in mind there are two formations involved, so the wells aren't doubling up on the drainage area for one formation.)
While the court orders stopping activity on Federal leases pending EPA evaluation of greenhouse gas production are injurious to activity in the National Grasslands areas, the danger of such an evaluation lies in the restriction of "greenhouse gas" production overall by the EPA. While the premise (Anthropogenic Climate Change) has been shown to be bogus, that will not stop the politicians from finding an additional way to suck dollars out of drilling programs.
They will already get lease payments (three years to drill--or you lose it and it goes back on the auction block) and royalties on production from the leases, anywhere from the once-standard 12 1/2 percent (one eighth) to 20 percent (one fifth), depending on what deal was cut at the time of the lease. Maybe they are just holding out for more money, but my bet is that they are looking for a way to tax the entire business of drilling wells and producing oil, whether the government holds the mineral rights or not.
Consider, too, that the regional economy is one of, if not the best in the nation, with 4 1/2% unemployment (statewide--there is no oil in the Eastern half), a housing boom, and a state running in the black, the Feds can't allow private enterprise and industry to show that the Obamites can't grow an economy like the extraction of mineral wealth by the private sector--that would make the economic disaster of the stimulus, bailout, and government job creation look like the failure it is.
For some reason, the media had a feeding frenzy on Bakken stories, and then moved on--fresh headlines sell papers, after all. On the privately held mineral acres, however, drilling continues at levels not seen since the oil boom of the late 1970s.
Just a quick note to attempt to end a persistent confusion: While the Bakken Shale is commonly referred to, the oil being produced is coming from the Middle Member of the Bakken Formation, and though the shale(s) (in the deeper parts of the basin there are two, one at the top and one at the base of the formation) are the source rock, the reservoir rock is more conventional, ranging from sandy dolomite to dolomitic sand/silt.
The shale(s) are believed to be the source rock for the oil.
The Three Forks underlies the Bakken, (the Sanish is a sand stringer near that contact) and that oil is believed to have come from the lower Bakken Shale, forced down section by the lithostatic pressure above it. So the oil in the Bakken and Three Forks is not 'shale oil' as in the oil shale of the Green River Formation in Wyoming, Colorado, and Utah. With hydrofracking technology, the oil is readily producible from the reservoirs, no 'baking' required.
The government owns the mineral rights for some of it, but they have put exploration on that acreage on hold for now, awaiting greenhouse gas production evaluation by the EPA.
The majority of the mineral acres in the Williston Basin are privately owned, under lease for exploration and production to oil companies.
If drilling is successful, the lease can be held by production, the mineral owners get a royalty interest, ranging from one eighth to one fifth of the production.
My bet is that the government will find another way to tax the industry.
The year everyone was ranting about Exxon Mobil making huge profits, the government took in three times that in taxes without risking a dime or batting an eye.
It is unfortunate the accident happened in the Gulf, otherwise, the government could be reaping the benefits of offshore drilling in lease and royalty revenues, rather than increasing its cut of other ventures.
Thanks for all the feedback SJ. And clearing up a few misinterpretations as to what geo formations hold what form of oil and or kerogen. I was under the impression the Green River formations of shale where in essence the same as what you folks are drilling into. Obviously I was mistaken.
The misconception about the Bakken is pretty common, and often fostered by a press which does not know the two types of formation apart.
Who cares if it enriches OPEC, if your company is making more money? Your first responsibility is to turn a profit.
If oil prices go down, your profit goes down.
Don’t lump me in with the black helicopter crowd. I believe this was an accident.
Sorry, Bryan, I wasn’t trying to imply the Gulf rig explosion was anything other than a tragic accident, certainly not that you or anyone was implying that. Please accept my apologies.
Let me try to explain and clarify my point, as it gets to the heart of what I think is really going one, and why conservatives like us need to be watchful.
The oil companies are indeed making large profits, but they are not reinvesting those profits. Instead, they are buying back their own stock and sitting on an increasingly larger pile of it. If all these opportunities are available, why not invest it in areas less risky than a mile deep ocean?
BP had trailed the other oil companies in profits, and the new CEO has been trying to change the culture. Despite a black mark with an incident at Texas City, he was making progress. However, the deep ocean drilling put the company at the edge of the technological knowledge we have. This reservoir was well-known. Exxon-Mobile’s engineers said the risk was too great due to the difference in pressure between the drill hole (primarily water) and the gas layer on top of the oil (all of which was under pressure from 12,000 feet of rock plus 5,000 feet of water, not the 17,000 feet of water that was the case with the drill hole.) The procedures have to be done just right; obviously, something went terribly wrong.
Why do all this and take this risk if the oil companies really think they can drill on land in this country at lower costs? They could dominate the world market.
The reality is that all of these unconventional oil sources, be they in North Dakota or under the Rockies, have very difficult technical issues of their own and are anything but sure bets. Many millions have already been lost on oil shale. Maybe Shell has found a winning method. Good for them if that is the case.
Meanwhile, the question remains, why are all the oil companies hoarding money, buying back stock, and not building refineries, pipelines or anything else? The answer I keep coming back to is the simplest one. They know the age of cheap oil is over, and that they will never recover the billions in investment needed to go after those sites.
If I’m wrong, the worst that happens is that our mutual funds keep going up. If I’m right, it’s a whole new world.
North Dakota has strongest economic growth-Chamber
http://www.reuters.com/article/idUSN0321454920100503?type=marketsNews
Economic stress drops in most areas-
The least stressed states were: North Dakota (5.61), South Dakota (5.97), Nebraska (6.5), Louisiana (7.7) and Vermont (7.76).
http://www.google.com/hostednews/ap/article/ALeqM5iGLWeDK3y4aT8IOK9HZqK6jl_r6gD9FFAIJ80
how did you do on your stocks?
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