Photo credit: WPX Energy
Posted on 07/30/2014 6:51:03 PM PDT by ckilmer
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July 30, 2014 | Comments (0)
Photo credit: WPX Energy
If I had told you five or six years ago that America would be producing more oil than ever before and potentially becoming an exporter of crude within a decade, you probably would have had me institutionalized. Yet thanks to the advancements in drilling techniques, we have been able to access one of the most abundant resources we didn't think were possible: shale and tight oil. Today, oil production from these sources total 4.6 million barrels per day and represent about half of our oil output.
What makes this story even more compelling, though, is the future ahead. Core Laboratories, a provider of oil and gas production technology, believes that some of the advancements it is working on could unlock hundreds of billions of barrels of more oil from shale. How is this possible? Let's take a look at how Core's work in shale could potentially lead to America becoming the worlds largest source of oil.
Going that extra 2% goes a long, long way
One of the things that many people don't understand about shale resources is that they are very, very hard to access. Despite the immense success that we have had extracting these resources over the past several years, we are only scratching the surface of these resources. According to Schlumberger research scientist Robert Kleinberg, we are only presently able to access 5% of the oil and gas available in these new resources, and based on the estimates from several companies working in some of America's top shale plays, even getting to a 5% recovery factor would be huge.
| Shale play | Estimated recoverable oil (barrels of oil) | Current oil recovery factor in region |
| Permian Basin (multiple formations) | 75 billion barrels | 3.5% |
| Bakken/Three Forks | 31.5 billion barrels | 3.5% |
| Eagle Ford | 26 billion barrels | 6% |
| Niobrara | 7 billion barrels | 1.4% |
Sources: Pioneer Natural Resources, Approach Resources, EOG Resources, and Continental Resources investor presentations, Oil & Gas Journal
Think about that for a second. The amount of oil these companies are estimating are absolutely massive, but they assume that we leave upward of 95% of the oil from these resources still in the ground. Using these recoverable resources and recovery factors as a rough guide, that means that the total oil in the ground in shale looks something like this:
| Shale Play | Estimated Oil-in-Place (barrels of oil) |
| Permian Basin (multiple formations) | 2,142 billion |
| Bakken/ Three Forks | 900 billion |
| Eagle Ford | 530 billion |
| Niobrara | 500 billion |
Source: Continental Resources & Pioneer Natural Resources Investor Presentations, and Oil & Gas Journal
There are multiple reasons why that oil recovery factors are so low for shale, but one simple reason is that we haven't been working with them very long to completely figure them out. Shale and tight oil have been a commercial success for less than a decade, while we have had over a hundred years to figure out conventional oil reservoirs. This is where Core Labs comes in. On the company's most recent conference call, CEO David Demshur said that the company is looking at ways of increasing oil recovery factors in the Eagle Ford and Bakken shale formations into the low teens. Based on where oil recovery is today for these formations, that is an additional 94 billion barrels of oil from just those two formations alone.
More importantly, though, is the potential impact that a move like this could have on all shale formations across the U.S. If oil recovery factors in shale could be increased to greater than 10%, then several prospective areas not currently economical could be attainable. For example, the Monterey shale in California is estimated to have 500 billion barrels of oil in place, but the geology is so complex that only a small portion of the oil in place -- about 0.12% -- is considered recoverable. If we could increase recovery factors. Increasing oil recovery there may not make all of it attainable, but it could certainly make a larger portion of that oil in place accessible.
Just to give you an idea of this level of potential, lets use the four major shale plays from above. If we were to increase oil recovery factors to just 10%, then the estimated recoverable resources would look a little something like this:
| Shale Play | Estimated recoverable resource using current recovery factors above (barrels of oil) | Estimated recoverable resource using 10% oil recovery rate (barrels of oil) |
| Permian Basin (multiple formations) | 75 billion | 214.2 billion |
| Bakken/ Three Forks | 31.5 billion | 90 billion |
| Eagle Ford | 26 billion | 53 billion |
| Niobrara | 7 billion | 50 billion |
| Total | 139.5 billion | 407.2 billion |
That's more than 267 billion barrels from just these four formations alone! If the economic conditions were right and these barrels of oil were to become proven reserves, we would have more reserves than Saudi Arabia.
What a Fool Believes
So far, the U.S. shale revolution has been a revelation. We are on the verge of producing more oil per day than in any other time in our history, and we are at a point where exporting oil to the world is a very real prospect. What is even more amazing, as these numbers show above, is that we barely have tapped the full potential of shale oil. It's highly unlikely that we will ever be able to recover shale and tight oil at the rate we can in conventional reservoirs -- about 50% today -- because of the specific nature of these geological formations, but even getting to 10% like Core Labs believes is possible would be a massive development for every company involved in oil and gas exploration and production and could drastically improve America's position in the global oil market.
Build a mote around drilling sites with hungry crocks and alligators.
THAT is a really outside the box question! My son works on oil rigs in Texas. Let me ask him.
The TMS ain’t working. Too much clay and too little TOC.
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That was the take four years ago. Most companies pulled up stakes and went to the Bakken.
Recently however four or five companies have been successful aided by core labs. This a new story.
So ? that would give us 41.07 years of oil.
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BP put out an estimate on oil demand last year which predicted that total oil demand would start to decline after 2030.
Why?
There’s a pretty large shift over into natural gas trains trucks busses and buildings. As well, a much much larger shift into electric cars is being jerked into motion by elon musk’s tesla.
We’ll never see the end of oil. Rather what will happen will be that it will occupy an ever smaller part of the economy starting in 10-15 years.
Hope I can still drive my petro fueled car in 15 years, or so I should say keep it running in the next 15 years, can’t afford a electric car.
Drill Frack baby, drill frack
If we started exploring ANWR 10 years ago as GWB suggested, we could be reaping the benefits from that oil right now.
But the media kept running clips of the “pristine” Alaska wilderness, failing to mention that the oil is literally seeping up thru the ground there.
A billion barrels is about 45 days of US domestic consumption at current rate. 200 billion barrels = 200 x 45 = 9000 days, which is something like 27 years worth.
However, that domestic reserve could be used to leverage down the world price of oil for far longer than that, if managed prudently.
The key words are, “we could” but unfortunately, we WON’T.
However, that domestic reserve could be used to leverage down the world price of oil for far longer than that, if managed prudently.
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I think US consumption of oil will start to go into decline after about 2020. Further that decline will start to steepen by 2025. By 2030 there will be a price collapse on oil. It will be hell on oil producers but heaven for American consumers and the worldwide economy. Oil prices will wind up about $+-35 a barrel — which on a btu basis is about where coal and natural gas are today.
There will always be oil in the ground mostly because it will no longer be used so much.
As a saudi sheik once said, “the stone age didn’t end because we ran out of stones.”
Hope I can still drive my petro fueled car in 15 years, or so I should say keep it running in the next 15 years, can’t afford a electric car.
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The only way sales volumes for electric cars will go up will be is prices come down. According to the Tesla guy —that’s going to happen in about 3 years—like it did with the first cars at the 20th century. The first cars were rich people’s toys. Ford’s model T changed that so that everyone could drive. That’s what Tesla aims to do with electric cars.
If we started exploring ANWR 10 years ago as GWB suggested, we could be reaping the benefits from that oil right now.
But the media kept running clips of the “pristine” Alaska wilderness, failing to mention that the oil is literally seeping up thru the ground there.
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All true. The Alaskans currently have chipped in to help oil companies construct a huge new pipeline to ship natural gas south from the north slope. So they’ll be able to get that out of the north slope.
Remember when Bush said “drill baby drill” and Obama said it would never work?
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Hell its even worse than that. The Obama administration is currently trying to take credit for the oil boom when they have done nearly everything they could to stifle it. Similar things happened in the Clinton administration,.
If we had a Congress and President with half a brain, we could be exporting oil in 5 years.
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It currently looks like the USA will be oil independent by the end of 2019.
“I am not sure if this question has been explored here on FR but whats the fracking world concerning fracking for oil in the oceans ?
Is it more difficult in the oceans ?
Not counting the difficulty of drilling for conventional oil deep in the oceans is the geology more difficult or more easy for fracking in the oceans ?
The subsurface does not care if the surface is under water or not.
Fraccing is done offshore but not very frequently. Basically, it takes too much equipment to frac, equipment that is difficult to handle on a platform or attendant barge.
Makes it very expensive and must be wisely undertaken on proper wells.
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