Perhaps it is turning around... perhaps the writer is pulling typical pump and dump? You decide...
Posted on 01/01/2014 7:37:40 AM PST by ckilmer
Shocking Prediction: The 'Second Phase' Of The Oil Boom Could Eclipse The First By Jody Chudley December 31, 2013
Shocking Prediction: The 'Second Phase' Of The Oil Boom Could Eclipse The First
Five years ago the idea of an oil boom happening in the North America was not much more than a dream.
Today, the U.S. is on pace to overtake Saudi Arabia as the world's top oil producer by the end of the decade.
It isn't as though the oil industry didn't always know that formations such as the Bakken in North Dakota and Eagle Ford in Texas contained lots of oil. Oilmen have been thinking about these plays for decades.
The problem was that there was just no way of getting that oil out of the ground without losing lots of money.
The application of horizontal drilling and multi-stage fracturing (or "fracking") has changed all that and made the renaissance in American oil production front page news.
What is still to come, and what most investors don't realize, is that the "first phase" of the oil "boom" in America is only recovering a fraction of the oil that it can -- and I predict will --produce in the "second phase," which has already started.
Despite being a true breakthrough, the first phase of horizontal oil production is only expected to recover 2% to 15% of the oil in areas such as the Bakken and Eagle Ford shales.
That means there will still be an enormous amount of oil left in the ground.
In the second phase of production, the most innovative companies will get to more of those reserves, and I predict a more profitable wave of the horizontal drilling boom will occur. If that happens, enhanced oil recovery (EOR) methods will turn oil producers into cash flow machines, and make some investors richer.
Why is this second phase of the horizontal boom going to be so profitable?
Further advances in technology, combined with significantly lower costs of second phase production, could drastically improve profit margins for oil producers.
First, let me talk about the lower costs of producing more oil.
During the primary phase of production, all of the land that contains the oil had to be leased or purchased, roads had to be laid to access drilling sites, pipelines needed to be put in place, well batteries had to be constructed and natural gas processing needed to be paid for.
Now, with the necessary infrastructure in place, that money doesn't have to be spent again. So each incremental barrel of oil produced through EOR is more profitable than the barrels produced under primary production.
The price per barrel of oil sold isn’t going to change, but the cost to produce that incremental oil through EOR is going to decrease.
Enhanced oil recovery techniques aren't new; they've been around for decades. It's just that they haven't been applied to the types of reservoirs that are being developed with horizontal drilling, until recently.
Now, there are several companies already using existing technology to innovate in the oil sector.
My favorite is a Canadian company called Lightstream Resources (OTC: LSTMF) that has found a way to quadruple production from some of its older wells through EOR.
This mid-sized Canadian company is using natural gas injection in its Saskatchewan Bakken play at Creelman to pull more than 200 barrels of oil per day from 5-year-old wells that at this stage of their life should be producing only 50 barrels a day.
To create this production increase, not a lot of incremental capital has to be spent. The main incremental costs to Lightstream relate to the drilling of injection wells (which paid for themselves through primary production before being converted to an injector) and the natural gas that is being injected (which will eventually be recovered anyway).
On top of lower production costs, Lightstream believes by rolling out natural gas injection across its Bakken land base, it can increase the amount of oil it will recover from its current estimate of 15% to almost 30% of the oil in place.
Given that we are talking about a percentage increase that is being applied to 1.69 billion barrels of oil, the numbers involved are very large.
To give you an idea of just how large, every 1% increase creates 17 million barrels of additional reserves for Lightstream. And combined with lower "second phase" costs, EOR can double Lightstream's reserves without coming anywhere close to doubling the amount of capital required to extract the oil.
So what? American jobs and American tax revenue will still be generated!
You should not care at all about who the final user might be.
I’ve read somewhere that natural gas at $4 has roughly the same cost per btu as coal. That both are roughly 1/3 the price per btu as oil. That for oil to be priced in equivalent btu as natural gas and coal...oil would have to priced at roughly $30@ barrel.
Is that correct?
Anybody know?
This second phase, could that possibly include drilling in the Spearfish Formation near Bottineau? Do you have any insight?
I read a Sep 2013 article where Lynn Helms was interviewed and it stated: “In the Spearfish formation near Bottineau, N.D., one operator has applied for spacing units that would allow the operator to drill roughly 400 wells.”
http://thebakken.com/articles/338/nd-mineral-director-shares-bakken-update-research-plans
This is great news! Hopefully we can purge the government of liberals of both parties
..........
I’d be amazed if that happened. The liberals will just pee on the oil revolution and take credit for it at the same time blame republicans for any problems that come from the new oil wealth while exploiting its benefits to the max.
that’s just the way it works. the media will provide the dems their story line and most of the people will be none the wiser.
Look at Gastar Oil. (GST) in my opinion this will be the hottest stock over the next year. I got in at 3.50.
http://www.engineeringtoolbox.com/fuels-reference-equivalents-d_1089.html
Kinda a clumsy table but I have been curious for some time myself.
Perhaps it is turning around... perhaps the writer is pulling typical pump and dump? You decide...
OTC: LSTMF
Average Heat Content of Different Fuels
Fuel Type No. of Btu/Unit
Kerosene (No. 1 Fuel Oil) 135,000/gallon
No. 2 Fuel Oil 140,000/gallon
Electricity 3,412/kw/hr
Natural Gas 102,800/1,00 cu ft (Therm)
Propane 96,000/gallon
Pine (20% moisture)* 18,000,000/cord
Hardwood (20% moisture) 24,000,000/Cord
The most important thing said here is that they expect phase 3 production to last at least 20 years in the Baaken.
.......................
During his address to members of the council, Lynn Helms, director of DMR, explained the phase of development certain portions of the Williston Basin are currently in. According to Helms, the Sanish and Parshall areas are in phase three of development with high density drilling inserting multiple laterals into individual geologic formations such as the middle Bakken or upper Three Forks formations. Phase three of development in those areas could last for twenty years or longer.
In addition to the Bakken and Three Forks formation, Helms also reported on activity in the Tyler and Spearfish formations. Marathon Oil Corp. is planning to put horizontal test wells into the Tyler starting next year. “The Tyler is at the stage the Bakken was at in 2003 or 2004,” he said. In the Spearfish formation near Bottineau, N.D., one operator has applied for spacing units that would allow the operator to drill roughly 400 wells.
In the Williston Basin, it will take 185 drilling rigs roughly 20 years to create 45,000 new wells, he added. “The Bakken has reached its cruising altitude, it is safe to get up and walk around in the Bakken, but there will be turbulence,” he said.
http://thebakken.com/articles/338/nd-mineral-director-shares-bakken-update-research-plans
mark
bttt
yeah, I didn’t buy the individual stock argument. I was more interested in the guy’s contention that fracking is only pulling up an extra 3-15% of the oil in the ground.
The other amazing side of this is that oil drilling for the last 150 years since the dawn of the oil age has only pulled up about 10 % of the oil in the ground.
That leaves 90 percent of the oil still in the ground. Fracking only brings up the next 3-15%.
When we get rid of Salazar out of office hopefully oil companies will be able to drill on land they leased and open up public lands to development. Open free markets make the best price for the people but then the government looses its dictatorial powers and skimming off the top like Chicago mobsters and call it taxes.
the thing i love about coal is that it is a CONSTANT, EVEN heat... with any other heating(except maybe electricity) you get a warm/cool cycle as the unit kicks on raises the temperature then the house cools down till the thermostat kicks the unit on again
THAT! right there needs fixing.
and, when oil people go back to old, old oil wells that were pumped dry, they find that they are filling back up.... “up from the ground comes a bubblin’ crude”. Jed Clampett was dead on. the supply of oil in this old earth may be infinite.
Thackney....
Does it include...
* Low Friction Tubing ( Plasma coated with a Diamond Like Coating )
* The Various "Ceramic" beads instead of Sand.
* Other "Fluids" such as Propane instead of H20 and Sand?
BTW a April 12' article in Forbes on Fracking, one of the CEO's involved in this arena sort of gave a hint more technology to come, ( My guess in regards to the process and or increased yield ). I think it might be safe to say, the Fracking story hasn't been written in this regards, the application of more technology might make it like a weekly soap opera on TV. Stay Tuned :-)...
....and the Green River Formation weighs in a 3 Trillion Barrels of oil....with 1 Trillion Barrels recoverable with todays technology.
and, when oil people go back to old, old oil wells that were pumped dry, they find that they are filling back up.... “up from the ground comes a bubblin’ crude”. Jed Clampett was dead on. the supply of oil in this old earth may be infinite.
.....
yeah, the old wells were only in special places like under salt domes. In those place oil would seep up from underlying source rock and collect. They were easy then to pump dry.
Over the years more oil would come up from the source rock to refill the oil under the salt domes.
Today the drillers are starting to drill in the underlying source rock.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.