Photo credit: BP.
Posted on 06/22/2014 10:52:21 AM PDT by ckilmer
June 22, 2014 |
Photo credit: BP.
BP (NYSE: BP ) has provided an intriguing update to its global oil reserves estimate in the company's latest yearly review of energy statistics. BP raised its reserve estimate by 1.1% to 1,687.9 billion barrels, which is enough oil to last the world 53.3 years at the current production rates. However, there's likely a lot more oil left in the tank beyond what BP sees today.
America's energy boom surges
A good portion of the growth in global oil reserves in BP's report comes from the United States. According to BP, the U.S. has 44.2 billion barrels of oil reserves, which is 26% higher than it previously thought. It's also quite a bit more optimistic than the U.S. Energy Information Administration, which recently increased its estimate to 33.4 billion barrels of reserves, or 15% more than previously thought.
The overall cause for that surge in oil reserves is that America's shale oil plays -- the Bakken, Eagle Ford and Permian Basin -- are now being unlocked through horizontal drilling technology.
Despite the big boost in reserves over the past year, there appears to be much more oil potential in each shale play, with the Permian Basin really standing out.
Source: Pioneer Natural Resources Investor Presentation.
As that slide points out, Pioneer Natural Resources (NYSE: PXD ) now estimates the Spraberry/Wolfcamp shale formations in the Permian Basin contain 75 billion barrels of recoverable oil and gas. That number is actually a major upward revision from last year when Pioneer estimated the two formations held 50 billion barrels of recoverable oil and gas.
These Permian Basin plays now make the Eagle Ford and Bakken shales look small in comparison. Yet the recoverable reserve estimates of both of those shale plays also continue to grow. In the four years since EOG Resources (NYSE: EOG ) began developing the Eagle Ford shale it has drastically revised its reserve estimates. The company now believes it will recover 3.2 billion barrels of oil equivalent on its land position, which is up from less than 1 billion barrels in 2010. New technologies and techniques, including closer spacing of wells, are providing a big boost to future reserve estimates.
Source: EOG Resources Investor Presentation (link opens a PDF).
Next up for America
As those three plays do all the current heavy lifting to grow reserves, new oil plays continue to emerge. The two most promising appear to be the Tuscaloosa Marine shale in the Gulf Coast region and several shale plays in the Rockies. EOG Resources this year unveiled four new horizontal oil discoveries in the Rockies, proving yet again that America's energy boom is just getting started.
EOG Resources estimates that it will ultimately recover about 400 million barrels of oil equivalent as it develops its acreage in the Rockies. However, keeping in mind the company's nearly fourfold boost to its estimated recovery figure in the Eagle Ford shale, it's likely there is a lot more upside in the Rockies as EOG Resources and others develop the oil rich shales in the region.
While the world as BP sees it might just hold 53.3 years' worth of oil, that certainly does not mean we'll run out of oil anytime soon. New shale plays continue to be discovered in the U.S., which should fuel substantial gains in reserves over the next decade. There's plenty of oil still left in the world's tank thanks to the development of America's shale resources.
Last time I checked we had 150 years of proven reserves left and potentially 100 years more.
The Obama economy will probably stretch this to 350 years.
The progressives have preached peak oil for 100 years now. It is always 20 to 50 years in the future... and will be for the next 500 years. After that we might have something to worry about. Oh, except for a planet size moon with lakes of methane... lol
Here is just a small example. Pioneer, the largest acreage holder in the Spraberry/Wolfcamp field, estimates 75 BBoe recoverable from S/W alone. That would make S/W the largest field in the U.S. At the same time, they estimate the Bakken to have around 9 BBoe recoverable. Earlier this month, Continental, the Bakken's largest leaseholder, estimated 32 to 45 BBo (not BBoe) recoverable from the Bakken/TF.
Whom should we believe?
Does EOG hold its cards and underestimate? Is Continental fairly neutral? Do smaller companies tend to hype this overheated investor market? Who are best at using experience and technology to reduce costs and increase recovery?
Everyone tells a different tale, depending on their investor PR strategy, within the bounds of the Securities Act. The Fool pulled together a group of contradictory numbers with no explanation.
Here is just a small example. Pioneer, the largest acreage holder in the Spraberry/Wolfcamp field, estimates 75 BBoe recoverable from S/W alone. That would make S/W the largest field in the U.S. At the same time, they estimate the Bakken to have around 9 BBoe recoverable. Earlier this month, Continental, the Bakken’s largest leaseholder, estimated 32 to 45 BBo (not BBoe) recoverable from the Bakken/TF.
Whom should we believe?
.................
You’ve hit on the central story of the next 12 months or so.
It looks like the land purchases 3-4 years ago were something of a crap shoot. That is, none of the companies had perfect visibility on what lay on their purchases except that they had fairly good prospects for oil.
I think that EOG, judging by their drilling do not have greatest parcels in either the bakken or permian basin. Their very best lands are in the Eagle Ford. As well, it looks like they have found a couple of very good prospects in the rockies.
On the other hand Pioneer acts and sounds like they have best land in the Permian basin but not so much elsewhere.
Continental acts and talks like they the best lands in Bakken and their pushing steadily into some very good parcels in the woodford cana fields in oklahoma.
That much is known. As well its plain that production is going up nearly parabolicly in the baaken, eagle ford and now so in Oklahoma and colorado. We also known that the eagle ford and the bakken —at least the top 3 layers of the bakken plus the top layer of the three forks formation— have been optimized/derisked so core labs business in both fields has been falling there.
Core labs business is still rising in the Permian basin. As well the number of wells being drilled there is rising. So We should see the same thing in the Permian basin. That is, we should see steeply rising production —especially if they’re sitting on 75 billion barrels of commercially accessible oil. We should see much steeper rises in oil production—given all the activity in the Permian basin than we are currently seeing.
So far we have not. The Permian is showing that its a good to great oil field but not the wild thing that papers have been talking about for the last year.
On that however, the jury is still out. We just don’t know.
That’s the big story of the next year.
Is the Permian basin a wild thing?
(Now of course a lot of this also depends on technology which seems to rapidly evolving as well.)
So stay tuned.
False, biotic oil formation is the basis for the people that find and produce oil around the world.
Abiotic oil theory only produces money from gullible people and occasionally governments.
How about 53.3/4 years.
Another consideration against the fossil theory is that oil and especially gas have been found very very deep. Deeper than tectonic processes could take organic materials in the time since life began on this planet over 500 million years ago.
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.