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Wells That Fizzle Are a ‘Potential Show Stopper’ for the Shale Boom
David Wethe, Bloomberg
The oil patch needs more brain for its brawn. The reason is enough to give pause to anyone enjoying the benefits of cheap, abundant energy produced in the U.S. New wells are fizzling out in their first year, threatening the 3-year-old oil boom.
Muscle has taken the industry pretty far. Freshly fracked wells sent U.S. oil production soaring 39 percent since 2011. That’s the steepest climb in history, and if production continues apace, the U.S. would become the world’s biggest source of oil by 2015, according to the U.S. Energy Information Administration.
Rapid well declines threaten to spoil that promise. The average flow from a shale gas well drops by about 50 percent to 75 percent in the first year, and up to 78 percent for oil, said Pete Stark, senior research director at IHS Inc.
"The decline rate is a potential show stopper after a while," said Stark, a geologist with almost six decades in the oil patch. "You just can’t keep up with it."…
(24 February 2014)
The View from Europe: America’s Shale Boom Looks More Like a Blip
Sharon Kelly, DeSmog Blog
Tue, 2014-03-04 05:00Sharon Kelly The fracking boom has progressed at breakneck speed across the U.S., with roughly one in 20 Americans now living within a mile of a well drilled since 2000. So, how much has the economy benefitted from this drilling…
(4 March 2014)
Link to the report
BP carves off US shale gas operations into separate unit
Alistair Osborne, The Daily Telegraph
BP’S future participation in America’s shale gas revolution has been thrown into question after the UK oil giant said it was separating its US onshore operations into a separate business unit.
The company said it was setting up a distinct business in Houston, separate from its existing US headquarters, that could react faster to the “rapidly changing and hyper-competitive energy landscape” brought about by America’s exploitation of shale gas.
Major oil companies have sunk billions of dollars into onshore unconventional gas in America, only to be outmanoeuvred by smaller, independent rivals more able quickly to react to falling gas prices.
(4 March 2014)
Shale, the Last Oil and Gas Train: Interview with Arthur Berman
James Stafford, OilPrice.com
How much faith can we put in our ability to decipher all the numbers out there telling us the US is closing in on its cornering of the global oil market? There’s another side to the story of the relentless US shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it’s all that’s left. There are some good things happening behind the fairy tale numbers, though—it’s just a matter of deciphering them from a sober perspective.
Oilprice.com: Almost on a daily basis we have figures thrown at us to demonstrate how the shale boom is only getting started. Mostly recently, there are statements to the effect that Texas shale formations will produce up to one-third of the global oil supply over the next 10 years. Is there another story behind these figures?
Arthur Berman: First, we have to distinguish between shale gas and liquids plays. On the gas side, all shale gas plays except the Marcellus are in decline or flat. The growth of US supply rests solely on the Marcellus and it is unlikely that its growth can continue at present rates. On the oil side, the Bakken has a considerable commercial area that is perhaps only one-third developed so we see Bakken production continuing for several years before peaking. The Eagle Ford also has significant commercial area but is showing signs that production may be flattening. Nevertheless, we see 5 or so more years of continuing Eagle Ford production activity before peaking. The EIA has is about right for the liquids plays–slower increases until later in the decade, and then decline.
The idea that Texas shales will produce one-third of global oil supply is preposterous. The Eagle Ford and the Bakken comprise 80% of all the US liquids growth. The Permian basin has notable oil reserves left but mostly from very small accumulations and low-rate wells. EOG CEO Bill Thomas said the same thing about 10 days ago on EOG’s earnings call. There have been some truly outrageous claims made by some executives about the Permian basin in recent months that I suspect have their general counsels looking for a defibrillator.
Recently, the CEO of a major oil company told The Houston Chronicle that the shale revolution is only in the "first inning of a nine-inning game”. I guess he must have lost track of the score while waiting in line for hot dogs because production growth in U.S. shale gas plays excluding the Marcellus is approaching zero; growth in the Bakken and Eagle Ford has fallen from 33% in mid-2011 to 7% in late 2013.
Oil companies have to make a big deal about shale plays because that is all that is left in the world. Let’s face it: these are truly awful reservoir rocks and that is why we waited until all more attractive opportunities were exhausted before developing them. It is completely unreasonable to expect better performance from bad reservoirs than from better reservoirs.
The majors have shown that they cannot replace reserves. They talk about return on capital employed (ROCE) these days instead of reserve replacement and production growth because there is nothing to talk about there. Shale plays are part of the ROCE story–shale wells can be drilled and brought on production fairly quickly and this masks or smoothes out the non-productive capital languishing in big projects around the world like Kashagan and Gorgon, which are going sideways whilst eating up billions of dollars.
None of this is meant to be negative. I’m all for shale plays but let’s be honest about things, after all! Production from shale is not a revolution; it’s a retirement party…
(5 March 2014)
Court Upholds Imposing Fracking Ban in Colorado City
Tripp Baltz, Bloomberg
A Colorado judge has approved the results of a November 2013 vote approving a five-year ban on hydraulic fracturing in Broomfield, Colo.
The Feb. 27 ruling by Colorado District Court Judge Chris Melonakis of the 17th Judicial District means Broomfield’s five-year ban on fracking remains in effect, the city said in a statement.
Following a recount in which the initiative was deemed to have passed by 20 votes, opponents of the ban challenged the election results. An earlier court ruling had enjoined the city from enforcing the ban…
(3 March 2014)
Los Angeles Moves Towards Ratifying Fracking Ban, but Is Federal Regulation Possible?
Jessica Desvarieux, The Real News Network vai Truthout
Kate Sinding and Adam Scow discuss the current legal loopholes for industry that exempt fracking operations from regulation, and the issue of job creation through developing alternative energy sources.
Transcript at original
(6 March 2014)
Brakes put on UK shale gas revolution
Verity Ratcliffe, Financial Times
When the British Geological Survey doubled estimates for the shale gas reserves in the Bowland Basin, it raised expectations of a US-style shale gas revolution in the UK…
But just because gas is recoverable, it doesn’t mean it makes economic sense to do so…
(4 March 2014)
Fracking health risks must be established now, before the industry grows
Michael Depledge, The Conversation
The Shale UK Summit conference is underway in London, bringing together geological, petroleum, engineering and energy economics experts. Despite all this expertise, and although much of the fracking technology used to extract the gas from shale rock is well established, there are still a large number of unknowns surrounding fracking, including the potential effects on health…
Despite the unconventional oil and gas industry growing rapidly in the US, and gathering momentum elsewhere across the world, scientific study of the health effects of fracking is in its infancy. Yet early findings suggest this form of extraction might increase health risks compared to conventional oil and gas wells. The fracking drilling sites have larger surface footprints, and may be (certainly in the UK) much closer to where people live. The need to transport and store large volumes of toxic chemicals and contaminated water are likely to pose negative consequences for health. Michael Depledge is Professor and Chair, Environment and Human Health at University of Exeter
(4 March 2014)