Arthur Berman: “Shale Oil and the Slurping Sound”

(Conversation recorded on Novemver 29th, 2023)

Show Summary

On this episode, Arthur Berman returns to unpack the complexity underpinning the oil trends of the last 75 years and what new data can tell us about availability in the coming years. After decades of declining oil production in the United States, the past decade of rising oil extraction has eased many worries about peak oil. But the past few years of continued growth have been obtained by using “a larger straw”, merely delaying the inevitability of the depletion of a finite resource. Art presents recent data on well productivity in US shale plays indicating we are much closer to ‘the slurping sound’. How does technology hide the declining availability of oil reserves, causing us to extract and use them faster without creating any new resources? Going beyond geology, how do geopolitics, finance, and social opinion affect oil availability? Where do we go when economically viable oil isn’t available anymore – and will we have the prudence to make the cultural shifts necessary before we have no other options? Have we now passed ‘peak oil’?

About Arthur Berman

Arthur E. Berman is a petroleum geologist with 36 years of oil and gas industry experience. He is an expert on U.S. shale plays and is currently consulting for several E&P companies and capital groups in the energy sector.

Watch on YouTube

Show Notes & Links to Learn More

00:00 – Arthur Berman info, previous episodes, Art’s slides for this episode

03:30 – What is oil

03:55 – Unconventional oil

04:18 – Products made from a barrel of oil, importance of diesel

04:33 – Refining process

05:03 – Natural Gas Plant Liquids 

07:58 – Peak Oil

08:52 – US is the largest oil producer, all of the growth since 2010 has been mostly due to US production increase

09:22 – Average well in the 1950s produced 150-200 thousand barrels/day, dropped to 20 thousand by 1970

10:21 – Average well production of unconventional wells (Slide 7)

12:23 – US production recent all time high

13:11 – EIA output projection for 2024

14:08 – Estimated Ultimate Recovery (EUR)

18:48 – Reduced investment in oil companies

20:52 – Breakeven costs

22:10 – Shale plays high rate of decline (Slide 8)

25:35 – Alaskan oil production

26:40 – Cantarell: Rise and Fall of Mexico’s Greatest Oil Field

27:05 – Current production is made of 70% tight oil (Slide 2)

27:49 – Commercially available oil reserves

39:02 – OPEC withholding oil to keep the price up

41:15 – Fossil fuel use in war

53:13 – FDR and Saudi Arabia deal

45:50 – Drainage radius of a well, effects of drilling too close together

53:16 – Rig count

57:55 – Increase in Rig Productivity

1:03:58 – Harold Hamm, Bloomberg Interview

1:04:29 – Scott Sheffield, Permian will peak in 5 years

1:08:25 – OPEC Vienna Meeting

1:08:37 – Tug of war between supply and demand on oil price

1:17:41 – United States’ unique resource ownership system

1:18:50 – Arctic drilling potential and barriers

1:26:23 – Helen Thompson + TGS Episode

1:27:17 – ½-⅔ of remaining oil reserve are within a few hundred miles of Israel