Given an analysis of play fundamentals based on current drilling data, there is no credible basis for the highly to extremely optimistic forecasts offered by the EIA. Actual production is likely to be far less. Assuming the EIA forecasts are accurate in a long-term energy plan is likely to end very badly.
Put this in the category of things that can’t be true, but that are nevertheless affirmed with a straight face: The U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, does not issue forecasts, at least not long run forecasts.
Hooray, oil is suddenly much cheaper than it used to be. That’s great news, right? Not so fast.
Drilling Deeper reviews the twelve shale plays that account for 82% of the tight oil production and 88% of the shale gas production in the U.S.
On May 21 the Los Angeles Times reported that “Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits…”
The EIA is the elephant in the room when it comes to energy statistics. Its data and forecasts are widely used by analysts and the media and influence energy policy. There is no room for the significant scale of errors and distortions reported herein.
Before I discuss the logic behind negating a peak of production of anything, let me sum up where we are in the U.S. in terms of crude oil production.