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5 Jaw Dropping Facts About the Permian Basin

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posted on Oct, 10 2013 @ 08:33 PM
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I received this today from the EDC president of Odessa, TX. If you are looking for work....read below. Yes, its hard labor to work in the oil patch....but there are also all the support services for that labor (hospitals, restaurants, tax processing, etc, etc....it all grows from billions of dollars in oil money.

Who says there is no work in America?


5 Jaw Dropping Facts About the Permian Basin
By Robert Baillieul
October 7, 2013 |
There has been a lot of talk about the new shale formations like Texas' Eagle Ford and North Dakota's Bakken. New technologies like horizontal drilling and hydraulic fracturing have unlocked vast quantities of hydrocarbons. We're in the midst of an American energy revolution, and it's creating a great opportunity for investors.
But like venture capitalists searching for the next Apple, the hunt is on for the next great American shale play. And an old field in West Texas just might be the biggest find yet -- the Permian Basin. Emerging plays in the Permian like the Cline, Wolfcamp, and Spraberry could soon become a regular part of investor vocabulary soon.
Here're five jaw-dropping reasons why you should keep this basin on your watch list.
1) New discoveries in the Permian could make it the world's largest discovery
The numbers coming in from the industry are remarkable. According to early estimates provided by Devon Energy (NYSE: DVN ) , the Cline could contain 30 billion barrels of recoverable oil. Meanwhile Pioneer Natural Resources (NYSE: PXD ) projects that the nearby Wolfcamp and Spraberry plays could contain some 50 billion recoverable barrels. For comparison, the United States Geologic Survey estimates that the Eagle Ford and the Bakken hold 10 billion and 4.3 billion recoverable barrels respectively.
"The Spraberry Wolfcamp could possibly become the largest oil and gas discovery in the world," Pioneer Chief Executive Scott Sheffield told analysts at a industry conference in August. The company plans to test 13 zones over the next year. Those reserve figures could increase as exploration is completed.
Due to its supposed size, the play may be too large for any single operator to tackle alone. To fund its program, Devon sold a 30% interest in its Cline and Wolfcamp shale assets to Sumitomo for $1.4 billion last year. The company is on track to drill 30 pilot wells this year.
2) The Permian is like six Eagle Ford shales stacked on top of the other
One attractive feature of the Permian is what's called in the industry as "stacked pay potential". In the Eagle Ford, the hydrocarbon producing zone is about 250 feet thick. In the Bakken, the pay zone can be as thin as 10 feet.
But in the Permian, several shale formations are stacked on top of one another allowing drillers to target several plays with a single vertical well. In some parts of the Permian, the pay zone is a much as 1,300-to-1,800 feet thick. That's like having four to six Eagle Ford shales stacked on top of each other.
3) One million barrels per day of transit capacity is expected to come on-line by 2014
Unlike isolated plays such as the Bakken, the Permian Basin is conveniently located right in the energy industry's backyard. Pipelines and processing facilities already dot the landscape which should keep development costs down. However, over one million bpd of new pipeline capacity will be added by the end of 2014 just to keep up with production.
Plains All American (NYSE: PAA ) is just one example of a company stepping up to become the leading shipper in the region. In April, the company announced plans to build a 310-mile, 20-inch pipeline to move crude oil across West Texas. The project will cost $375 million and add 200,000 bpd of capacity. Since 2009, the company has spent $300 million in new infrastructure and upgrades.
4) The Permian Basin is an investment bonanza
According to a research report from Wood Mackenzie, capital spending in the Wolfcamp and Bone Spring plays alone could top $22 billion by 2018. To put that number into perspective, operators are expected to invest $28 billion in the Eagle Ford this year which accounts for a quarter of oil CapEx in the lower 48 states.
Leading the charge are a lot of smart money operators. ConocoPhillips (NYSE: COP ) plans to invest $3 billion over the next five years in the Permian. The development is expected to add 40,000 barrels of oil equivalent per day, ir boepd, of production by 2017.
Other operators moving into the Permian include Apache and Chevron. Altogether, Wolfcamp and Bone Spring could cost a combined $220 billion to fully develop.
5) Midland, TX ranks as the 2nd wealthiest town in the country
High oil prices and surging production has sparked an economic boom in West Texas. The unemployment rate in Midland, located right in the heart of the Permian Basin, is 3.4%. In 2011, the city's average income was $65,100, ranking No. 2 nationwide. For comparison, San Francisco and New York City ranked third and eighth respectively.
Foolish bottom line
New shale developments in the Permian Basin are still speculative. Many of the plays, like the Wolfcamp and the Cline, haven't been de-risked beyond a handful of core acreage. Early reserve estimates could prove wildly optimistic, but if the play can live up to even a fraction of the hype, the Permian Basin could be America's next great shale play.


Our streets are full of 22 year old kids driving $80k trucks. There is real money to be made....so stop complaining about the lack of work and get your butts down here!!!!

Edit: Additional source
edit on 11-10-2013 by Gemwolf because: Added source




posted on Oct, 10 2013 @ 08:46 PM
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reply to post by bigfatfurrytexan
 


I flagged your thread


My guy has a good job (engineering dept. at a huge hospital), but he's bored and thinking about changes in his career. A change in scenery sounds appealing too, but not so sure about the hard labor at this point in our lives. This looks like young & strong labor.. right?



posted on Oct, 10 2013 @ 08:52 PM
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bigfatfurrytexan

Our streets are full of 22 year old kids driving $80k trucks. There is real money to be made....so stop complaining about the lack of work and get your butts down here!!!!

Ok, that'll give roughly 00000.1% of the unemployed a job for a while, what about the other 99.99999% of unemployed people?



posted on Oct, 10 2013 @ 08:56 PM
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I have an chemical engineer friend who moved his family down there.

But, still, it's kind of sad that the US is still clinging to this as energy and income in 2013. I had just hoped for something else...flying cars, space colonies, robot maid etc..LOL!



posted on Oct, 10 2013 @ 09:16 PM
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kosmicjack
I have an chemical engineer friend who moved his family down there.

But, still, it's kind of sad that the US is still clinging to this as energy and income in 2013. I had just hoped for something else...flying cars, space colonies, robot maid etc..LOL!



I agree. The oil companies continue to dish out big money so they can keep pillaging and beating the dead horse with public consent.



posted on Oct, 10 2013 @ 10:04 PM
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reply to post by kosmicjack
 


robot maid. I've seen the Jettsons. She's not happy at all.

Either that, or they turn on you... I've seen I Robot.

They say space, the final frontier... but really, it's robots. How best to serve cyborg-kind.

The biggest problem with unemployment is we no longer NEED to work to fulfil a purpose in society. We NEED to work to sustain a quality of life. We don't need someone to tend the crops in our society. We don't need someone to feed the chickens. Or pick the grapes. All of this is now industrialised.

So we either work mundane plebeian jobs that have no job satisfaction and we become stressed, ill, uncaring about our work ethic, and just go through the motions leading us to feeling trapped and useless - Or we seek work that fulfils us.. And that is the rub in an age when we still consider working something you MUST do to be a real person in society.

Look at the internet, billions are being made by a select few because they got in first. If this were an open market now, and it still is relatively, you could find a niche that satisfies you. But we're still told "get down to macdonalds you lazy bum, do an unskilled, fulfilling job and be paid peanuts, then you can work till your 80 and die knowing you at least contributed ugly burgers to your fellow drones."... as opposed to instilling a sense of creativity and innovation.

I don't even know where the Permian basin is, but I had a mate who worked on islands up off the coast of Darwin abut 25 years ago, setting up base camps for an offshore navigation company. Him and one other bloke for 3 months at a time. No booze, no anything. He took a 386 laptop up to keep him sane.

He came back RICH... but all it did was cause him to spend it all and now he does an unfulfilling job. I guess, I haven't spoken to him in years. Last I heard, the job was killing him.

You need to do something that you'd do for free, but have the luxury of being paid.. not something that pays you billions in worthless currency if you're going to be young and blow it all.

at least in my opinion.. I'd rather do something that gets me by that I enjoy and can do for the rest of my life, than something I hate but sets me up to fail later on.
edit on 10-10-2013 by winofiend because: I wrote some atrociously horrible mistakes in that mess...
edit on 10-10-2013 by winofiend because: (no reason given)



posted on Oct, 10 2013 @ 10:16 PM
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Yeah, there are a lot of jobs there but the problem is a lack of housing. My brother in law moved out their 3 years ago before the big boom. Lived outside of Midland in Greenwood. He got transferred back to east Texas, his house was one the market for 3 days and he sold it for $30,000 more than he paid for it.



posted on Oct, 10 2013 @ 10:24 PM
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slednecktx
Yeah, there are a lot of jobs there but the problem is a lack of housing. My brother in law moved out their 3 years ago before the big boom. Lived outside of Midland in Greenwood. He got transferred back to east Texas, his house was one the market for 3 days and he sold it for $30,000 more than he paid for it.


Camper trailer. Great investment if you are working in that area.

It's amazing how any actual good or positive news is run down and bitched about as if it were bad. Meanwhile all of the gloom and doom junkies are wallowing in any bad thing they can think of with unmitigated glee.

BFFT might as well keep his mouth shut about all of the good paying jobs in Texas. No need to attract a horde of whiny fussbudgets down here who will whine all the more after getting decent jobs. Otherwise someone might get the mistaken idea that success is a good thing.

I say let em stay home and cry.
edit on 10-10-2013 by badgerprints because: (no reason given)



posted on Oct, 10 2013 @ 10:48 PM
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reply to post by badgerprints
 


I didn't mean it as a negative thing I just wanted to warn people before they sell everything and move down here. I worked offshore 10 years ago,the oilfield is good money but it is hard work and youll never know when the bottom will drop out. I'm an east Texas boy, proud to be a Texan, but west Tx . is ugly and flat, sorry a Mesquite is a bush not a tree.



posted on Oct, 10 2013 @ 10:56 PM
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reply to post by bigfatfurrytexan
 

Well bigfatfurrytexan, there are certainly jobs in the oil patch. And, there are "bucks" to be made.
4 years ago, I moved into a three bedroom house, that costs more than my family's entire household budget before -- more than 3 Times what I was paying when I moved here, 4 years before that... --- AND I WAS LUCKY to get into one when I did, because there is such a shortage of housing, that the oil & oilfield service companies are having to build worker camps outside town (man camps).
People are (when they can get away with it) living in rented storage units.
A guy I work with only got into an apartment because of someone he knew.
I get to water my DIRT (I mean - yard) twice a week.
The restaurants and retail stores can't maintain proper staff...because the staff aren't paid enough TO LIVE HERE.
Medical care leaves a lot to be desired.
We've been in a strenuous drought for quite a while, now...and water is precious.
Other than that -- I love the quasi-desert vistas.
...love mesquite. ...love purple (desert) sage.
A good five hour drive will take you to Dallas, San Antonio, Austin, Amarillo, Big Bend National Park - Terlingua - McDonald Observatory - Ruidoso (NM) - (another hour or two to) White Sands National Monument (and park)
Or - just sit around and watch West Texans go crazy over high school football...
But - you are right. A lot of money flowing into and through the Permian Basin nowadays.



posted on Oct, 10 2013 @ 11:00 PM
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reply to post by bigfatfurrytexan
 


I use to live in Odessa, but yeah I say that all the time, if you really need a job and aren't afraid of a little bit of hard work Oil Field is the place, anything from roughnecking to hauling water, to doing safety work.

You'll have money in your pocket for sure.

And if you ever make it to be a consultant like 300k+ a yr
edit on 10-10-2013 by Lysergic because: (no reason given)



Granted rent is way over priced atm in Odessa.
edit on 10-10-2013 by Lysergic because: (no reason given)



posted on Oct, 10 2013 @ 11:03 PM
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slednecktx
reply to post by badgerprints
 


I didn't mean it as a negative thing I just wanted to warn people before they sell everything and move down here.


I know.
I answered you. Camper trailer is the way to go. Didn't mean to seem like I was getting onto you.

The rest was for the angry gloomandoomers who look right past a good thing and turn left at Whinerville.



posted on Oct, 11 2013 @ 12:07 AM
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RobinB022
reply to post by bigfatfurrytexan
 


I flagged your thread


My guy has a good job (engineering dept. at a huge hospital), but he's bored and thinking about changes in his career. A change in scenery sounds appealing too, but not so sure about the hard labor at this point in our lives. This looks like young & strong labor.. right?


He is an engineer?

Then maybe not. You should create acounts with "Work in Texas" (our state workforce website for job postings) and see what is posted.

Shale drilling is as much an art as a science. I know a slant driller that banks about 300k a year. He is 40 years old, and when we went to school together he was dumb as a rock.

BUt the engineers....they are the brains. They are what is known as "company men". The white collars.



posted on Oct, 11 2013 @ 12:09 AM
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VoidHawk

bigfatfurrytexan

Our streets are full of 22 year old kids driving $80k trucks. There is real money to be made....so stop complaining about the lack of work and get your butts down here!!!!

Ok, that'll give roughly 00000.1% of the unemployed a job for a while, what about the other 99.99999% of unemployed people?


300mil americans couldn't live in West Texas. Your question is morose. I am trying to offer a real ray of hope to someone. Individuals. I can't do anything for the 300mil unwashed masses you are focused on here.



posted on Oct, 11 2013 @ 12:10 AM
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Tucket

kosmicjack
I have an chemical engineer friend who moved his family down there.

But, still, it's kind of sad that the US is still clinging to this as energy and income in 2013. I had just hoped for something else...flying cars, space colonies, robot maid etc..LOL!



I agree. The oil companies continue to dish out big money so they can keep pillaging and beating the dead horse with public consent.


I suppose you ride a bike or walk? And don't use rubber or plastic?

Or is that you, too, giving your consent?



posted on Oct, 11 2013 @ 12:14 AM
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slednecktx
Yeah, there are a lot of jobs there but the problem is a lack of housing. My brother in law moved out their 3 years ago before the big boom. Lived outside of Midland in Greenwood. He got transferred back to east Texas, his house was one the market for 3 days and he sold it for $30,000 more than he paid for it.



I star'd this post for accuracy.



posted on Oct, 11 2013 @ 12:23 AM
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reply to post by WanDash
 


So i take it you are for neither the Permian Panthers OR the Lee Rebels? LOL

People in service positions are, for the most part, paid enough to live. Like I said....our local McDonalds has it on their big sign out front, "Now Hiring....$14/hr". They can't keep staff for 1 reason alone: the oilfield has pulled them out.

You either have the males being woo'd with $25/hr jobs, tons of OT, and a company truck to drive. Meanwhile the wives just stay home and tend to the kids. I ran a call center for almost 10 years that was shut down because there just was not enough staff, and our clients pulled the contract. Our bread and butter: the oilfield wives, disappeared when their husbands started working unGodly hours to satisfy drilling schedules that keep getting tighter and tighter, in response to demand.....but also labor shortage.

Otherwise, even housekeepers at rundown hotels are making $10/hr (where the standard was $3/room just 6 years ago for 4 of the hotels in my town).



posted on Oct, 11 2013 @ 09:20 AM
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Peak 'Cheap' Oil: Shale Oil Proves Peak Oil Is Indeed Upon Us
We wouldn't drill for it if the cheap stuff were still here
by Chris Martenson

Monday, September 30, 2013


Ever the contrarian, I have been quite skeptical of the many breathless claims being made by wide swaths of the media about how a new energy bonanza is going to overtake the U.S. and eventually the world. The subject, of course, is the new shale plays in both natural gas and oil.

While these plays are in special cases quite extraordinary, and the technology is just brilliant, many of the more exuberant claims made in the past about the potential contributions of these plays are now being dialed back.

The reason? Just like any other resource, the shale plays were 'high graded,' meaning the best ones were drilled first. (As they say in Texas: We drill the best spots first.)

The reason I say in the title that shale oil proves that Peak Oil is upon us is that we would not be drilling them if there were anything better left to drill. The simple yet profound reason that we're going after this more difficult and expensive oil is – drum roll please – the easy and cheap stuff is all gone.

Rather than proving that Peak Oil is dead, as many have claimed, the new focus on shale plays indicates to me that we've indeed moved down the resource ladder to the next best (i.e., less good) options because the better ones are all gone.

Again, I think the technology and ingenuity on display in the shale plays is extraordinary. And I think, in the end, we're going to drill all of these plays up – not just here, but elsewhere in the world. These are legitimate wells.

But they are not the same as the old conventional plays. Not by a long shot.

They are expensive. And they consume a lot of water and a lot of land. A typical shale play will involves tens of thousands of wells with drill pads all over the place – something that will pretty much prevent their widespread adoption in more populated areas of the world.

A Peak Oil Mistake
A big mistake of the Peak Oil community (of which I am a self-described member) was in not qualifying statements about oil reserves and production in terms of price. Obviously, the higher the price goes, the more exuberant and elaborate will be the attempts to get more oil from harder, deeper, and more expensive places.

That is, up to a point, the amount of oil that we will drill for will depend on price.

If, for example, oil were to suddenly fall to $50 per barrel or less and stay there, then there would be no more drilling in the shale plays, because the all-in cost of those plays is higher than that. In many plays, a lot higher than that.

Conversely, if the price of oil was to rocket up to $300 a barrel, then you'd see all kinds of marginal oil plays around the world suddenly begin to get tapped.

So the amount of oil we'll ultimately get is a tricky function of price, actual reserves, technological developments, and geopolitical realities.

The actual argument that makes the most sense is to call for Peak Cheap Oil, which is something that we can quite confidently argue is now safely in the rear-view mirror.

And someday, no matter how much the shale oil plays ultimately contribute to the story, those, too, shall have their days of ascendancy followed by a terminal decline.

Oil "Peak" Delayed
It seems shale oil has pushed back the date of the arrival of the true worldwide "peak" in oil, possibly by as much as five to ten years.

This is new information that changes things some. But, unfortunately for a world still addicted to oil, not nearly as much as many had originally hyped – er, hoped.

Back in 2009 and 2010, I calculated that somewhere around 2013-2014, the world would have to come to terms with the reality of peak oil production. I rather doubt that's the case now.

Back then, I underestimated the impact that the 2008 global recession would have on demand, as well as the contributions that would come from shale. Together, these have served to lessen the global demand for oil to the extent that a (barely) tolerable price of ~$100 per barrel is balancing supply and demand (for now), which is allowing Peak Oil to shift off into the distance for a few more years.

The way that global oil supply and demand have balanced has involved both increased U.S. production and reduced U.S. demand, which has dramatically reduced U.S. demand from elsewhere on the globe. This has then allowed the rest of the world to compete for non-U.S. oil with relative ease.

If we look at U.S. production, nearly 2 million barrels per day (mbd) of increased domestic production over the past two years simply meant 2 mbd that the U.S. did not have to import:



So that helped. And it was a good thing, too, because if we look at global production of crude oil with the U.S. removed from the equation, we see this:



Virtually zero growth in oil production across the globe, despite a full doubling of expenditures by the oil companies on exploration and production and a near tripling of the price of oil.

media.peakprosperity.com...

If you want to understand why oil prices tripled, the above chart is really all you need to look at. It's just basic economics. Supply and demand are matched by price. If demand was rising (and it was) and supplies were stagnant (and they were), then price balances the equation.

To know when Peak Oil will finally be recognized across the world's stage, I would need to know by just how much global economic growth is going to advance, what new discoveries will arrive, the price of oil, and whether or not the Middle East will stabilize or destabilize.

In short, I can't predict any of these things with any sort of statistical accuracy. But I can know that every oil find eventually depletes and that the new ones are less spectacular than prior ones. And that we've drilled out the best plays first, so the future ones are likely to be underwhelming.

The Best Plays First
It's important to note that the recent U.S. experience in drilling the Bakken, Eagle Ford, and Permian Basin plays cannot and should not be linearly extrapolated across the 20 total U.S. shale basins known to exist.

The reason is that the remaining plays are certain to be of lesser quality, more difficult/expensive to access, and/or lower yielding.

This has certainly proven to be true, at least judging by these news releases:

Shale formation in Montana frustrates oil drillers

Mar 15, 2013

The pessimists are right for now: The Heath oil play cutting a swath across Central Montana is no match for the Bakken.

In fact, a handful of companies drilling in this shale formation in Central Montana have all pulled out.

And Montana’s other big energy hope -- using CO2 to coax oil out of the old Bell Creek field in southeastern Montana -- has been delayed.

“The last wells are coming in at 15 or 20 barrels a day. At $4 million to $6 million a well, that doesn’t cost out,” said independent oil man Tom Hauptman of Billings.

Production of shale wells decline rapidly after a year or two. So the Heath wells would have to produce 30 times what they are now to be economical, Hauptman said.

Two years ago, the petroleum industry veteran was touting the Heath as a potential mini-Bakken.

Continued:
edit on 11-10-2013 by raiden12 because: (no reason given)



posted on Oct, 11 2013 @ 09:21 AM
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So the Heath play, recently touted as the next big thing, turns out to be no real thing at all. At least not until oil goes up in price by a factor of thirty.

Another one of the larger hopes was the Utica Shale, which underlies much of Ohio and western New York. Many companies rushed in and spent a lot on acreage, and now we have the drill results, and the verdict is...not good:

Ohio’s $500 Billion Oil Dream Fades as Drillers Misjudge

April 16 (Bloomberg) -- U.S. drillers that set up rigs amid the rolling farmland of eastern Ohio on projections underground shale held $500 billion of oil are packing up.

Four of the biggest stakeholders in untapped deposits known as the Utica Shale have put up all or part of their acreage for sale, as prices fall by a third in some cases. Chesapeake Energy Corp. of Oklahoma City, the biggest U.S. shale lease owner, last week offered up 94,200 acres (38,121 hectares). EnerVest Ltd. and Devon Energy Corp. are selling as early results show lower production than their predictions.

“The results were somewhat disappointing,” said Philip Weiss, an analyst with Argus Research in New York. Early data show “it’s not as good as we thought it was going to be.”

The flip-flop underscores the difficulties faced by even experienced drillers around the world in tapping the sedimentary rock.

In California, Occidental Petroleum Corp. was stymied by the Monterey Shale’s fault-riddled terrain. In Poland, Exxon Mobil Corp. stopped drilling because shale output was minimal. China’s failures with shale gas drove producers Cnooc Ltd. and China Petrochemical Corp. to seek expertise in North America.

In Ohio’s Utica formation, which runs eastward as far as New York, drillers frequently found the rock too dense and underground pressures insufficient to produce oil.

The rush to buy acreage has reversed.

The Utica grabbed the U.S. shale spotlight in 2011 when the Ohio Department of Natural Resources estimated it held 5.5 billion barrels of recoverable oil reserves -- equivalent to more than twice Yemen’s proven resource and valued at about $488 billion at yesterday’s $88.71-a-barrel U.S. oil price.

Chesapeake had boasted Utica would outperform the Eagle Ford. EnerVest, the biggest gas producer in Ohio, had said the Utica would bring jobs and new industry to the state. EnerVest in the past year has tried to sell acreage there and no buyers have emerged.

Source

I remember reading all the hype surrounding the Utica Shale a couple of years back and noted that journalists were invariably quoting the oil men and company spokespeople – i.e, those with the most to gain from big claims.

However, all the petroleum engineers I talked with said, you cannot know anything until you sink a well and see what happens.

The geology might be unfavorable, or the oil may not be there, or it might not flow, or it might be lousy quality, etc. and so on.

And the verdict is now in: The Utica Shale is not worth pursuing. At least not at this time (or more accurately, this price).

Moving along...we just received this news about the Mississippian Formation that underlies Kansas. Verdict? Not good:

Shell Oil pulling out of Kansas

Sep 19, 2013

Shell Oil has confirmed what it had hinted earlier: that it is pulling out of Kansas completely, selling off 45 producing wells and 600,000 acres of leases in Barber, Harper, Kingman, Pratt, McPherson, Sedgwick, Sumner, Rice and Reno counties.

It’s the most dramatic in a series of high-profile departures of major exploration companies that have given up on the Mississippian formation, or at least the Kansas side of it.

Shell stopped drilling in June and reviewed results for what it has said all along are exploratory wells, said company spokesman Scott Scheffler.

“As part of that process, in some cases – as in this review – assets are identified that do not meet our targets and the best value option for Shell is to divest. Therefore, Shell has completed its appraisal of its exploration holdings in the Mississippi Lime play and has elected to market these assets for sale and redeploy resources elsewhere in our global portfolio.”

Source

While Shell is trying to spin this as nothing more than closing a few test wells and making a strategic realignment to its portfolio, it bears noting that it held 600,000 acres and sold off 45 producing wells.

By the time a producing well is not even worth holding onto for whatever cash stream it can generate, you know the play is simply not a good one.

So we can scratch off the Mississippian Formation, too.

Moving along further...on to the big kahuna, the biggest prize on the table: the much heralded Monterey Formation in California, upon which much hope and even more hype have been lavished.

The verdict? Um...at best, we can say: It's complicated.

Oil Firms Seek to Unlock Big California Field

Sep 22, 2013

California's Monterey Shale formation is estimated to hold as much as two-thirds of the recoverable onshore shale-oil reserves in the U.S.'s lower 48 states, but there's a catch: It is proving very hard to get.

Formed by upheaval of the earth, the Monterey holds an estimated 15.4 billion barrels of recoverable shale oil, or as much as five times the amount in North Dakota's booming Bakken Field, according to 2011 estimates by the Department of Energy.

The problem is, the same forces that helped stockpile the oil have tucked it into layers of rock seemingly as impenetrable as another limiting factor: California's famously rigid regulatory climate.

So far, there have been no production breakthroughs.

(Source)

The summary here is no surprise to me. Whereas the Bakken is a big, flat expanse, unsullied by geological forces over time, the Monterey is in seismically active California and has been stressed and bent and folded and heaved over millions and millions of years.

When you are trying to frack oil and gas out of the earth, every fault works against you by bleeding your pressure away. Worse, some fractures connect to other features, complicating the practice of keeping fracking fluids away from water tables.

So, for now, the best we can do is place the Monterey on the 'maybe' list. But note that it's certainly no slam-dunk, simple-as-plumbing operation like the earlier storied shale plays.

Conclusion
As far as I am concerned, the shale plays prove that Peak Oil is real, rather than invalidating the theory.

We can certainly say two things about shale oil: 1) It's more expensive than oil finds of the past, and 2) we've already drilled the best plays first.

This means we cannot ever expect to see Cheap Oil again, at least not in a meaningful way (although perhaps a global economic slump could temporarily drive prices lower). So we should be acting as if fossil energy is rare, limited, and exceptionally valuable.

The best shale plays in the U.S. are already in the rear-view mirror, and all of the most recent plays have been something of a disappointment. There will probably be a couple more that prove promising (the Cline Shale play in TX may be one of them), but there certainly isn't anything like 20 Bakkens kicking around, as some desperately want to believe.

edit on 11-10-2013 by raiden12 because: (no reason given)



posted on Oct, 11 2013 @ 09:21 AM
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Meanwhile, oil production from the rest of the world continues to chug along in a virtually flat line. And the U.S., even with its recent production gains, still imports roughly a third of its daily petroleum needs, which means the U.S. is just as dependent on the global oil situation as any other country. Possibly even more.

I remain convinced that a prime reason the world economy is not doing well, and why marginal states and countries are struggling, is that oil is no longer cheap and easy to find and produce.

In short, there's nothing yet in the data that makes me think that Peak Oil is dead or that we can breathe a collective sigh of relief that we've bought ourselves a few more easy decades of abundant fossil energy via shale.

Again, the shale plays are magnificent in many respects, but they are not permanent game-changers that afford us the choice of neither examining our beliefs nor changing our behaviors. Indeed, they are a reinforcing indicator that we now live in the age of Peak Cheap Oil.

~ Chris Martenson
edit on 11-10-2013 by raiden12 because: (no reason given)





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