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Shale oil surely will help the U.S. economy, but it's expensive to get out of the ground, and...

Shale oil surely will help the U.S. economy, but it's expensive to get out of the ground, and the amount the fields actually can deliver has been oversold, James Hamilton writes. Annual production increases require not just new wells but an increasing number of new wells each year, but the number of new wells that can plausibly be drilled each year and the number of available well locations are limited.
Comments (4)
  • PeakOiler
    , contributor
    Comments (298) | Send Message
     
    Not only that but the largest fields have already been tapped, with the new fields being continuously smaller in size. And the average depletion rate of the shale oil (and gas) fields is almost 40% per year, which means the drillers must step up and drill more and more wells just to replace the declining output from the larger fields. Like hampsters running faster and faster on awheel, they can only keep accelerating for so long. Eventually costs increase dramatically because drilling more wells is expensive, and unless prices at the well head keep pace, supply will level off and even decline until a balance is found. Peak oil is all about production limits, not oil supply, and eventually oil production will begin an inevitable decline because of rising costs and pricing limits.
    19 Dec 2012, 07:04 PM Reply Like
  • SoldHigh
    , contributor
    Comments (1013) | Send Message
     
    The peak oil argument is rehashed every year.

     

    Meanwhile, reserves increase.

     

    *yawn*
    19 Dec 2012, 07:11 PM Reply Like
  • bigbenorr
    , contributor
    Comments (775) | Send Message
     
    "the number of new wells that can plausibly be drilled each year and the number of available well locations are limited."

     

    A: operators are getting faster and faster at drilling laterals. When I started working in the Bakken, it took a month or more. Now? Two weeks. Also, operators are stacking older rigs in favor of newer hydraulic "walking" rigs, this minimizes downtime when you drill 8-16 wells on one pad.
    More rigs + faster drilling + lower downtime = more wells

     

    B: I don't know if he has ever been to North Dakota, but let me assure you, they got plenty of land and not much else. Also, operators will continue to down space (drill more wells per acre) and hit other layers (3 forks, possibly others) from existing pads.

     

    Also the author posted charts of the relatively fast decline rate and completely ignored secondary recovery options. Since most of the oil in the Bakken is currently being left behind, eventually someone will figure out how to take advantage of the thousands of wells already drilled by using waterflood or other better techniques.
    19 Dec 2012, 08:45 PM Reply Like
  • davidbdc
    , contributor
    Comments (3165) | Send Message
     
    Only one way to find out!
    19 Dec 2012, 11:09 PM Reply Like
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