The Energy Thread

[Green Monstah]

According to this guy, the oil glut is artificial and we are heading for a major recession in 2018.

https://medium.com/insurge-intellige...86b#.b9g831viy

My friend (chemical engineer) tells me that we have barely scratched the surface on enhanced oil recovery technology. Who is right here?

Moliere? GM? '71? Bueller?

I mostly agree with Mol's post. The exploration (i.e. seismic tech), drilling, and fracing technologies are making oil available and profitable in ways you would not have imagined twenty years ago. The recent wolfcamp shale announcement demonstrates your Chem.Eng. friend's point: We have been drilling wells and exploring for oil in West Texas for the last 100 years. It's not like this was an area that was looked over, and yet, here we are in 2017 with billions of barrels of oil that enhanced technology allows us to recover. I don't know what the next level of technology looks like, but with the amount of money put into R&D in the industry, I can guarantee that another game changer will come along before peak oil occurs.

Internationally, horizontal development is not necessary in a lot of places. Once those conventional resources are exhausted, then the new and improved technology will be applied elsewhere, further extending the date for peak oil.

[Applejack]

. Btw, this is causing nightmares for accountants...for really boring reasons.

No way!!!!!!!!!!!!!

[Uncle Ted]

I don't know about enhanced oil recovery. However, my FIL is a reservoir engineer who has spent the last ~25 years overseas developing new wells. He has told me repeatedly that all of the major wells have long been discovered; all the new ones are relatively small. In addition, the new ones are usually offshore. I've also seen him lose money more than once getting paid with stock options. It takes a ton of money to develop a new well, especially those offshore. And even when a well is projected to make a profit, many unrelated factors (mostly geopolitical and economic) can pull the plug on drilling at any time. He is usually a skeptic, but I guess in that field hope in profits turns you optimistic. One time he saw his stocks rise from pennies to real money, back to pennies again because he didn't want to sell before production.

I have no background in petroleum, I have only superficial knowledge of it, yada yada.

Was that before or after the shale oil discovery in west texas?

Shale oil discovery in West Texas largest ever

The U.S. Geological Survey has made its largest discovery of recoverable crude ever under parts of West Texas, the federal agency announced Tuesday.


A recent assessment found the “Wolfcamp shale” geologic formation in the Midland area holds an estimated 20 billion barrels of accessible oil along with 16 trillion cubic feet of natural gas and 1.6 billion barrels of natural gas liquids. That’s three times higher than the amount of recoverable crude the agency found in the Bakken-Three Forks region in the upper midwest in 2013, making it “the largest estimated continuous oil accumulation that USGS has assessed in the United States to date,” according to a statement.


“The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” said Walter Guidroz, program coordinator for the USGS Energy Resources Program.
[...]

http://amarillo.com/news/local-news/2016-11-16

[myboynoah]

I'm sleepy. Need a nap.

Try fracking. It's a for sure energy boost.

[All-American]

I'm sleepy. Need a nap.

[Jeff Lebowski]

That's what I understand. Fracking is banned in many places outside the US and even some states in the US. The US is kind of unique in that a lot of the mineral rights are owned by private individuals or companies and royalties/taxes are paid to the government when the minerals are extracted. That helps with the oil boom and also with fracking because people are willing to put up the risk (it's really not that risky) to have someone drilling/frack on their property because they stand to reap the rewards through royalty payments. If the drill rig is also on your property, you get a decent amount of lease bonus payments as well as kind of a right of way payment. I believe in many other countries, the government controls most of the mineral rights, so why let a company drill on your property when you stand to gain nothing? That's one reason why fracking is more hated outside the USA.

Fracking really took off when prices soared to over $100/bbl. It's wasn't very economical at first without the higher prices and priced stayed up that high for at least 3 years, which enabled fracking to gain not only a foothold but a near majority of the drilling. Then when prices tanked, upstream companies had little choice but to make it more efficient since they had drill rigs under contract and they were just starting to get good at it. Back in 2008 you had horizontal wells that would cost up to $10 million to drill and complete, and they were not 2 miles long. Now some companies can drill a 2 mile horizontal well for between $3-$4 million. Companies struggled to make money on fracking at $70-$80/bbl oil back in 2008 and now we are making 20-30% returns on $50/bbl. It's incredible how far it has come in the past 6-8 years.

Not to continue to ramble, and you probably know this given your field, but companies can also drill different layers of rock from the same drill pad. In the Permian Basin, there are several different layers (e.g. Wolfcamp, Bone Springs, etc.) that have oil and porous rock that can be drilled and fracked. So some companies are drilling one layer then going right under that layer to the next one and fracking both and getting very good results not only from the first frack but the second frack (in the second well) is improving on the production in the first well. Btw, this is causing nightmares for accountants...for really boring reasons.

Oh, and I didn't read that article. Maybe I should, but it soundded dumb based on yours and Omaha's synopsis.

Thank you.

[Moliere]

That is consistent with what my friend is telling me. He also says that there is very little enhanced recovery being done outside the US. Thus, tons of untapped potential out there. Would you agree?

That's what I understand. Fracking is banned in many places outside the US and even some states in the US. The US is kind of unique in that a lot of the mineral rights are owned by private individuals or companies and royalties/taxes are paid to the government when the minerals are extracted. That helps with the oil boom and also with fracking because people are willing to put up the risk (it's really not that risky) to have someone drilling/frack on their property because they stand to reap the rewards through royalty payments. If the drill rig is also on your property, you get a decent amount of lease bonus payments as well as kind of a right of way payment. I believe in many other countries, the government controls most of the mineral rights, so why let a company drill on your property when you stand to gain nothing? That's one reason why fracking is more hated outside the USA.

Fracking really took off when prices soared to over $100/bbl. It's wasn't very economical at first without the higher prices and priced stayed up that high for at least 3 years, which enabled fracking to gain not only a foothold but a near majority of the drilling. Then when prices tanked, upstream companies had little choice but to make it more efficient since they had drill rigs under contract and they were just starting to get good at it. Back in 2008 you had horizontal wells that would cost up to $10 million to drill and complete, and they were not 2 miles long. Now some companies can drill a 2 mile horizontal well for between $3-$4 million. Companies struggled to make money on fracking at $70-$80/bbl oil back in 2008 and now we are making 20-30% returns on $50/bbl. It's incredible how far it has come in the past 6-8 years.

Not to continue to ramble, and you probably know this given your field, but companies can also drill different layers of rock from the same drill pad. In the Permian Basin, there are several different layers (e.g. Wolfcamp, Bone Springs, etc.) that have oil and porous rock that can be drilled and fracked. So some companies are drilling one layer then going right under that layer to the next one and fracking both and getting very good results not only from the first frack but the second frack (in the second well) is improving on the production in the first well. Btw, this is causing nightmares for accountants...for really boring reasons.

Oh, and I didn't read that article. Maybe I should, but it soundded dumb based on yours and Omaha's synopsis.

[Jeff Lebowski]

The oil glut isn't artificial. That doesn't mean we won't have a recession but oil prices/supply shouldn't usually cause a recession. Instead, they are an effect from a recession.

It's scary how good oil companies are getting at enhanced recovery. Do people even drill vertical wells anymore? My company is drilling two mile long laterals and fracing (hat tip to Niku) the crap out of them. We have enough places to drill under lease for decades and we are only in one basin...of course it's the most prolific onshore basin in the US right now.

That is consistent with what my friend is telling me. He also says that there is very little enhanced recovery being done outside the US. Thus, tons of untapped potential out there. Would you agree?

[Moliere]

The oil glut isn't artificial. That doesn't mean we won't have a recession but oil prices/supply shouldn't usually cause a recession. Instead, they are an effect from a recession.

It's scary how good oil companies are getting at enhanced recovery. Do people even drill vertical wells anymore? My company is drilling two mile long laterals and fracing (hat tip to Niku) the crap out of them. We have enough places to drill under lease for decades and we are only in one basin...of course it's the most prolific onshore basin in the US right now.


Sent from my iPhone using Tapatalk

[Omaha 680]

On the one hand, this article is supposedly based on an exhaustive study done by a major bank. So it isn't just one crackpot.

On the other hand, this guy has written a book on "how climate, energy, food and economic crises are driving state failures around the world" so he has a pet narrative. Also, the article includes this statement:



Post-capitalist? Uh... OK.

And:



Hey, if renewable energy truly is cheaper (I don't believe that for a second), then what is the problem?

I had the same feelings in reading through the beginning of the article. I wish I had the time to read (and understand) the study because it didn't take long to recognize the article author was presenting the study viewed through a very specific lense.

[Jeff Lebowski]

According to this guy, the oil glut is artificial and we are heading for a major recession in 2018.

https://medium.com/insurge-intellige...86b#.b9g831viy

My friend (chemical engineer) tells me that we have barely scratched the surface on enhanced oil recovery technology. Who is right here?

Moliere? GM? '71? Bueller?

On the one hand, this article is supposedly based on an exhaustive study done by a major bank. So it isn't just one crackpot.

On the other hand, this guy has written a book on "how climate, energy, food and economic crises are driving state failures around the world" so he has a pet narrative. Also, the article includes this statement:

One way we can brace ourselves for the next crash is to recognise it broadly for what it is: a symptom of global system failure, and therefore of the inevitable transition to a post-carbon, post-capitalist future.

Post-capitalist? Uh... OK.

And:

Secondly, even as spikes may temporarily return some oil companies to potential profitability, such higher oil prices will drive consumer incentives to transition to cheaper renewable energy technologies like solar and wind, which are already becoming cost-competitive with fossil fuels.

Hey, if renewable energy truly is cheaper (I don't believe that for a second), then what is the problem?

[Northwestcoug]

According to this guy, the oil glut is artificial and we are heading for a major recession in 2018.

https://medium.com/insurge-intellige...86b#.b9g831viy

My friend (chemical engineer) tells me that we have barely scratched the surface on enhanced oil recovery technology. Who is right here?

Moliere? GM? '71? Bueller?

I don't know about enhanced oil recovery. However, my FIL is a reservoir engineer who has spent the last ~25 years overseas developing new wells. He has told me repeatedly that all of the major wells have long been discovered; all the new ones are relatively small. In addition, the new ones are usually offshore. I've also seen him lose money more than once getting paid with stock options. It takes a ton of money to develop a new well, especially those offshore. And even when a well is projected to make a profit, many unrelated factors (mostly geopolitical and economic) can pull the plug on drilling at any time. He is usually a skeptic, but I guess in that field hope in profits turns you optimistic. One time he saw his stocks rise from pennies to real money, back to pennies again because he didn't want to sell before production.

I have no background in petroleum, I have only superficial knowledge of it, yada yada.

[Jeff Lebowski]

According to this guy, the oil glut is artificial and we are heading for a major recession in 2018.

https://medium.com/insurge-intellige...86b#.b9g831viy

My friend (chemical engineer) tells me that we have barely scratched the surface on enhanced oil recovery technology. Who is right here?

Moliere? GM? '71? Bueller?

[Uncle Ted]

duvv211hwq5y.jpg

[Uncle Ted]

Nuke baby, nuke!

To Slow Global Warming, We Need Nuclear Power

If 20 fire marshals came around and told us our houses were about to burn down, we’d buy some fire insurance. So when the leading science academies in 20 developed countries, along with several major American corporations and the national security community, all tell us that burning fossil fuels is causing dangerous changes to the climate, we think it’s time for the United States to get serious about clean energy. It also means supporting safely operating nuclear power plants that produce carbon-free electricity.


Already, 60 percent of our carbon-free electricity comes from the 99 nuclear reactors that dot the nation’s map, from Avila Beach, Calif., to Seabrook, N.H. These reactors provide low-cost, reliable electricity for the United States, which uses nearly 20 percent of the world’s electricity. But over the next decade, at least eight of these reactors are scheduled to shut down. That will push up carbon emissions from the American electricity sector by nearly 3 percent, according to the United States Energy Information Administration.


In California, the closing of the San Onofre Nuclear Generating Station in 2012 contributed to a 24 percent increase in carbon emissions from the electricity sector, according to data from the California Environmental Protection Agency Air Resources Board. Carbon emissions from the electricity sector in New England rose 5 percent in 2015, the first year-to-year increase since 2010, largely because of the closing of the Vermont Yankee Nuclear Power Station in December 2014, according to ISO New England, the region’s grid operator.


In roughly two decades, the United States could lose about half its reactors. That’s because, by 2038, 50 reactors will be at least 60 years old, and will face having to close, representing nearly half of the nuclear generating capacity in the United States. Without them, or enough new reactors to replace them, it will be much harder to reduce carbon emissions that contribute to climate change.

Unfortunately, some of our federal policies to encourage clean energy, such as the Clean Energy Incentive Program within President Obama’s Clean Power Plan, do not explicitly include or incentivize nuclear power. Likewise, some states have chosen to adopt policies, such as renewable portfolio standards, that do not include or incentivize nuclear power.

At the same time, our energy markets do not currently account for the value of carbon-free power, a failure that puts nuclear power at an unfair and economically inefficient disadvantage to fossil fuels like coal and natural gas.


We come from different political parties, but we agree on the overall goal of leveling the playing field for nuclear power, and the need to find a bipartisan solution to achieve it. This matters because the investments we make today, in new plants and transmission infrastructure, will be around for decades. Every time new fossil energy replaces nuclear, we’re locking ourselves in to a more carbon-heavy energy mix for years to come.
[...]

http://www.nytimes.com/2016/12/21/op...ower.html?_r=0

Those opposing nuclear power are causing global warming.