The Imminent Peak in US Oil Production

This is a guest post by David Archibald

The Imminent Peak in US Oil Production

The seven years of production of tight oil in the US has produced enough data to
enable estimation of the amount of oil that will be recovered from these systems and
the timing of peak production. Based on data to May 2014, the four main tight oil
basins will produce a total of 7.7 billion barrels with a peak production rate of 3.9
million barrels per day in mid-2015. Following that peak, production is predicted to
decline as rapidly as it rose. That in turn is expected to cause a re-assessment of the
ability to produce sufficient transport fuels based on current policies.

The Bakken in North Dakota

Jean Laherrere has plotted monthly oil production from the Bakken Fm in North
Dakota using Hubbert linearization:

Laherrere 2014

FIG. 1

Also called a logistic decline plot, Hubbert linearization plots annual production divided by cumulative production to that date on the y axis against cumulative production on the x axis. This is the method that M. King Hubbert famously used in 1956 to predict the peak of US oil production in 1970. He was also largely correct in predicting the rate of decline from that peak. This methodology is based on the theory of the rate of extraction from a finite resource originally developed by the early nineteenth-century Belgian mathematician Pierre Francois Verhulst (1804–1849). The fact that Bakken production from 2012 has plotted as a straight line on this graph reflects depletion of a resource close to 2,500 million barrels.

Nearly 90% of Bakken production in North Dakota comes from four counties:Williams, Dunn, Mountrail and McKenzie. Figure 2 shows the monthly production history of these counties from 2005:

Big Four Data

FIG. 2

Each of these counties also demonstrate Hubbert linearization as shown in Figure 3:

McKenzie

Mountrail

Dunn

Williams

FIG. 3

Analysis by county confirms the play-wide assessment. Based on data to May 2014,Table 1 details the amount of oil produced to date, the estimated ultimate recovery (EUR) and the percentage depleted:

Big Four Data

Table 1

As well as the Bakken, the other three main US tight oil basins/formations are the Niobrara, Eagle Ford and the Permian. Using Hubbert linearization, the EUR, peak production rate and year of peak for these plays is shown in Table 2:

Shale Data

The expected production profile of these basins/formations to 2019 is shown in Figure 4 following:

US Tight Oil Production

FIG. 4

The contribution of tight oil to US production has been welcome but will be short-
lived. The shale gas boom has different dynamics and will be more enduring. US tight oil production has stopped world oil production from declining over the last five years. The projected decline in US tight oil production from mid-2015 can be expected to have a price impact. Figure 5 following shows the WTI oil price and the Henry Hub gas price (x6) from 1997 and the modeled internal rates of return for coal-to-liquids facilities at $100, $120 and $140 per barrel based on a capital expenditure of $130,000 per barrel of daily capacity:

Oil Gas Price

FIG 5.

David Archibald, a Visiting Fellow at the Institute of World Politics in Washington,
D.C., is the author of Twilight of Abundance: Why Life in the 21st Century Will Be
Nasty, Brutish, and Short (Regnery, 2014). He also operates five million acres in the
Canning Basin of Western Australia.

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206 Responses to The Imminent Peak in US Oil Production

  1. Jim Baldauf says:

    Good article and good comments – But regarding the idea of “slapping down” ISIS, it may be more problematic than it looks according to some analysts.

    ISIS Fighters Secretly Trained by U.S. in Jordan , http://www.wnd.com/2014/06/officials-u-s-trained-isis-at-secret-base-in-jordan/

    and

    French Report ISIL(ISIS) Leader Al-Baghdadi Jewish Mossad Agent!
    https://socioecohistory.wordpress.com/2014/08/06/french-report-isilisis-leader-al-baghdadi-jewish-mossad-agent/

  2. B says:

    These two articles are almost a month old, but they offer a very informative look at slickwater fracturing. This method improves EURs in the Middle Bakken and consequently has become a much more common procedure in the Bakken this year, with many operators mentioning slickwater in their investor presentations and conference calls. Note, however, that there is apparently still debate on whether slickwater fracs can improve EURs in any of the oil-producing benches of the Three Forks formation.

    The Secrets of Slickwater

    [Excerpt from article]
    Traditional hydraulic fracturing techniques are often compared to interconnected channels. A conventional fracture method utilizes a viscous fluid to carry proppant into a horizontal lateral. The fluid-proppant mixture is pumped downhole to wedge the rock open, creating long, wide channels for trapped hydrocarbons to flow through. These bilateral fractures can extend between 500 and 1,000 feet outwards from the wellbore. The fluid mixture is typically pumped into the well at 20 to 40 barrels per minute. The maximum proppant concentrations in the fluid range from 4 to 12 pounds per gallon. The permeability of the rock to be fractured dramatically affects the type of treatment required. The tighter the rock, the more fracture complexity required. Conventional hydraulic fracturing methods typically do not create this complexity.

    A slickwater frack offers a peculiar outcome. The technique is simple by design, but it can create a larger, more complex fracture network. The method creates a fracture network that is closely related to a broken pane of safety glass with all the tiny fragments attached. “If you have ever seen a piece of safety glass and it has shattered into a thousand little pieces but they all stay connected,” [Mike Stemp, corporate engineering advisor for fracturing at Sanjel Corp.] says, “that is more or less what we are trying to do with slickwater fracks but in a three dimensional network.”…

    By lowering the fluid viscosity and changing the proppant type, we can essentially improve production by increasing the total fracture network. We call them slickwater because the fluid used is non-viscous and slick.”

    Because a slickwater fluid does not include gels or other viscosity enhancers, more fluid is required to move the amount of proppant necessary to effectively prop open the stimulated reservoir. “We pump at a very high rate,” Stemp says. A conventional frack job would be pumped at 20 to 40 barrels per minute. A slickwater job is pumped at 60 barrels of fluid per minute or more. The main additive to the fluid is a friction reducer, an element of the fluid necessary to allow for the high pumping rate. For every gallon of fluid pumped, a completions crew will add from 0.25 to a maximum 2 pounds of proppant.

    To effectively pump the fluid mixture at the desired rate, Sanjel’s teams typically use 15 to 20 pumping trucks, a large increase from the 5 to 10 trucks used on a well site in the past. Although Sanjel works with operators who complete their wells in various stages or with differing designs, Stemp says most are running three perforation clusters per discrete fracture zone and each well is completed with 25 to 40 zones. For each discrete fracture zone, Sanjel’s team will pump slickwater first to initiate the fracture, followed by ramps of low proppant concentration, then a PAD or a sweep stage to create additional fractures, followed by additional stages of 0.25, 0.5, 0.75 and 1.5 pound per gal of proppant. In some instances that process would be repeated three to four times per zone. In the end, the results are massive. On a per zone basis, a well could use 150,000 pounds of proppant and 250,000 to 300,000 gallons of water. The end result could push the well totals for proppant and water to 4.5 million pounds or greater, and 8 million gallons or greater.In many cases, the vast quantity of fluid and proppant can make or destroy the economics of the treatment,” he says….

    For Sanjel and the entire industry, designing a fracture network based on the abilities of slickwater was not as difficult as learning the most efficient way to physically align the elements needed to perform the frack job. “It has been a massive learning curve for the region,” he says. “The logistics for all of the proppant required, the trucks to move the fluid, and everything else involved was difficult. But now, the industry is comfortable doing this. We are comfortable, and successful in doing this,” he says.
    [End of excerpt]

    The Slickwater Story

    [Excerpt from article]
    When Halcón Resources reported a record initial production rate [4,224 barrels of oil equivalent per day] for a well in the Fort Berthold Indian Reservation in a June presentation, slickwater fracks were recognized as the reason for the record. Oasis Petroleum has already said that in the second half of 2014, 60 percent of all new Oasis wells will be completed using slickwater fracks after test results revealed a production increase of nearly 25 percent over wells completed with other methods. Triangle Petroleum Corp. said it has increased production by as much as 40 percent with the combination of cemented liners and slickwater fracks and reduced well-completion costs by $400,000 per well thanks to slickwater. Liberty Resources II, the exploration and production firm considered a leading-edge completion designer, has gone almost exclusively to slickwater fracks. And Lynn Helms, director of the North Dakota Department of Mineral Resources, said earlier this year that one of the major trends his office is seeing is the use of more water (slickwater) in frack jobs performed in the state….

    The basics of the method involve water combined with a polyacrylamide friction reducer. The slickening agents reduce the friction of the water in the pipe and the viscosity of the fluid. Because the fluid is less viscous and the water is lighter, more volume is needed to carry the same amount of proppant to effectively prop open the fracture networks responsible for draining the reservoir. Higher rates of pressure are also required to move the water. Pumping rates of 100 barrels per minute are common—a much higher rate than other unconventional fracturing pumping method requirements. The high pressure needed to perform a slickwater frack also helps to stimulate more rock and create more fractures. The absence of gel also allows for a quicker and easier placement of proppant into the fractures allowing the hydrocarbons to flow back quicker.

    Of all the concerns about slickwater treatments, the greatest is the water volume required. Because the Williston Basin is situated in a geographic region with an abundant water supply, operators are able to deploy the method without incurring high water costs. The amount of water needed to perform a slickwater frack job typically exceeds 4 to 8 million gallons. In some cases, the quantity of pumping trucks used to inject the pressurized water into the wellbore needs to be doubled. Because the fluid treatment doesn’t rely on additives, slickwater fracks are more conducive for produce and flowback water recycling efforts, the authors [of a Society of Petroleum Engineers paper] also wrote….

    The continued implementation of slickwater frack designs will increase the amount of oil retrieved. It will also alter the way water providers and infrastructure design and construction teams operate. AE2S Water Solutions currently designs water supply and takeaway systems for several operators in North Dakota. Grant Slick, principal engineer for the water and engineering firm, believes slickwater fracking will impact how his team designs and operates infrastructure. “In order to handle the amount of water needed to complete a slickwater frack, which is often in the range of 250,000-plus bbls there has to be greater focus on hydraulic modeling of the entire [infrastructure] system.” The enhanced modeling needs to include pipe size information, pumps and storage containers, all of which have to be part of the overall water supply infrastructure. The design of the entire system is necessary, Slick says, because when a well is fracked with a slickwater design, a high volume of water will be needed at the well site, but over time, the volume of water needed is drastically reduced.

    Slick and his team are proponents of the pipeline system for fracking and well maintenance. “With the increased amount of water used, you are basically tripling or even quadrupling [assuming approximately 60,000 to 80,000 bbls needed for the frack job] the amount of truck trips needed to deliver the freshwater to the well pad,” Slick says. “The economics for putting in a pipeline certainly are more favorable with the increased water use, but there are also other variables at play such as geography from source to end use, topography, quantity of wells served and other parameters.”…

    The rise of slickwater fracking methods may be the hot topic now, but for Slick it won’t always be the most important. “Maintenance water over the lifetime of the well can actually add up cumulatively to quite a bit of water,” he says. Some areas of the Bakken may not need fresh water for well maintenance flushing, while others could require as much as 100 bbls per day per well. According to Slick, if an operator installs both produced gathering pipelines and freshwater pipelines, the system could operate on a closed loop cycle. Recycled water taken and treated from the gathering line could be reinjected into the freshwater pipeline. “Although recycle is in its infancy, proactive infrastructure planning can reduce the investment later.”
    [End of excerpt]

    (Photo below, from Sanjel Corp.)
    Sanjel Corp. uses 18 to 20 pressure pumping trucks for slickwater jobs. Non-slickwater jobs require as few as five to ten pumping trucks.

  3. Steve Reilly says:

    I’ve been reading these articles for decades, loaded with downward sloping graphs so beloved by greenies. The notion of Peak Oil has been around since 1975, almost 140 years, and it will always be with us. Fortunately so will oil.

    • Old farmer mac says:

      Yeah .

      There will always be oil.

      But less and less at higher and higher prices.

      Get used to it.

      If you are rich and the peasants like me don’t lynch you on general principles you can drive a four hundred mile range Tesla in twenty years or less.

      This is sarcasm and rough country humor in case anybody doesn’t get it.

      But I suggest you get the high ground clearance SUV model rather than that slick looking sedan.

      The potholes are going to be a real problem by then.

      Maybe you ought to consider having it bullet proofed before you take delivery.

      Poor hillbillies like me might want your car for the batteries which we could charge up with stolen pv panels and thus still have a refrigerator when the far ends of the grid go dark.More sarcasm for people who can’t recognize it without a label.

  4. Steve wrote in a link that has just got too narow, referring to the Ukraine uprising by Russian separatist:

    Ron, “That’s a Putin thing.” Ron… with all due respect, you can’t be that naive.

    With all due respect Steve, if you think the Ukraine invasion by Russian troops an the Crimean land grab is anything but a Putin thing then…. This entire thing is Putin trying to restore the glory of Mother Russia. Putin ordered all those weapons into the Ukraine, those were Russian troops in Crimea. That was a Russian rocket that shot down the passenger plane, and there are Russian troops, advisers and instructors inside Ukraine teaching the Russian separatist how to use those very sophisticated rocket launch systems.

    Putin could stop this thing today if he wished by just pulling his weapons and troops back out of the Ukraine.

    If you think it is something else Steve, then it would behoove you to tell me what it really is rather than posting smirky remarks calling me naive.

    • SRSrocco says:

      Ron,

      I thought you didn’t even see my comment. However, I will go ahead with your request and say a few things… but I doubt they will change your mind.

      Factions in the U.S. Govt… call them NEO-CONS or whatever, have been working to destabilize Ukraine for a decade. They finally were successful by getting the democratically elected Ukrainian officials over-thrown.

      Ron, if you believe the U.S. Corporate media on what is taking place in Russia… I CAN”T HELP YOU….LOL. I am surprised that you believe and write the things you stated in your comment.

      Actually, I am going to leave it right there… because it’s really a waste of time trying to debate this issue. The U.S. Govt is trying to destabilize Russia and is using the Press to BAMBOOZLE the American public into war.

      FRICKEN INSANE.

      steve

      • Oh, now I understand where you are coming from. It’s all a giant conspiracy by the US government. Question, are the republicans in on this conspiracy or is it just the Obama team?

        That was a rhetorical question, doesn’t need an answer. Now that I know you are a conspiracy theorist that explains everything.

        • SRSrocco says:

          Ron,

          I thought after you saw that OIL VIDEO SERIES on how a few major oil companies basically controlled the worlds oil and gas resources you would realize a bit more what is going on in the world.

          Furthermore, I thought it was a given that Americans realized that the U.S. Govt was overthrowing foreign governments and countries for the past 5 decades plus. Don’t you remember that was the case in Iran in the Oil Video Series?

          Ron, you can call me a conspiracy nut and that’s fine. However, if by chance you want to listen to what ex-Assistant Secretary of the Treasury Paul Craig Roberts has to say about our situation in Ukraine… here is a link to the interview below:

          http://kkrn.org/broadcasts/view/590

          Ron, I really enjoy the work you do here on your site and the openness in allowing a diverse debate on all subjects. But, I really believe if you had access to more information and data, I think you would see the world in a totally different way.

          steve

          • But of course. If I were just a little bit smarter then I might start buying into all kinds of conspiracy theories.

            Why Rational People Buy Into Conspiracy Theories

            “The best predictor of belief in a conspiracy theory is belief in other conspiracy theories,” says Viren Swami, a psychology professor who studies conspiracy belief at the University of Westminster in England. Psychologists say that’s because a conspiracy theory isn’t so much a response to a single event as it is an expression of an overarching worldview.

            • SRSrocco says:

              Ron

              If you spend a day at a local courtroom and listen to all the different cases the Judge has to listen to… 1 out of 10 are based a on some sort of conspiracy. This is true.

              I now understand how you look at life. I gather we will just have to disagree on this subject matter.

              Steve

              • Steve, of course there are petty conspiracies. Two bank robbers conspiring to rob a bank is a conspiracy. Surely you know the difference between that and a conspiracy that involves thousands of co conspirators.

                I think you know what I am talking about and you are just trying to be silly by bringing up crimes that involves conspiracies between criminals.

                • SRSrocco says:

                  Ron… I gather you didn’t hear that the top banks conspired to rig the LIBOR rate. This was proven. Is that what you call petty?

                  Ron I focus on the financial markets. And I have spoken on the phone with guys who were high up in the system. If you heard the stuff from their experiences… I think you would see the world in a different way.

                  Anyhow.. the collapse of the Dollar is coming. Hope you don’t have to depend on a retirement to survive.

                  Steve

      • Dave P says:

        Steve, sometimes people have trouble seeing things from the ‘inside of the empire’. Transcript of leaked Nuland-Pyatt call.

        http://www.bbc.com/news/world-europe-26079957

        ‘Her strong statement of preference for how Ukraine’s government should be formed – and apparent confidence that the US has major influence over that – is a reminder of the disconnect between US government assurances that it doesn’t meddle in nations’ internal politics and its actual behavior (White House spokesman Jay Carney repeats this canard in his comment on the tape.) This was not a conversation analyzing unfolding events and how to respond to what comes next. This was about molding a situation according to US interests.’

  5. Carl Martin says:

    Peak oil discussion, anyone?

    Apparently not at this site anymore…… Everything else, but.

    The article presented has nothing to do with the reality of the present day US oil production situation, and most of the comments have nothing to do with the article, anyway.

    Looks to me like Peak Oil is no more, and chaos has simply overtaken this thread, instead.

    Slickwater fracturing does have quite a lot to do with all this. Those were some good links to a reality many here seem to be having considerable difficulties dealing with. But the facts are that there has been a quantum leap in tight oil production recently, and right across the board, and everyone says that it’s because of slickwater fracturing.

    You can expect monthly Bakken production to be at the least in the range of +25-35,000 BO/day, every month for the next six months, or so until December. Last month’s results (+ 36,653 BO) were no fluke. In just a few days the June results will be in. Then you can all start to see what the US oil reality actually is, and where it is heading to.

    Theories about reality seldom have much to do with reality. If both are available at the same time, then why would anyone ever want to choose theory over reality? Must be that reality is just too harsh to handle for some people.

    • Carl, on this site we discuss any and all subjects related to energy and occasionally climate change. I am happy with the site just as it is and have no intention of changing it. Restrictions on what people can post only drive away readers as well as posters.

      • Carl Martin says:

        Ron,

        Climate change IS connected to energy, but I think you know that anyway.

        I’m not suggesting restricting, I’m just suggesting keeping all comments not directly related to the articles another place. In other words, you could run a website on say, your ten favorite subjects all at once. All you have to do is re-place comments to where they are more/most relevant. I believe that would increase the quality of your site, as well as increase your readership and the number of posters and postings. Just sayin’.

        • Perhaps but I don’t know how you would do that with only one domain name. And it would be quite a chore doing all that. I am spending enough time just as it is without making it more difficult and time consuming. I think I will just keep it as it is. Messy I know but it is all the time I have for it.

          • Carl Martin says:

            Ron,

            I would probably be the last person to know how to do it, but I believe you can install links to other subjects at this site, but still have people remain at this site.

            You could also start off simply by just having one link to a general discussion, where anything and everything goes. Later, you could consider if you wanted to divide the general discussion up into more specific areas if necessary, or desired.

            At first you would probably have to direct a lot of traffic there, but I think people would learn fast, and see the wisdom in reserving the space under the articles just for comments pertaining to such. But, I think there are many people here in need of a more general forum to comment upon whatever is concerning them most at the moment. There certainly is a wide range of issues out there to be concerned about. But, sometimes I wonder if most people here even read the articles at all. I see no reason to believe that they actually do.

            I think your site has unfortunately morphed into a general commentary site, where somewhat opposing groups are constantly vying for control of the commentary just to further the selfish purposes of their own private group.

            By the by….. In case you already have happened to view the latest Bakken results for the month of June, I hope you still have both your socks on!!! This is what I was trying to prepare you folks for, because I knew it was coming down the pipeline sometime soon. But, all that (!) and just from 185 new wells. The increase in well efficiency from 127 bpd to 131 bpd is absolutely massive, and tells the whole story right there. The huge increase in 30 day average IP rates due to slick water fracturing is finally starting to show up in the statistics. I don’t belive that this is merely a one month wonder, but we’ll see about that…..

            • But, all that (!) and just from 185 new wells. The increase in well efficiency from 127 bpd to 131 bpd is absolutely massive, and tells the whole story right there.

              Carl, you have it all wrong. That was not 185 new wells, it was 185 additional wells. I don’t know how many new wells there were because for the first time Helms did not say how many wells were completed. I suspect it was somewhere around 250 however. How do I know this? Well there were 227 new well completions last month and…

              Director’s Cut
              The drilling rig count was up one from May to June, and up two more from June to July. The number of well completions increased as weather impacts eased in June with significant rainfall on 2 days near Minot and 1 day near Dickinson. However, there were still 6 to 8 days with wind speeds in excess of 35 mph (too high for completion work).

              There had to be a lot of wells shut in. That is how the barrels per well increased. Old low or no producing wells were shut down. That increased the barrels per well figure.

              I will think about the links thing. I will not likely get a post out on the Bakken and North Dakota until tomorrow or more likely Sunday. I have a lot of other things going on and I just don’t have the time.

  6. A good many valuables you’ve given me.

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