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Discussion: (15 comments)

  1. Benjamin Cole

    Seems to me we have been wasting extraordinary sums of money (trillions of dollars) in maintaining a Mideast military presence.

    We are nearly energy independent, and the oil we import largely comes from the Western Hemisphere anyway.

    How about we stop wasting money, bring the troops home, and put that money back into the productive and jobs-producing private sector, not the parasitic public sector?

    Ron Paul I am calling you!

    1. WE haven’t been wasting that money, the U.S. government has. Let’s no pretend that democracy affords real influence over the dirty work of politicians and their corporate handlers. More disturbing is the loss of who knows how many lives.

  2. Michael Colligan

    Two things concern me about the trend towards chestbeating in the subject of the shale hydrocarbon phenomenon: first, the nature of unconventional hydrocarbons is an initial high rate of production, which, much more rapidly and steeply than with conventional resevoirs, followed by a long “tail” production at low rates; the current massive drilling campaign has taken the US into the “boom” phase, but the decline will soon follow – it is assumed that the best targets that the drillers have are the ones which were drilled first – there may be significant underperformance of later fields, as the drillers work their way down the priority list, and US production could drop, suddenly, far faster than anyone now projects; second, the wasteful overproduction of natural gas, a finite resource, which has driven the price below $5/MCF for several years now, and this has been largely done to get at the “gas liquids” that make the wells economic; once the “liquids rich” gas, less than 20% of the resources, have been fully exploited, the price of gas will need to go to new levels (one guess is $8/MCF) to make further drilling an economic proposition – at that level the price advantage with the the rest of the world will be sharply reduced, and the “free ride” that things like the chemical industry had will be over.
    Finally, it is worth noting that shale oil requires at least a $70/bbl oil price to be economic, several times that of the OPEC countries. If oil prices actually fell to close to $70, there would be a sharp drop in drilling activitiy, followed, shortly there after, by a steep fall in US production, for the reasons outlined above.
    The shale “boom” is a result of sustained high oil prices, on which the “boom” depends. Without taking anything away from George Mitchell and the other pioneers of the industry, a lot of this came down to timing. And luck.

    1. second, the wasteful overproduction of natural gas, a finite resource

      It isn’t relevant that natural gas is finite. There are other fuels, and there are opportunity costs to conserving natural gas.

  3. 1. The Department of Energy reported yesterday that US oil production for the week ending August 30 averaged 7.62 million barrels per day (bpd), which is the highest weekly output of crude oil in the US since October 1989

    That’s also higher than the US 1964 production average, which was 7.614 million barrels per day:
    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=a

    Production was only higher than it is today during a brief 25-year period.

  4. The shale oil is not going to come to the rescue, apparently.

  5. I think it’s a big game. I mean Syria crisis.

  6. Attila Csikai

    Nice that the US is floating on the ocean of shale hydrocarbons and exploiting it makes the US more competitive.
    Unfortunately the rest of the world pays the price for it when all that gas and oil is burned and the CO2 emission is increased.
    And we shall not forget about the environmental impact of these “revolutionary drilling techniques”.

      1. Attila Csikai

        Indeed I missed that post although Mr Perry mentioned this fact in point 5/c so I was aware that when I posted my comment.
        My point was/is that having abundant energy supply at low price is an advantage for the US economy. But if the price does not contain the environmental effects (externalities) then it is over-consumed (!). Then US consumers share the benefit while the rest of the world shares the burden.

        1. You were “aware” that total US CO2 emission is declining, but you referred only to “increased” emission in your post. Why?

          Does the rest of the world not want the same material things that Americans have, and can we not assume that the only fault that can be ascribed to Americans is that we arrived first? Is it not probable that Americans will also lead innovation at reducing emissions?

          What is the major source of CO2 emission in the US that you thing Americans should live without?

          1. Pardon the typo: thing = think.

            What is the acceptable level of per capita CO2 emission today? The most effective way to reduce emission would be to impoverish wealthy countries, perhaps to the level of Niger. By taxation, perhaps?

            You probably know that the US doesn’t lead the world in total CO2 emission; China does. Despite heavy fuel consumption taxes, the EU is third. Why dump the lion’s share of blame on the US when it accounts for only about 18 percent of the world’s annual CO2 emissions, and declining.

            What are you going to tell the Chinese people they should live without to decrease their CO2 emissions?

  7. Michael Colligan’s remarks of Sept7 2013 are absolutely on the mark and soundly treat the economics of drilling $6 to $7 million horizontal wells to obtain oil and natural gas production from very dense reservoir rocks.

    After the flush production from the fractured area of the wellbore is finished, a very steep decline of the production rate is normal…..so, to maintain these high production levels, more wells or more fracturing is needed.

    Hence the conclusion that other analysts have also reached…….this oil costs $70 per barrel to produce..
    ……needs new capital constantly chasing production rate.

    this is the same cost to produce a barrel of oil from the
    Alberta oil sands……their high initial capital cost once in place,however,allows a constant production rate from a reserve base probably larger then Saudi Arabia’s.

    whether fracturing wells or mining/steaming oil sands the oil industry applies the best and safest technology to get the job done as economically as possible……media
    excitement or self serving NGO’s notwithstanding.

    Gary J Last, retired Petroleum Engineer

  8. Notclueless

    In discussions on Syria crisis, it has been said over and over by USA politicians, including President Obama, the the West(USA) is responsible for the free flow of oil from Middle East.

    My question is: Why?

    We, in both North and South America, do not need any Middle East oil.

    The combined European Union is both larger in population and wealth than USA.

    So why is USA spending our money and blood to supply Middle East oil to Europe?

    I have an obligation to my fellow US citizens and US politicians have an obligation to support MY interests and safely.
    I have NO obligation to supply Europe with oil, specially when they have the larger population and economy.
    Many reply..”Well, EU is too unorganized to do anything with USA.”
    Wrong. NATO and EU do not NEED to make any hard decisions or actions because they know USA will do their dirty work for them.
    I am not an isolationist. Totally believe in working WITH other countries. The key work is WITH, not FOR other countries.

    1. Notclueless

      correction: should be
      Many reply..”Well, EU is too unorganized to do anything without the USA.”

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