PeakTrader.com

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Setting the Record Straight on U.S. Oil Reserves
Mar 26, 2012

"Oil production has been increasing in the U.S., primarily driven by expanding production from the Bakken Shale Formation in North Dakota and the Eagle Ford Shale in Texas. The oil that is being produced from these shale formations is sometimes improperly referred to as shale oil.

Even though the oil in the Bakken and Eagle Ford is being extracted from shale formations, the term shale oil is reserved for something entirely different. The oil in these shale formations actually exists as oil, but the shale does not allow the oil to flow very well. This oil is properly called “tight oil”, and advances in hydraulic fracturing (fracking) technology have allowed this oil to be produced.

But the Green River formation is the source of talk of those huge oil resources — larger than those of Saudi Arabia — and it is a very different prospect than the tight oil being produced in North Dakota and Texas.

The oil shale in the Green River looks like rock. Unlike the hydrocarbons in the tight oil formations, the oil shale (kerogen) consists of very heavy hydrocarbons that are solid. In that way, oil shale more resembles coal than oil.

Oil shale is essentially oil that Mother Nature did not finish cooking, and thus to convert it into oil, heat has to be added. The energy requirements — plus the fact that oil shale production requires a lot of water in a very dry environment — have kept oil shale commercialization out of reach."

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PeakTrader said...

Since 2005, global oil production hasn't changed much.

When strong global economic growth accelerated in 2006 and 2007, there was an increase in oil prices instead of a significant increase in global oil production.

Over the past few years, if major economies had normal recoveries, instead of deep depressions, oil prices would've likely rose to new highs, while global oil production remained roughly fixed.

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Jon, oil is a depletable resource.

Higher oil prices, along with slower economic growth, may be preventing or postponing global oil production from declining.

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Anyway, the U.S. macroeconomy is in poor shape.

We not only spent and squandered $5 trillion over the past four years just to maintain our standard of living, at some point, we'll have to reduce the huge budget deficits, i.e. contractionary fiscal policy, which typically leads to recessions.

And "peak oil" will remain a constraint on economic growth.

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bart said...

Yearly averages, world oil production

Yearly averages
2005 73,671
2006 73,378
2007 72,906
2008 73,590
2009 72,182
2010 73,896
2011 73,980

The change from 2005 to 2011, is a total increase per year of .06% or 6/100 of a percent. That's a rounding error.

The change from Jan 2011 to Jan 2012 (75,235 to 75,581 bbls) is also basically a rounding error - .04%.

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Charts:

http://crudeoilpeak.info/wp-content/uploads/2012/03/US_crude_oil_production_1900_2035.jpg

http://www.nowandfutures.com/images/oil_production_vs_brent.png

http://www.nowandfutures.com/images/oil_production_world.png

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http://www.blogger.com/comment.g?blogID=28997633&postID=5955589573123183837

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PeakTrader said...

Some people are in denial.

Oil is $100 in a depression, and $40 to $80 when real GDP recedes in the depression.

We're a long way from the $10 oil in the late 1990s, when the economy was booming.

Peak oil will constrain economic growth for at least 10 more years, until alternative energy is developed to compensate for the oil decline.

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"...we never have, and never will, run out of scarce resources like oil because as a resource becomes more scarce, its price will rise, which will set in motion a series of actions that will counteract the scarcity.

For example, higher prices for oil will increase the incentives to: a) find more oil, b) conserve on the use of oil, and c) find more substitutes."

Oil is a finite resource. Here's what someone said about Peak Oil:

"The question is why do we need new frontiers if oil production isn't peaking? It is an odd concept that oil companies would spend millions of dollars in politically unstable countries and areas where the physical barriers are immense such as the Arctic just for the hell of it.

The truth is all the low hanging fruit have been picked...What we are seeing now is increased exploration in increasingly economically dubious areas such as the Canadian tar sands, deepwater drilling, and fracking and horizontal drilling in tight oil plays.

It is as if the pundits pushing this line have never seen a globe before. The world is round. There is a finite amount of land and ocean that can realistically be developed to economically produce oil."

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