Wednesday, August 7, 2013

Wood Mackenzie Says Bakken & Eagle Ford Will Produce More than the Two Largest Fields in North America Combined

Wood Mackenzie reported on July 30, 2013 that U.S. shale plays will produce 5 million barrels of oil per day by 2019, at least half coming from the Eagle Ford and Bakken shale plays.  Naturally, most people believe this without asking the obvious question, "How does this huge volume of oil compare with present U.S. production or the largest fields in the world?"

The U.S. produced 7.3 million barrels of crude oil per day in May, 2013 and reached peak production of just over 10 million barrels of oil in 1970.  WoodMac would have us believe that U.S. oil production will exceed peak production by about 2 million barrels per day, and will increase present production by almost 70%.  That would be awesome but seems highly unlikely based on the history of oil production decline in countries and basins around the world.

This is like telling the average American whose life expectancy is 79 that, by some miracle, we can all now expect to live to be 115 years old.  Never mind that only one person is known to have lived to be this old, it's still reasonable that everybody will live this long! Hmm.

Back to oil production, Ghawar, by far the largest oil field in the world with 74 billion barrels of reserves, produces 5 million barrels of oil per day and never produced more than 5.7 million barrels.  We are, however, supposed to believe that shale plays--the Bakken and Eagle Ford, in particular--will equal Ghawar.

Cantarell, the largest oil field in North America with 19 billion barrels of reserves, produced 2.1 million barrels of oil per day at its peak.

Prudhoe Bay, the largest oil field in the United States with 13 billion barrels of reserves, produced 1.5 million barrels of oil per day at its peak.

WoodMac would have us believe that the Bakken and Eagle Ford will almost equal production from the two largest oil fields in North America combined.  I certainly hope that they are right but history and facts suggest that this estimate is at best highly optimistic and, at worst, exaggerated.

As far as I know, the WoodMac report is not publicly available so I cannot comment on how they arrived at the numbers.  How could they be wrong?  I would first look at the per-well reserves and decline rates used in this estimate because these have been unrealisticallly optimistic for all shale plays so far.  Second, I would look at the size of the commercially productive area they assume for these plays because these have also been unrealistic for other shale plays.

Everybody likes good news but we all hate disappointments.  In a world of dwindling oil resource opportunities (that's why we are drilling shale, after all!), it is time to start changing our behavior and using less oil.  Reports like this give people the message that there is no reason to change our wasteful practices.  Don't worry, be happy!

6 comments:

Paul Schwartzmeyer said...

A good friend who I went to college with, (Geology 1980) and has drilled much of the bakken and Eagle Ford told me last week. "You can't make money there. It's a fraud"

FWIW.

D Coyne said...

Hi Mr Berman,

What is your take on the USGS evaluation of the Bakken/Three Forks from April 2013. For the North Dakota portion of the play if proved reserves (2.2 Gb In Dec 2011 from EIA + est 0.5 Gb added in 2012) are added to mean undiscovered TRR, we get 8.5 Gb TRR. If we further assume that a reevaluation of the Eagle Ford results in a doubling of the present USGS estimate of 1.75 Gb and then add 1 Gb of proven reserves (EIA Dec2011) + 0.5 Gb for estimated proved reserves added in 2012 we get a 5 Gb TRR for the Eagle Ford.
If these resource estimates are correct a fairly reasonable scenario gets you to 3 MMb/d in 2015 see chart at link below:

https://sites.google.com/site/dc78image/images/bakefmod2.png

This is followed by a rapid decline, maybe the other 2 MMb/d is from the Permian and other plays, I doubt the Permian will go much higher than 1.5, Niobrara is at 0.25 MMb/d, I am not sure about the Mississippian and Granite Wash, maybe together they might be at 0.3 MMb/d but that is a WAG.

Dennis Coyne

oilpeakclimate.blogspot.com

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