[Ok-sus] Energy "surprise" possibilities in 2013.

Robert Waldrop bwaldrop1952 at att.net
Thu Jan 3 08:57:43 CST 2013

These aren't predictions, or even necessarily probabilities.  They are 
situations that could become energy realities in 2013.  From one of the energy 
commentators I read regularly.

Bob Waldrop, OKC


Sunday, December 30, 2012 
Five possible energy surprises for 2013
by Kurt Cobb

Many people trot out their predictions for the coming year right  about now. I'm 
generally allergic to predictions and think rather in  terms of probabilities. 
Naturally, the world we live in is far too  complicated to yield anything 
approaching certainty concerning such  matters as the future price and supply of 
energy, future economic  conditions, and future political developments. In the 
end, the future is  simply unknowable. So, I've tried to think of some 
developments which  conventional wisdom has judged rather unlikely and which 
would therefore  significantly alter our lives and perceptions should they  
occur--precisely because we are not prepared for them.

I don't think any of the following is likely to happen in 2013.  But, any one of 
them would certainly surprise most people and most  experts and upset the plans 
and expectations of many governments,  businesses, investors and consumers. Here 
are my five possible energy  surprises for 2013:
	1. U.S. natural gas production falls. There has been so much talk of the vast 
resource of natural gas now  available to America in the form of shale deposits 
that it is  practically unthinkable that U.S. natural gas production would 
actually  fall. Of course, very low natural gas prices have led drillers to cut  
way back on drilling until the current glut is worked off and prices  rise. What 
most people don't know is that U.S natural gas production has essentially been 
flat so far in 2012. One  person I know who is tracking natural gas production 
closely believes  that drillers will wait too long to ramp up drilling again 
leading to a  plunge in supply--and here's the real kicker--one from which we 
cannot  recover. The annual production decline rate for U.S. natural gas wells 
taken as a whole has reached 32 percent. That means that if we were to forgo 
drilling any new natural gas wells  in the coming year, production would fall by 
one-third. The production  decline rate for shale gas wells is considerably 
higher than that of the  average natural gas well--above 50 percent in the first 
year with many  shale gas wells declining by more than 60 percent from initial 
flow  rates. By the end of the second year, shale gas wells are often down 85  
percent from initial flow rates. This means that by the end of the  second year 
of operation, 85 percent of the production from any given  set of shale gas 
wells must be replaced just to keep shale gas  production level.

	3. The logistical challenges of shale gas are  daunting, i.e., getting enough 
rigs and workers quickly enough in the  field along with the necessary millions 
of gallons of fracking fluid  needed for each well. But perhaps even more 
important, investors who  took a shellacking in the previous drilling boom may 
be reluctant to  part with more capital to drill wells until they are absolutely 
certain  that prices will stay high enough long enough to reward them. That will  
mean further delays in reviving drilling once it becomes apparent that  supply 
is shrinking in earnest.
All this adds up to not enough  rigs, not enough personnel, and not enough 
capital to keep up with the  ferocious production declines in shale gas and even 
conventional fields.  It will nevertheless be a surprise to most people if U.S. 
natural gas  production actually falls in 2013. But, it'll be an even bigger 
surprise  if production then fails to rise or recovers only marginally once  
prices get high.
	4. Oil production from the America's most prolific tight oil region, North 
Dakota, falls. Tight oil (often mistakenly referred to as shale oil) is 
typically  extracted using the same method as shale gas. But, as a result, tight  
oil wells experience the same types of declines. Wells drilled into the Bakken 
formation in North Dakota show an annual production decline rate of around 40 
percent.  As the rate of production grows from this deposit, more and more 
effort  will have to be devoted to simply replacing production from wells that  
are swiftly declining. Already production increases are slowing. But almost no 
one expects oil production in North Dakota to decline in 2013 which is why it 
will be a surprise if it does.
more at the link above.
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