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