[Ok-sus] Awash in misinformation? America's tight oil bump

Robert Waldrop bwaldrop1952 at att.net
Fri Mar 22 19:58:16 UTC 2013

The truth behind the cornucopian propaganda is that we'll get a little bump and 
then it's back to decline-as-usual-in-oil-production.  See the article below for 
this side of the story.
Bob Waldrop, Oklahoma City
http://www.ipermie.net -- How to permaculture your urban lifestyle


Daniel Davis
Lieutenant Colonel, U.S. Army
Awash in Misinformation: America's Domestic Tight Oil 'Bump'
Posted: 03/22/2013 2:50 pm
On March 4, David Frum, a former special assistant to President George W. Bush, 
published an article on CNN.com titled "Peak Oil doomsayers proved wrong" in 
which he not only claimed there was no danger of a shortage of oil, but also 
that "our oil problem is that we're producing so much of the stuff that we are 
changing the planet's climate." Mr. Frum is only the most recent contributor to 
a growing list of luminaries to declare that we need not worry about any future 
shortage of crude oil. The only problem with these reassuring proclamations is 
that the physical evidence does not support them, and does in point of fact, 
warn of a looming imbalance between supply and demand with troubling 
implications for the U.S. economy.

Last month, the standard-bearer for those arguing the U.S. will soon be awash in 
domestically produced oil testified before the House Energy and Commerce 
Committee. Daniel Yergin, Chairman of Cambridge Energy Research Associates, told 
Members of Congress in his prepared remarks, "Owing to the scale and impact of 
shale gas and tight oil, it is appropriate to describe their development as the 
most important energy innovation so far of the 21st century" and "the 
unconventional oil and gas revolution has already had major impact in multiple 
dimensions. Its significance will continue to grow as it continues to unfold."

Yet the Energy Information Administration (EIA) and independent analysis confirm 
that far from the "energy revolution" of the century, the increase in domestic 
oil production represents a temporary bump in production that will be 
short-lived. If we recognize the probability the impressive increases we've seen 
in shale gas and "tight oil" production are of limited volume and duration and 
set policies accordingly, we can reap great benefit; pretend these increases 
herald a new and ever-increasing permanent condition and we risk setting 
ourselves up for an avoidable economic contraction when the expected drop in 
production occurs. Geologist David Hughes, a 32-year veteran of the Geological 
Survey of Canada, recently conducted a detailed examination of the years-long 
performance of 65,000 shale gas and tight oil wells. The results were telling.

In the February 21 issue of Nature Magazine, Mr. Hughes reported that "much of 
the oil and gas produced [in shale formations] comes from relatively small sweet 
spots within the fields. Overall well quality will decline as sweet spots become 
saturated with wells, requiring and ever-increasing number of wells to sustain 
production." More ominously, he notes, "high-productivity shale plays are not 
ubiquitous, as some would have us believe. Six out of 30 plays account for 88% 
of shale-gas production, and two out of 21 plays account for 81% of tight-oil 
production." Even the typically optimistic EIA echoed the concerns about sweet 
spots and the likelihood high levels of production cannot be sustained.

In a little-noted press release last December, the EIA projected there would be 
a considerable increase in tight oil production in the next few years, but then 
conceded, "The growth results largely from a significant increase in onshore 
crude oil production, particularly from shale and other tight formations. After 
about 2020, production begins declining..." But as Mr. Hughes points out, 
evidence is growing that the production is not likely to rise as high as hoped, 
and his analysis indicates the drop in production could begin by 2017.

In late February, the EIA reported that "Saudi Aramco's CEO Khalid al-Falih 
warned that rising domestic energy consumption could result in the loss of 3 
million barrels per day (bbl/d) of crude oil exports by the end of the decade if 
no changes were made to current trends." The New York Times reported that 
Chinese consumption by 2020 could be almost two-thirds greater than it was in 
2011, resulting in a 6 million barrels per day (mbd) increase. Thus, viewed in 
context evidence indicates that U.S. domestic oil production could max out as 
early as 2017 and then begin a slow decline -- just as Saudi Arabia could be 
exporting 3 mbd less and China could be needing 6 mbd more. The consequences to 
the U.S. economy of such a confluence could be drastic.
The idea of oil "independence" understandably appeals to Americans. It is 
likewise understandable that individuals and groups who have a financial 
interest in the American oil industry would argue and lobby for the investment 
in the means of producing energy for the U.S. that would most benefit them. But 
at some point America's leaders must recognize the physical evidence indicates 
the alleged "energy revolution" is likely to be merely a relatively short-term 
bump. If we fail to acknowledge the likely realities, we may be setting the 
stage for an energy crisis in the near term that might have been minimized. The 
consequences of such a failure are difficult to predict, but given the already 
weakened health of the U.S. economy, they would likely be severe and 
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