Tag Archives: shale

  • Podcast

    Art Berman: Exposing The False Promise Of Shale Oil

    Estimates of recoverable oil are proving wildly wrong
    by Adam Taggart

    Wednesday, January 16, 2019, 10:44 AM


    Art Berman, geological consultant with over 37 years experience in petroleum exploration and production, returns to the podcast this week to debunk much of the hopium currently surrounding America’s shale oil output.

    Because the US is pinning huge hopes on its shale oil “revolution”, so much depends on that story being right. Here’s the narrative right now:

    • The US, is the new Saudi Arabia
    • It’s the swing producer when it comes to influencing the price of oil
    • The US will be able to increase oil production for decades to come
    • New technology is unlocking more oil shale supply all the time

    But what if there’s evidence that runs counter to all of that?

    We’re going to be taking a little victory lap on this week’s podcast because The Wall Street Journal has finally admitted that shale oil wells are not producing as much as the companies operating them touted they would produce — which is what we’ve been saying for years here at PeakProsperity.com, largely because we closely follow Art’s work.

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  • Insider

    A Bust For The Ages

    Much less oil than expected = much less Everything
    by Chris Martenson

    Friday, January 11, 2019, 7:52 PM


    Executive Summary

    • In short, we've been lied to about the production potential of America's shale wells
    • Huge decisions have been made based on the (faulty) assumptions we've swallowed
    • When it's finally clear than much less is going to be available (and at a higher price) all hell will break loose
    • The choices we make right now will determine how bad the reckoning will be

    If you have not yet read Part 1: The Shale Oil 'Revolution' Actually Reflects a Nation in Decline, available free to all readers, please click here to read it first.

    The reason I keep bringing us all back around to the energy situation is because it’s so critical to, well… Everything

    To make good decisions, you have to be armed with good information.  That’s not easy to find these days, especially in the US where we are saddled with a massive propaganda campaign when it comes to energy.

    It’s aim seems to be to convince everyone that there’s nothing to worry about. It's a near-constant barrage of these sorts of talking points and ideas:

    • The US is the new Saudi Arabia
    • The US is hitting new production records each month
    • The US is now a net exporter of oil for the first time in 75 years
    • Technology has improved so much that shale wells can now break even at $40/bbl oil prices.

    And so on.

    The problem with this sort of messaging is that the statements all need a couple of giant asterisks next to them, with some heavy explaining attached to add critical missing context.  They're misleading, at best. And collectively inaccurate.

    If you buy into these stories, you'll probably make the wrong choices.  When, not if, but when the US enters the next phase of the oil story, it will all be over.  There aren’t any new source rocks to go after. 

    I think we’re just a few years away from that decline phase, which means we don’t have a lot of time to prepare for what is certain to be an ugly period of adjustment. 

    As I wrote in Part I, the WSJ has finally managed to run some basic numbers and discover that the shale story has been over-hyped by the operators.  It’s quite a fascinating tale, one that we are quite familiar with at Peak Prosperity.

    These companies committed quite a few frauds along the way, each of which contributed to over-estimating how much oil (referred to in the industry as the “EUR”) that would come out of an average well, which include:

    • Claiming much lower than observed rates of decline (5% vs ~15%)
    • Using a tiny cluster of highly prolific wells to represent the entire play
    • Excluding really crappy wells entirely from the calculations for the “average”
    • Using ridiculously long estimates of well life (50 years when there are already wells tapped out after 10 years in some cases)

    These are way beyond simple analytical differences and amount to overt fraud.  Okay, fine, caveat emptor to the investors, right?

    Well, the problem here is that the US generally, and major corporations as well as individuals specifically, have bought the story hook-line and sinker and made big, long-term decisions based on these frauds.  Ford dropped selling sedans in North America to focus on selling trucks and SUVs, the US government rolled back plans on fuel standards, and individuals bought pickup trucks and/or SUVs under the theory that gasoline would always be cheap.

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  • Daily Digest
    Image by push1, Flickr Creative Commons

    Daily Digest 2/6 – Shale Reality Check, Permafrost Home To Large Mercury Reserves

    by DailyDigest

    Tuesday, February 6, 2018, 5:41 PM

    • Stocks and Precious Metals Charts – Blue Monday – How Are the Mighty Mispricings of Risk Fallen 
    • A Timeline Of The FBI And DOJ's Involvement In Hillary's Emails And The Trump Dossier
    • How much are illegal activities behind the demand for crypto-currency?
    • The Market Meltdown Is an Ominous Sign
    • FEMA Contract Called for 30 Million Meals for Puerto Ricans. 50,000 Were Delivered.
    • Shale Reality Check
    • Oil Prices Ravaged By Financial Turmoil 
    • Arctic permafrost home to large mercury reserves, study finds 

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  • Podcast

    Art Berman: Don’t Get Used To Today’s Low Oil Prices

    They're a temporary anomaly. Higher prices are ahead.
    by Adam Taggart

    Sunday, May 7, 2017, 7:00 PM


    Oil expert and geological consultant Art Berman returns to the podcast this week to address head-on the question: Was the Peak Oil theory wrong? With the world "awash" in sub-$50 per barrel oil, were all the warnings about persistently higher future oil prices just a bunch of alarmist hand-wringing?

    In a word: No.

    Art explains how the current glut of oil created by the US shale boom — along with high crude output by both OPEC and non-OPEC  producers — is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue our demand curve; and at the same time, we are extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch. It's not a matter of if, but when.

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  • Podcast

    Arthur Berman: Why The Price Of Oil Must Rise

    Why a supply shock is inevitable
    by Adam Taggart

    Sunday, January 10, 2016, 9:09 PM


    Geologist Arthur Berman explains why today's low oil prices are not here to stay, something investors and consumers alike should be very aware of. The crazy-low prices we're currently experiencing are due to an oversupply created by geopolitics and (historic) easy credit, not by sustainable economics.

    And when the worm turns, we are more likely than not to experience a sudden supply shortfall, jolting prices viciously higher. This will be a situation not soon resolved, as the lag time for new production to come on-line will be much longer than the world wants.

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  • Podcast

    Arthur Berman: Why Today’s Shale Era Is The Retirement Party For Oil Production

    A leading geologist delivers the hard facts
    by Adam Taggart

    Saturday, February 7, 2015, 10:00 PM


    Much of what's been 'sold' to us about the US shale oil revolution is massively over-hyped. The amount of commercially-recoverable shale oil is much less than touted, returns much less net energy than the petroleum our economy was built around, and is extremely unprofitable to extract for most drillers at today's lower oil price.

    To separate the hype from reality, our podcast guest is Arthur Berman, a geological consultant with 34 years of experience in petroleum exploration and production, who sees the recent US oil production boost from shale drilling as and short-lived and somewhat desperate; a kind of last hurrah before the lights get turned out.

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  • Podcast

    Gail Tverberg: This Is The Beginning Of The End For Oil Production

    Why the shale collapse is ushering in a permanent turndown
    by Adam Taggart

    Saturday, January 17, 2015, 5:28 PM


    With the recent collapse in the price of oil, Gail Tverberg, returns to discuss the likely impact on the US shale oil industry, as well as the global market for oil. 

    While as an actuary, Gail is one to avoid hyperbole and the let the numbers speak, her analysis of the outlook for future oil production is nothing short of dire.

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  • Blog
    Oleksii Sergieiev | Dreamstime.com

    The Dangerous Economics of Shale Oil

    Today's lower prices will kill the shale 'miracle'
    by davefairtex

    Tuesday, December 23, 2014, 7:31 PM


    For years, we've been warning here at PeakProsperity.com that the economics of the US 'shale revolution' were suspect. Namely, that they've only been made possible by the new era of 'expensive' oil (an average oil price of between $80-$100 per barrel). We've argued that many players in the shale industry simply wouldn't be able to operate profitably at lower prices.

    Well, with oil prices now suddenly sub-$60 per barrel, we're about to find out.

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  • Blog
    Michael Wick/Shutterstock

    The Dangerous Economics of Shale Oil

    Why the recent oil price drop is so vicious to shale
    by davefairtex

    Wednesday, December 17, 2014, 2:58 AM


    With the recent free-fall in the price of oil, an increasingly asked question is: What impact will these lower prices have on America's production of shale oil?

    If we just look at the income statements they file with the SEC, it's difficult to determine if the current raft of shale companies are engaged in a profitable enterprise. Intuition tells us something is probably wrong, and smart people we trust mutter about cash flow and talk about a ponzi scheme, but how can we know for sure?

    Can shale oil be profitable at all? If so, at what price? And under what conditions?

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  • Podcast

    The Shocking Data Proving Shale Oil Is Massively Over-hyped

    It's time for America to focus on the facts
    by Adam Taggart

    Sunday, December 14, 2014, 12:03 AM


    Hooray, oil is suddenly much cheaper than it used to be. That's great news, right?

    Not so fast. For certain it's not good news for those counting on a continued rise in US oil production from the "shale miracle". Many drillers were challenged to operate profitably when oil was above $70 per barrel. Very few will remain solvent with oil in the $50s (as it is as of this writing).

    So, expect US oil production to suffer from these lower prices if they persist. But even if oil prices rise and rise soon, there's new data that indicates the total amount of extractable oil from America's shale plays is less — much less — than what we're being told (or better put, "sold").

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