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    The Destruction That Awaits

    The ponzi elements of the shale story start to implode
    by davefairtex

    Wednesday, December 17, 2014, 3:30 AM

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Executive Summary

  • Predicting when US shale oil production will peak
  • Why these lower oil prices *must* result in substantially lower US shale production
  • How the 'shale miracle' indeed has numerous ponzi elements that are on the brink of collapsing
  • Expect a tsunami of shale bankruptcies to arrive soon

If you have not yet read Part 1:The Dangerous Economics of Shale Oil available free to all readers, please click here to read it first.

Predicting The Peak

Now we expand our focus from one hypothetical producer, to one actual shale region: the Bakken, located in North Dakota. My key source of information about the Bakken region is the Department of Mineral Resources in North Dakota. Every month the Director (Lynn Helms) produces the “Director's Cut”, a just-the-facts summary of oil production in North Dakota. Yes, it really is called the Director's Cut.

Regional data provided by EIA is smoothed and massaged and – less useful for seeing what is going on at the point of the spear. So knowing now about how all the parts of the shale operation works, we can use the Director's Cut stats to track all the stages of producing oil. We have, in order of execution:

  • drilling permits

  • rig counts

  • wells awaiting completion

  • well counts

  • monthly production

 

In other words, before you can drill, you need …

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