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March 07, 2010

Comments

Not to quibble, but please tell me where you got the data to build the Stacked Cumulative chart?

Gracias.

My pleasure...

http://tonto.eia.doe.gov/dnav/pet/pet_crd_pres_dcu_STX_a.htm

1. Let's agree that there's nothing wrong with EIA statistical sampling.

2. Sales and acquisitions are not meaningful, except that it changes the number and statistical weight of operator data multiplied by EIA to estimate total production and reserves. They are not counting all operators or all barrels.

3. Texas production is declining.

4. New reservoir discoveries in 2007 and 2008 in old fields were apparently a big factor in revising reserves (19 new discoveries). You'd think there'd be some industry chatter about that. Big new onshore discoveries where?

5. EIA is using the PRMS proved definition. In some years, operators can book more proved "economically recoverable" reserves. It doesn't mean any of it can or will be produced.

I think production tells the whole story. But if there's been a big upswing in field extensions and new discoveries, I confess I'm completely ignorant.

The Wolfberry is the volumetrically huge Texas crude contributer. The SEC redefinition of "proven reserves" will likely cause an increase in the 2009 reserve numbers as well as strong end of year crude price.

One thing that throws a wrench in all Peak Oil theories is the neglect/underestimation
of technology. We all know that recoverable reserve estimates include
a recovery factor. What I find most often negleted is any mention of
advancements in technology both in E&P and in efficiency on the
consumption side. Estimates are always based off of current,
mainstream recovery abilities. Most of the revisions that you mention
happened due to new or improved technology. Look at the Haynesville
shale, it was not "discovered" in the last 5 years, we have known
about it for decades. What happened is that we have recently developed technologies
that allow us to economically drill and complete those wells.

The simple fact is that there is so much inherent error in reserve
calculations that you have to take these estimates with a boulder of
salt. As a wise reservoir engineering professor of mine once said
"understanding the error in these calculations is vital, because
while .01% error may seem small, when you multiply that by huge
numbers, that .01% no longer seems so insignificant"

We need to quite focusing on predicting the future of energy, because
we are always wrong. We need to develop all the resources that we
can, while simultaneously developing new technologies.

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