Lots of folks don't want unconventional hydrocarbons to be viable in the US, for any number of reasons. Art Berman is the most popular skeptic and is a popular speaker on the Peak Oil circuit. I just wanted to show you some simple illustrations that deconstruct his major argument.
First, he has run economic analyses on various shale wells and says the average production is below economic breakeven, so the whole thing is a scam perpetrated on the investing public. A cartoon of this kind of analysis is shown below.
Makes sense, I guess. Superficially. Next, let's look to see if the averages have been getting better....
And we see that they are. This, again, is typical in most plays. Operators get better at recovering the hydrocarbons under the lands they own. Call it a "Learning Curve". They all have it. What happens when you run an "average type curve" by operator? You see, as shown below, that a small minority might be producing economic hydrocarbons. This will typically be misidentified as geological "sweet spots", which do exist. This still drives the conclusion that "this play is uneconomic. Only a couple of guys in sweetspots will make money". But what about what we saw vis a vis operators producing more every year? Is the forward prediction correct that this play is Uneconomic based on these averages?
The answer, of course, is "Of Course Not". From a predictive point of view 40% of the companies are currently economically producing and another 20% will join the ranks next year... thus a majority of the operators are producing economically.
These numbers are cartoons of what is happening in virtually all unconventional plays SAVE the Cotton Valley. This is the reason to be excited. If you can't help yourself, and insist on gloom and doom, the answer for you is to NOT invest in these companies! That keeps the price lower for those of us that let the data really talk....
Congratulations to Bud and the other good folk at Brigham on their sale to Statoil. I understand Norwegian is a bitch of a language!
"Lots of folks don't want unconventional hydrocarbons to be viable in the US, for any number of reasons."
Who are these people? Can you name one? I have not met one and I do move around some.
On the surface this looks like a crybaby position from someone that cannot professionally respond to a peer review or a critical analysis. I hear this kind of thing all the time on Fox News when people or groups disagree with Fox anointed policy. They “Hate America” says Sean!!
Posted by: Royal Enfield | October 28, 2011 at 03:18 PM
Once again, Royal, this is what the "professional response" has been to Berman's analysis. It has been vetted and passed "peer review" much more than Bermans. I want you to understand the basis for the analysis done by various engineering groups, including my sponsors here at Drillinginfo, and which their engineers have presented at many conferences, and which I have merely synopsized here for the layman who doesn't understand the differences in approaches... ie the simple wrong approach, and the real approach. I understand that you agree with Berman and you think it is a massive conspiracy. I could call THAT the crybaby approach, but that isn't a constructive forward progression to the discussion. I have presented much of the data in the past (with permission), so look it up and debate the frigging facts instead of name calling. I love the fact that you aren't involved in these plays. We will compare notes in a decade or so.
Posted by: Open Choke | October 28, 2011 at 04:34 PM
Once again you dodge the question.
"Lots of folks don't want unconventional hydrocarbons to be viable in the US, for any number of reasons."
Who are these people? Can you name one?
Posted by: Royal Enfield | October 28, 2011 at 06:29 PM
You, Berman, many Peak Oilers... I mean this is the group that actively dismisses unconventionals. It is quite fun to read the threads on the Peak Oil sites. Lots of peculiar anger directed at those that question whether 1971 or 1972 was the US Peak... why is that, do you think? Direct enough for you?
Posted by: Open Choke | October 29, 2011 at 09:30 PM
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