Thursday, July 18, 2013

Staggering Energy Growth

A reader alerted me to this incredible story. A marketing/advertising story; not a straight news story; take some of it with a grain of salt.

CoStar Group is reporting:
Growth in the domestic energy industry is driving heated demand for prime real estate, predominantly in a handful of cities where the oil and gas industry is booming. That growth is expected to create more than 3.5 million American jobs by 2035, including 700,000 in the next two years alone.

Leonardo Maugeri, a former oil industry executive from Italy who is a fellow at the Kennedy School’s Belfer Center for Science and International Affairs, studied the performance of 4,000 American shale oil wells and the work of about 100 companies involved in shale oil production.

In a paper titled “The Shale Oil Boom: A U.S. Phenomenon,” Maugeri wrote that the unique characteristics of shale oil production are ideal for the U.S. and unlikely to be mirrored elsewhere in the world. These factors include the availability of drilling rigs, and the entrepreneurial nature of the American exploration and production industry, both critical for the thousands of wells required for shale oil exploitation.

Maugeri said the number of American shale oil wells in North Dakota and Texas could soar from the current 10,000 to more than 100,000 working wells by 2030. He said steady improvements in technology and cost would continue to drive industry growth in the shale oil fields in the Dakotas and Texas.

A key distinction between shale oil production and conventional oil wells is the intensity of drilling required to extract shale oil. Maugeri noted that the Bakken-Three Forks region in North Dakota required 90 new wells per month to maintain production of 770,000 barrels per day. Shale oil wells reach peak output almost immediately but quickly decline, so multiple new wells constantly need to be drilled. Maugeri believes only the U.S. oil industry is capable of such drilling intensity, he wrote. 
The consensus is that North Dakota will need 50,000 wells to drill the Bakken, so 100,000 wells for North Dakota and Texas is not unreasonable.

Only "90 new wells per month to maintain production of 770,000 bopd." North Dakota easily has the capability of 200 wells/month. 

Several story lines. The biggest story line: an incredible opportunity for young investors.

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