Peak Oil Theory

Updates

July 23, 2016: if you scroll down through American West at Risk, one can find any number of references to "Peak Oil." Humorous. With the paucity of blogging at that blog, it appears they ran out of contributors and contributions before we ran out of oil.
 

Original Post

The Oil Drum is calling it quits. This particular article will be interesting to look at in five, ten, and twenty years.  Figure 13 is particularly fascinating.  -- posted July 22, 2013

This is an interesting article posted earlier this year, 2012: The Myth of Peak Oil: The Real Problem is Not Too Little Oil, But Too Much.

Whether one agrees with the conclusions of the author, the article is full of interesting data and observations. [From an environmentalist's view, the author says their is too much oil. If we were running out of oil, there would be increased efforts to use less, thus producing less carbon.]

One interesting data point from the linked article:

However, by 2006 the Department of Energy estimated that domestic oil resources still in the ground (in-place) total 1,124 billion barrels.  Of this large in-place resource, 400 billon barrels is estimated to be technically recoverable with current technology.

This estimate was produced before horizontal drilling and hydraulic fracturing or fracking techniques were widely adopted which most authorities believe will yield considerably more oil than was thought to be recoverable in 2006.

The End of Oil's Golden Era, Seeking Alpha, October 25, 2010.

Peak oil: There is No "Plan B" for Oil, Seeking Alpha, October 14, 2010.

Huge increase in Russian production; as a reminder, Russia took over the lead in oil production from Saudi Arabia earlier this decade. I had forgotten that. September 15, 2010.

What peak oil theory? It's back. Forbes, September 14, 2010.

What peak oil theory? And this is just federal land.  Forbes, February 15, 2010.

Peak Oil Overview, Oil Drum, March, 2008.

World Oil Production, Oil Drum, December 20, 2010.


There's Something Funny About Them Gasoline Prices -- Mike Nesmith

Ross Field Update

Updates

October 5, 2012: random update of three recent Ross wells; look at the decline rate (minimal).

Original Post

This is what has me interested in the Ross Field: the NDIC Docket for Wednesday, January 13, 2010, case number 11991: Hess applied to the NDIC to establish two 2560-acre spacing units consisting of all the sections 20, 21, 22, and 23 and all of sections 26, 27, 28, and 29, in township 156N-90W, in the Ross field; and, to be allowed to drill up to six horizontal wells at any location not closer than 500 feet to the boundary.

And now we see the first of those permits: 18602, 18603, 18604, 18605, 18606, and 18607.

The names associated with these permits, respectively:

18602, 207, RS-Nelson Farms A-156-90-2829H-1, t6/10; cum 119K 7/12;
18603, 154, RS-Shuhart 156-90-2726H-1, t8/10; cum 66K 7/12;
18604, 366, S-Nelson Farms A-156-90-2829H-2, t10/10; cum 110K 7/12;
18605, 339, RS-Shuhart 156-90-2726H-2; t11/10; cum 56K 7/12;
18606, 117, RS-Nelson Farms A-156-90-2829H-3; t1/11; cum 81K 7/12;
18607, 120, RS-Shuhart 156-90-2726H-3; t3/11; cum 43K 7/12; 

These six permits sit in a single line, running north to south, each 50 feet from the next one,  in section 27. I call this configuration a "Dakota Candle." [I no longer use this term.]

Based on their names, the wells will all be "long laterals."

18602 will run from section 28 to 29.
18603 will run from section 27 to 26.
18604 will run from section 28 to 29.
18605 will run from section 27 to 26.
18606 will run from section 28 to 29.
18607 will run from section 27 to 26.

So, we have three long laterals running from 27 to 26, and three long laterals running from 28 to 29.

My hunch: one long lateral each in the Middle Bakken, the Upper Three Forks Sanish, and the Lower Three Forks Sanish. 

These wells are on my "wells to watch" list.

Otherwise, at the moment, the Ross field is relatively unremarkable. The Ross field is mediocre in size: 110 sections. It is an old field based on the irregularity and one short boundary actually cutting a section in half -- seldom seen. Unlike most other fields in the agrarian state of North Dakota, there are actually two "urban centers" in this field: Palermo and Stanley, population 77 and 1,279, respectively, in the 2000 census, according to Wikipedia. I assume Stanley is a whole lot bigger now. Stanley is the county seat of Mountrail County, currently the most prolific oil ounty and the most active county in the current Bakken boom.

Stanley has also been in the news lately with regard to shipping oil out of North Dakota on rail: Stanley is where EOG established a rail terminus to load oil on a daily basis and ship it to Cushing, Oklahoma. That's  how tight the pipeline capacity is in North Dakota: EOG was taking a discount on its oil due to overcapacity in the pipeline, so it set up this terminal. EOG set a deadline to have the facility operational by February, 2010, but in fact were able to make the first shipment on New Year's Eve, December 31, 2009.

The Ross field, though a bit irregular in shape, is almost rectangular (2 sections east-to-west; 1 section north-to-south), and sits directly north of the two most prolific fields in "the Bakken": the Sanish and the Parshall.  The two major townships in Ross field: 156-91 and 156-90.

Currently, there are about 33 producing wells; two (2) wells on the confidential list (both near Palermo; one of those inside the corporate boundaries of Palermo); and 11 permits, including the six (6) permits noted above.

IPs and cumulatives updated September 11, 2012.

Bakken investors: a rare post.

I normally don't do this, but for investors, here's one way of playing the Bakken.

Check out the Whiting USA Trust 1 (WHX). Its distribution is currently 15% on an annual basis, and had you bought shares in the trust just a few months ago, you would have doubled your money by now, in addition to collecting the distribution. Check out the Yahoo!Financial site for WHX and look at the interactive chart for the past year.

If you buy tomorrow (February 16, 2010) you might be able to collect this quarter's distribution; the distribution will go to those holders of the trust as of February 19, 2010. I don't know how many days it takes to record the transaction so I don't know if you buy tomorrow you will be recorded a record holder three days later. It will be close. The discussion groups will help you out if you are interested.

*****

UPDATES

Update, October 13, 2010: Update on when the trust will terminate. In case the link breaks, the trust will end somewhere between 2014 and 2017, and will probably pay out $10 - $11 per year until then.

Update, August 8, 2010: I could be wrong on this, but I believe this Whiting Trust was "opened" in 2007 and will "close" when 9 million barrels of oil have been pumped, now expected to be sometime in 2015.

Trends in ND Spacing

Trends in the current North Dakota oil boom.

Comparing some wells head-to-head:

The field: the Sanish
These four wells are all in adjoining sections; all within a few miles of each other (IPs in red):
4-152-91 -- #17072 -- 2,846 -- Whiting
5-152-91 -- #17072 -- 2,846 -- Whiting

6-152-91 -- #16902 -- 2,192 -- Whiting
1-152-92 -- #16902 -- 2,192 -- Whiting

8-152-91 -- #17579 -- 872 -- EOG
9-152-91 -- #16845 -- 1,418 -- EOG

Throughout the Bakken, permits for 640-acre spacing wells are being canceled.
The most recent dockets show a shift toward 1280-acre spacing.