- August 7, 2013
- Posted by: Art Berman
- Category: The Petroleum Truth Report
Wood Mackenzie reported on July 30, 2013 that U.S. shale plays will produce 5 million barrels of oil per day by 2019, at least half coming from the Eagle Ford and Bakken shale plays. Naturally, most people believe this without asking the obvious question, “How does this huge volume of oil compare with present U.S. production or the largest fields in the world?”
The U.S. produced 7.3 million barrels of crude oil per day in May, 2013 and reached peak production of just over 10 million barrels of oil in 1970. WoodMac would have us believe that U.S. oil production will exceed peak production by about 2 million barrels per day, and will increase present production by almost 70%. That would be awesome but seems highly unlikely based on the history of oil production decline in countries and basins around the world.
This is like telling the average American whose life expectancy is 79 that, by some miracle, we can all now expect to live to be 115 years old. Never mind that only one person is known to have lived to be this old, it’s still reasonable that everybody will live this long! Hmm.
Back to oil production, Ghawar, by far the largest oil field in the world with 74 billion barrels of reserves, produces 5 million barrels of oil per day and never produced more than 5.7 million barrels. We are, however, supposed to believe that shale plays–the Bakken and Eagle Ford, in particular–will equal Ghawar.
WoodMac would have us believe that the Bakken and Eagle Ford will almost equal production from the two largest oil fields in North America combined. I certainly hope that they are right but history and facts suggest that this estimate is at best highly optimistic and, at worst, exaggerated.
As far as I know, the WoodMac report is not publicly available so I cannot comment on how they arrived at the numbers. How could they be wrong? I would first look at the per-well reserves and decline rates used in this estimate because these have been unrealisticallly optimistic for all shale plays so far. Second, I would look at the size of the commercially productive area they assume for these plays because these have also been unrealistic for other shale plays.
Everybody likes good news but we all hate disappointments. In a world of dwindling oil resource opportunities (that’s why we are drilling shale, after all!), it is time to start changing our behavior and using less oil. Reports like this give people the message that there is no reason to change our wasteful practices. Don’t worry, be happy!