One thing I learned in school is there are generally two spirits of scholarship, one haughty and the other humble. I discovered later in life that the humble spirit is ultimately better; Art Berman is a humble scholar.
I was in the audience ASPO 2009- Denver. On the panel discussion you described 4,000 Barnett Shale. 90% of the average wells production came out in the first four years. Ever since then, I’ve been in Hawaii preparing for now. Most people don’t realize how serious this is.
Hello. I listened to your podcast interview with Christ Martensen, and generally I agree with your assessment of the tight oil situation, but think you are still slightly too optimistic. As it relates to the oil industry, I have often heard the expression “the cure for high prices is high prices” and conversely, “the cure for low prices is low prices”. This may very well be true if no complicating factors get involved. Presenting as an impending “complicating factor” are the seriously underperforming economies of China and India. Both nations are massive oil importing countries. Together the two countries represent 2.5 billion people, and both appear to be sliding into a recession. With these oil markets in retreat, there is no chance of any serious rebound in the price of oil for the next few years. As such, the negative free cash flows in the shale patch will continue, and with that, a continued loss of investor confidence. Drilling activity has already declined 25% year over year. Production in the shale patch does however continue to increase due to the backlog of DUC’s. As the backlog of DUC’s declines, without a compensatory rise in drilling, some observers see tight oil peaking in the summer of 2021. Based on your observations of the scene Mr. Berman, does this seem possible?
I understand about the economic situation in India and China but those are “what-if and maybe” scenarios that are not real at present. I could make up all kinds of reasons that MIGHT happen to affect oil prices, but I don’t find that approach helpful. I disagree that oil production continues to increase because of DUCs. Eagle Ford, Bakken, Niobrara have decreasing DUCs but that’s not new. Permian DUCs have only started to decline by a few dozen out of thousands so I don’t accept that as an explanation either.
I’ve been following you since Chris Martenson “introduced” us. I live in Baton Rouge and would have loved to hear your talk. I work in chemical engineering. I am amazed when I am required to be the intermediary between the ChE’s and the MBA’s .The thermodynamics of production “is what it is”. The process doesn’t compute “$” just BTU’s. It leaves me gobsmacked when big league MBA fail to grasp the basics of thermodynamic reality. This is just a microcosm of our society writ large!
One thing I learned in school is there are generally two spirits of scholarship, one haughty and the other humble. I discovered later in life that the humble spirit is ultimately better; Art Berman is a humble scholar.
Thanks, Sam!
Art
I was in the audience ASPO 2009- Denver. On the panel discussion you described 4,000 Barnett Shale. 90% of the average wells production came out in the first four years. Ever since then, I’ve been in Hawaii preparing for now. Most people don’t realize how serious this is.
Richard,
It is good to hear from you. Yes, I got that right. Sometimes, I’d rather be wrong.
Best,
Art
Hello. I listened to your podcast interview with Christ Martensen, and generally I agree with your assessment of the tight oil situation, but think you are still slightly too optimistic. As it relates to the oil industry, I have often heard the expression “the cure for high prices is high prices” and conversely, “the cure for low prices is low prices”. This may very well be true if no complicating factors get involved. Presenting as an impending “complicating factor” are the seriously underperforming economies of China and India. Both nations are massive oil importing countries. Together the two countries represent 2.5 billion people, and both appear to be sliding into a recession. With these oil markets in retreat, there is no chance of any serious rebound in the price of oil for the next few years. As such, the negative free cash flows in the shale patch will continue, and with that, a continued loss of investor confidence. Drilling activity has already declined 25% year over year. Production in the shale patch does however continue to increase due to the backlog of DUC’s. As the backlog of DUC’s declines, without a compensatory rise in drilling, some observers see tight oil peaking in the summer of 2021. Based on your observations of the scene Mr. Berman, does this seem possible?
James,
I understand about the economic situation in India and China but those are “what-if and maybe” scenarios that are not real at present. I could make up all kinds of reasons that MIGHT happen to affect oil prices, but I don’t find that approach helpful. I disagree that oil production continues to increase because of DUCs. Eagle Ford, Bakken, Niobrara have decreasing DUCs but that’s not new. Permian DUCs have only started to decline by a few dozen out of thousands so I don’t accept that as an explanation either.
Thanks for your comment,
Art
Art,
I’ve been following you since Chris Martenson “introduced” us. I live in Baton Rouge and would have loved to hear your talk. I work in chemical engineering. I am amazed when I am required to be the intermediary between the ChE’s and the MBA’s .The thermodynamics of production “is what it is”. The process doesn’t compute “$” just BTU’s. It leaves me gobsmacked when big league MBA fail to grasp the basics of thermodynamic reality. This is just a microcosm of our society writ large!
Thanks again for you truth seeking!
Mark,
Good to hear from you! Yes, it is difficult trying to explain reality to those who believe they fully understand it already!
Best,
Art