THE DEATH OF THE BAKKEN FIELD HAS BEGUN: Means Big Trouble For The U.S.

The Death of the Great Bakken Oil Field has begun and very few Americans understand the significance.  Just a few years ago, the U.S. Energy Industry and Mainstream media were gloating that the United States was on its way to “Energy Independence.”

Unfortunately for most Americans, they believed the hype and are now back to driving BIG SUV’s and trucks that get lousy fuel mileage.  And why not?  Americans now think the price of gasoline will continue to decline because the U.S. oil industry is able to produce its “supposed” massive shale oil reserves for a fraction of the cost, due to the new wonders of technological improvement.

I actually hear this all the time when I travel and talk to family, friends and strangers.  I gather they have no clue that the Great Bakken Oil Field is now down a stunning 25% from its peak in just a little more than a year and half ago:

bakken-field-oil-production-sept-2016

The mighty Bakken oil field located in North Dakota reached peak production in December 2014 at 1.26 million barrels per day (mbd) and is now down to 942,000 bd.  This decline is no surprise to me or to my readers who have been following my work for the past several years.

I wrote about the upcoming crash of the Bakken oil field in my article (click on image to read article)– Published, NOV. 2013:

the-coming-bust-of-the-great-bakken-oil-field

I ended the article with these sobering words:

There are only so many drilling locations available and once they run out, the Great Bakken Field will become a BUST as the high decline rates will push overall oil production down the very same way it came up.

Those who moved to the frigid state of North Dakota with Dollar signs in their eyes and images of sugar-plums dancing in their heads will realize firsthand the negative ramifications of all BOOM & BUST cycles.

Well, the Bust of North Dakota economy has arrived and according to the article, “The North Dakota Great Recession“:

Unfortunately by April 2015 it was clear that the oil markets were in a secular decline brought on by oversupply in the global energy markets fueled by a deep recession in China. As a result, companies started to lay off workers, and over the following months caused a massive exodus of people as jobs were eliminated. Nobody is exactly sure how many people have left the state, but some put estimates as high as 25,000.

The strongest real estate market continues to be Watford City with the weakest in Minot. However, even in Watford City the price of a three-bedroom rental home has come down from $2,500 in 2015 to a current price of $1,400. This represents a 44 percent decline of the rental price in the market.

Some folks believe the reason for the decline in oil production at the Bakken was due to low oil prices.  While this was part of the reason, the Bakken was going to peak and decline in 2016-2017 regardless of the price.  This was forecasted by peak oil analyst Jean Laherrere.  I wrote about this in my article below (click on image to read article)– Published, APRIL 2015:

what-will-the-death-of-the-great-bakken-look-like

I took Jean Laherrere’s chart and placed it next to the current actual Bakken oil field production:

bakken-oil-decline-vs-jean-laherrere-forecast

As we can see in the chart above, the rise and fall of Bakken oil production is very close to what Jean Laherrere forecasted several years ago (shown by the red arrow).  According to Laherrere’s chart, the Bakken will be producing a lot less oil by 2020 and very little by 2025.  This would also be true for the Eagle Ford Field in Texas.

According to the most recent EIA Drilling Productivity Report, the Eagle Ford Shale Oil Field in Texas will be producing an estimated 1,026,000 barrels of oil per day in September, down from a peak of 1,708,000 barrels per day in May 2015.  Thus, Eagle Ford oil production is slated to be down a stunning 40% since its peak last year.

texas-eagle-ford-oil-production-sept-2016

Do you folks see the writing on the wall here?  The Bakken down 25% and the Eagle Ford down 40%.  These are not subtle declines.  This is much quicker than the U.S. Oil Industry or the Mainstream Media realize.

And… it’s much worse than that.

The U.S. Oil Industry Hasn’t Made a RED CENT Producing Shale

Rune Likvern of Fractional Flow has done a wonderful job providing data on the Bakken Shale Oil Field.  Here is his excellent chart showing the cumulative FREE CASH FLOW from producing oil in the Bakken:

bakken-cumulative-negative-free-cash-flow-likvern

I will simply this chart by explaining that the BLACK BARS are estimates of the monthly Free Cash flow from producing oil in the Bakken since 2009, while the RED AREA is the cumulative negative free cash flow.  As we can see there are very few black bars that are positive.  Most are negative, heading lower.

Furthermore, the red area shows that the approximate negative free cash flow (deducting CAPEX- capital expenditures) is $32 billion.  So, with all the effort and high oil prices from 2011-2014 (first half of 2014), the energy companies producing shale oil in the Bakken are in the hole for $32 billion.  Well done…. hat’s off to the new wonderful fracking technology.

According to Rune Likvern in his article on the Bakken, he stated the following:

Just to retire estimated total debts (about $36 Billion, including costs for DUCs, SDWs, excluding hedges and income/loss of natural gas and NGLs) would require about 7 years with extraction and prices at Jun-16 levels.

Nominally to retire all debts (reach payout) would take an (average) future oil price close to $65/bo (WTI) for all the wells in operation as of end June – 16. This is without making any profit.

For the wells in production as per Jun-16, the total extraction of these will decline about 40% by Jun-17, and depletes their remaining reserves with about 20%. By assuming the operations remain cash flow neutral, total debt remains at $36 B in Jun-17.

As from Jul-17 this would now require an average oil price of about $73/bo (WTI) for these wells to nominally retire all debts (reach payout). Additional wells will add to what price is required to retire the total debt.

What Rune is stating here is that the $36 billion in total cumulative debt will occur by June 2017.  Thus, it would take an average $65 a barrel to just pay back  the debt in seven years.  With the way things are going in the U.S. and world economies, I doubt we are going to see much higher oil prices.

Furthermore, the work by Louis Arnoux and the Hills Group suggest the price of oil will fall, not rise due to a Thermodynamic Collapse.  More about this in an upcoming interview.

The United States Is In Big Trouble & Most Americans Have No Clue

As I have been documenting in previous articles (going back until 2013) the U.S. Shale Oil Industry was a house-of-cards.  Readers who have been following my work, based on intelligent work of others, understood that Shale Oil is just another Ponzi Scheme in a long list of Ponzi Schemes.

From time to time, I look around different websites that publish my work and read some of the comments.  I am surprised how many individuals still don’t believe in Peak Oil even though I explained the Falling EROI – Energy Returned On Investment quite clearly.

For some strange reason, some individuals cannot use deductive reasoning to destroy lousy conspiracy theories.  Moreover, if they do believe in Peak Oil, then they think there is a wonderful “Silver-Bullet Energy Technology” that will save us all.  I gather they believe this because the REALITY and IMPLICATIONS of Peak Oil are just too horrible, to say the least.  So, holding onto HOPE that something will save us, just in the nick of time, is better than accepting the awful reality heading our way.

And the awful reality of Peak Oil will be felt more by Americans as their lifestyles have been highly elevated by the ability to extract wealth and resources from other countries through the issuing of massive amounts of paper Dollars and debt.  Basically, they work, and we eat.

Unfortunately, the propping up of the U.S. market by the Fed and the domestic shale energy Ponzi scheme is running out of time.  This is why it is imperative for investors to start moving out of Bonds, Stocks and Real Estate and into physical gold and silver to protect wealth.

For the wealthy investor or institution that believe a 5-10% allocation in physical gold is good insurance, you are sadly mistaken.  While Donald Trump is receiving more support from Americans in his Presidential race, his campaign motto that he will “Make American Strong Again”, will never happen.  The America we once knew is over.  There just isn’t the available High EROI – Energy Returned On Investment energy supplies to allow us to continue the same lifestyle we enjoyed in the past.

So, now we have to transition to a different more local or regional way of living.  This new living arrangement will be based on capital that is “STORED ECONOMIC ENERGY or WEALTH.”  This can only come via the best sources such as physical gold and silver.

If individuals and countries have been acquiring physical gold and silver, they will be in better shape and will be able to enjoy more options than those who have been selling their gold and accumulating lots of debt and derivatives.

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131 Comments on "THE DEATH OF THE BAKKEN FIELD HAS BEGUN: Means Big Trouble For The U.S."

  1. “The America we once knew is over. There just isn’t the available High EROI – Energy Returned On Investment energy supplies to allow us to continue the same lifestyle we enjoyed in the past.

    So, now we have to transition to a different more local or regional way of living. This new living arrangement will be based on capital that is “STORED ECONOMIC ENERGY or WEALTH.” This can only come from via the best sources of physical gold and silver.”

    agree about america being over, and for more reasons than just oil scarcity (the average white in america is age 58, the entire economy is tied to fiat debt currency, etc). but what on earth makes you think g/s can replace oil? g/s store nothing, they only expedite trade with existing resources. to the extent that resources don’t exist then there will be no trade. with oil becoming scarce then economic goods will become scarce, probably abruptly in most regions. no-one is going to sell you anything you need because 1) they need it too and 2) there won’t be enough to go around.

    • Energy cannot be created or destroyed. I think Steve is referring to the transfer of energy out of debt, future energy growth, and finding its way to past energy usage, precious metals and other produced goods. The wealth won’t vanish, it will just be running to the other side of the boat. Any good that uses alot of energy to create will skyrocket since future supply will be severely cut. You need to think Venezuela, the world didn’t end for this country. I however think skills are more highly valued than gold or silver. Good luck

      • “Energy cannot be created or destroyed … The wealth won’t vanish, it will just be running to the other side of the boat.”

        are you saying wealth is a static quantity?

        well, actually, on consideration, I suppose it is. consider sitting in your house, drinking your coffee and watching the morning news. the wealth on display – your coffee shipped from columbia (or wherever), the ceramic mug made from clay shipped from egypt to china for manufacture and then to walmart for sale, the electronic display screen made from silicon and phosphor mined in the u.s. and shipped to china for manufacture and then shipped right back to walmart for sale, and the electricity used to power it generated by machinery manufactured from heavy steel in the u.s. and turned by oil shipped from the middle east – yeah, it really is the same wealth that lays latent in the ground awaiting the work necessary to turn it into a form usable by humans. the wealth is the same, it merely has been changed in its form.

        changing its form, however, is … an issue.

        • “changing its form, however is … an issue”.

          As in the disposition of debt. Debt is not destroyed. It changes form.
          There is a loser – either creditor or debtor. Its the form of the loss thats an issue.

          ALL DEBT WILL BE PAID. First law of economics. It will be paid with dollars that are worth pennies, or with pennies worth dollars.

          • “Debt is not destroyed … ALL DEBT WILL BE PAID.”

            oh nonsense. between outright jubilee and the debtors simply burning down the bank and expelling the blood-suckers, debt most certainly can be destroyed and not paid. ESPECIALLY fiat debt.

          • Debt will be repaid, by the lender or the debtor. Default is a lender payment, which brings ownership of collateral formerly nominally in possession of the borrower. Taking possession of collateral may be desirable or undesirable, depending on depreciation or appreciation since it was pledged. A good banker is a good judge of character and financial future reality, not a social worker. Credit is mostly dependent on the belief of the lender in the moral character and ability of the borrower, according to J.P. Morgan.

            If a middle-income man earns $45K/year and is a good lucky worker for 40 years, his economic worth is $1.8M over that time. If careful, he might have a couple hundred thousand in assets at retirement. This is the collected undissipated wealth of a life-time working: a sack of gold an old man might carry in one hand.

            What penalty is appropriate for a fraud that takes the savings of a man or makes it valueless? What penalty for a fraud that takes the savings of millions of men?

            Banks always win, when you let them play with unlimited base money (not-gold, not-silver, not anything deliverable or actually limited) and infinite lending ratios. We don’t have much history of public hanging for financial crimes (along with clawback dispossession from the familial/associate beneficiaries), which might encourage better behavior in bank Officers/Trustees/Board Members.

    • Don’t worry…once the culling is done and the tears have dried, there will be more to go around. At that time gold and silver will once again serve their purpose. There are simply too many people relative to the amount of available resources. Nature will rebalance itself just as it always has. Good luck

      • “once the culling is done and the tears have dried, there will be more to go around.”

        actually, there will be less. consumables come from work. less people means less work done, less energy means less work available, less trade means less work accessible. and given that most surface-accessible mineral resources are depleted there will be less resources available absolutely.

        • Your probably right..but there will be a bright side. There will be sustainable growth, the banking parasite should be dead, you won’t have a mortgage. You won’t have a fancy gas guzzler, you will live locally and perhaps regionally. If you have gold and silver you will have money.

          • What makes you think that your community and household will be uniquely resilient when everybody else is in exactly the same position? What makes you think that you and yours will survive where others won’t? What makes you think that the elites aren’t as skilled at preparing escape plans this time as they have been during every other orchestrated Ponzi collapse? What makes you think that your community will survive at all, particularly if it has not made arrangements to secure a stable supply of oil and gas to maintain key legacy infrastructure? It’s deeply disappointing to find ‘green’ ideology guaranteeing the doom of many communities in my country, programming them against pipelines and related things that might otherwise prevent their neighborhoods from becoming eventual ghost towns.

          • @ Lore: you have time to prepare. That’s the point. I’ve been doing so for the last few years…little by little. Get resilient.

            By the way…there are no guarantees in life, just delusions. However, my family depends on me to lead and an attitude of defeatism doesn’t help. I’ll face the crises of the next paradigm with a resilient mind, body, spirit and am attempting to get my house in order for a more sustainable future. Good luck to you and yours.

          • “What makes you think that your community and household will be uniquely resilient when everybody else is in exactly the same position?”

            well, a lot of preppers are calvinist christians who believe they are chosen by god both for salvation and also to survive whatever comes. many of the others are “libertarians” meaning they think they are smart and everyone else is just a bunch of stupid pigs to be culled when the time comes – they have 100,000 rounds of ammo and talk about “one-shot-one-kill” and they’re deadly serious. the bulk of the remainder are mormons who just do this sort of thing.

    • ” but what on earth makes you think g/s can replace oil? g/s store nothing, they only expedite trade with existing resources. to the extent that resources don’t exist then there will be no trade. with oil becoming scarce then economic goods will become scarce, ”
      History repeats itself . Do some research on trends. With oil all but gone take a look back in time when the world wasn’t dependent on it due to not realizing it’s potential yet. How did physical gold and silver play a role at that time ? Seems to this reader that they were treated with respect as a very worthwhile bargaining chip !

      • “With oil all but gone take a look back in time when the world wasn’t dependent on it due to not realizing it’s potential yet. How did physical gold and silver play a role at that time ?”

        (bangs head on table) you may want to do some research yourself. the decline won’t simply coast to a gentle halt at the enlightened 18th century, it will overshoot in a freefall all the way to the times when the king simply feed and taxed and confiscated all the gold and most of the silver (especially by killing and looting all the bandits who robbed everyone they could). you’re not going to buy your way out of this.

        • thumbs up gman – I’d think Zippo lighters and cases of EverClear are on the agenda for anyone looking to transfer “wealth” across the great divide. Just found the site and thought I’d add my two cents.

    • I think that oil follows the same law as everything else: the cure for low prices is low prices. Demand will bring out new supply and lower the price, and lower prices will cause inefficient supplies to close down. What we really have to worry about is debt. Too many people are holding their wealth in credit instruments that cannot be satisfied. They hold them via mutual funds. When debt is destroyed, the people who held all their wealth in non-credit instruments will fare the best.

      • fazha,

        Actually, Supply & Demand do not work in a falling NET ENERGY ENVIRONMENT. This is what I have now found out from Louis Arnoux and the Hills Group.

        The Modern Economic Principle of SUPPLY & DEMAND only work in an “AMPLE SURPLUS ENVIRONMENT.” Thermodynamics has been the driver of our modern Economy, not Supply & Demand. However, now that the EROI is collapsing, Supply & Demand forces will no longer work.

        steve

  2. There are reserves untouched (Alaska)….There is Federal lands currently off limits to exploration….Off shore is rated in the trillions of barrels not counting gas reserves there…These are off limits too…..So just like this dire prediction of short falls……So to the reinstatement of viable lands and sea deposits yet to be reopened or opened….We will see.

    • JEAN,

      I gather you are relatively new to the site. If you have been reading my work on the Falling EROI, you would realize the supposed trillions of barrels here or there are quite useless as we can’t afford them.

      Steve

      • What you don’t understand, that is a Death Blow to your Doomsday Scenario, is that as EROEI goes down, the resource base goes up.
        In your Logic a well that produces 10,000 barrels a day that has a EROEI of 50 to 1 is better that a Canadian Oil Sand project that only has a 6 to 1 EROEI but produces 1,000,000 barrels a day.
        Coal to liquids has a large resource base, Hemp, etc.

        • Steve, it’s the all-in costs that determine the producers’ fates. As the EROEI goes down, those costs start soaring, whereas the real economy cannot afford energy that would make the average producer even just a tiny net profit. The oil industry as a whole is selling below cost and this continues only due to an increasing mountain of debt, which will be either defaulted upon or hyper inflated (bailed out) by even more debt on somebody’s balance sheet. The ultimate limit to EROEI is 1:1, but energy production will dramatically fall before that and this is when things will fall apart for good, as no fix is available to replace the needed energy/oil.

          • More Doomer Nonsense!
            The Canadian Oil Sands use the energy within them to produce the oil.
            If the EROEI is positive and it can be scaled up to produce millions of barrels a day, it will be produced.
            EROEI does not take into account the volume of the resource base.
            Coal to liquids is not economic at sub $50 oil.
            At $100 a barrel the resource base is well over 10s of millions of barrels per day.
            Peak Oil Doomers are Completely Ignorant about this FACT.
            It might take a while to scale production up but there are many different resources that will come to market when oil surpasses $100 a barrel.
            Peak Oil Doomers have been wrong for Decades and they will continue to be wrong.

        • “It might take a while to scale production up but there are many different resources that will come to market when oil surpasses $100 a barrel.
          Peak Oil Doomers have been wrong for Decades and they will continue to be wrong.”

          But it isn’t $100 a barrell is it Steve?
          It isn’t $50 a barrell is it?
          Best estimates don’t see it getting there in the forseable future.

      • Hi Steve,

        What we can’t afford is fuel for transporting regular people in individual 3000-9000 pound air-conditioned boxes on wide smooth roads paid for with a few pennies per gallon of a grossly-underpriced fuel, or after a while, NG to heat huge suburban homes. There will be JP4/8 for military vehicles, and an allocation for emergency trucks, and plenty of crude to process into plastics/chemicals/pharma. Prepare to move under your own power except for limited regional transport on rail or Official Motor Vehicle: bicycle or walk.

        The spread between wages and fuel will widen to a single-knotted-rope bridge over a wide chasm, from the current 6-lane (each way) polished-smooth 80+ mph Interstate Freeway with no-charge bicycle lanes/HOV/light rail lanes that tripled the construction price. A 250cc motorcycle will seem like real travel freedom, almost affordable at 80mpg and “fast, like the 20th century!”. With a few hundred Watts of pv, a person could charge an electric scooter to ride every few days, if you plan ahead (for domestic-only Crisis Dollars that won’t buy imported/rationed goods).

  3. Thanks Steve–great work as always!

    Not the sharpest tool in the shed, but seems to me that the U.S. Oil Industry and Shale producers need to take a number and have a seat in the waiting room along with all the other problems the United States is going to see & have to deal with going forward.

  4. I see the decline, but is this because oil wells have been capped? They new the price was going down, they have to make what at least 52 dollars a barrel up there to make a profit. So this to me is what is happening!

    • GPackers,

      I talk to folks who work in the oil industry. The one thing an operator will never do is shut in or cap a well. The only time they would do this is if there is a leak or something wrong with the well.

      Wells are not capped because of a low price. Why? Because, if a well is capped, when restarted, it never comes back to the production level before. Capping a good productive well for a period of time destroys it’s production capacity later on.

      Steve

      • Permit me to interject. Western Canada saw thousands of wells capped in the early 80s when the price declined. Many projects were not revived until the late 90s (usually under different corporate names, as the previous companies no longer existed). I guess this falls under the umbrella of what SRSRocco calls “Legacy Production.” I haven’t looked at the production reports for ages, but there is additional regional capacity that will be brought online if / when the market justifies it (this applies to oilsands projects as well, although the additional production involved seems minor in the context of the overall decline picture that SRSRocco is addressing). That said, if the green-washed (brainwashed) global warmists (another scam) continue to stand in the way of vital pipeline, storage and hyrdroelectric initiatives, the damage to their communities will be irreversible. Basically, whatever we can build before the end of this decade needs to get done or will never happen, and the alternative seems increasingly horrific.

    • This seems logical to me, even if instead of being capped, new wells were not drilled to replace the declining ones precisely because the price of natural gas was too low to be profitable. In fact, I have heard of well decreases due to price declines, so we know it has had an impact. IMO, any production graphs MUST consider the impact of price and profit on drilling in order to give an accurate depiction of reserves.

  5. Oh, ok. I was just wondering. My thoughts only. Not an oil man.

    Thanks

  6. Of course the fields are dropping. These wells are not traditional oil, the wells have to be refracted every so often to maintain production. The formations are like sponges with tiny oil pockets that need tracking to remove the oil. They are not underground oil lakes. This is the mistake that people make when comparing a shale formation with traditional oil deposits. You need rigs to frack lest rigs means reduced production over time…

  7. Hi, although I understand most of what you are saying is true. I have been in the oil industry for over 25 years, I work for one of the largest oil companies in the world. At one of their plants in the Pacific Northwest, 25 years as an FCCU operator. I know the inner goings on in these and other refineries in the US. There is still massive capitol investment happening and projected sources of oil for the foreseeable future, there is not a lack of oil in the world, js political gamesmanship and the basic rules of supply and demand. Yes there has been a curtailment of exploration and such due to the low prices of oil;and oil companies do cap wells, just FYI. Politics and world issues will determine oils future,not the lack of availability.

    • “Politics and world issues will determine oils future,not the lack of availability.”

      PRICE will determine oil’s future the most.

      • “Politics and world issues will determine oils future,not the lack of availability.”

        “PRICE will determine oil’s future the most.”

        neither. the “global elite” “international financiers” “deep state” will determine who gets the oil, and who pays for it. they will get it, we will pay for it.

    • Politics will affect price and end-user availability. I predict bad/corrupt politics that results in higher costs & prices with irregular availability. $40/bbl crude with $2.29 unleaded is okay for the US consumer but not okay for banks or high-cost producers.

      I believe that I will have another shot of The Glenlivet, and conserve fuel.

  8. i will have to agree with Sean, one particular plant has made a huge investment specifically to bring Bakken oil in by rail. And the information I get says the primary reason for dropping production is the price, shale oil is expensive to get out of the ground, just like the tar sands in Canada, is a very expensive process to get the oil out.

    • Bigoil

      Where is the cut-off. If the estimates for a sustainable productive rate is 12/1 and we are only getting 5/1, “how long can that last”? Maybe they just nationalise the oil companies and ration the oil. Are the estimates wrong? All resources on this planet are finite, when do we start using them in a sustainable way? Do we continue to allow our resources to be profiteered by a select few? Should our societies not be having a debate with the people about this?

      I don’t have the answers !! BUT I have heaps of questions…… 🙂

      I read this forum regularly to learn from people like Steve who have some expertise in this area and people like you Bigoil who have worked in the industry. I listen to you all because it is a very important topic that will eventually affect us all.

  9. You need to read Lindsey williams book the energy non crises. Alaska has oil wells that have been capped since the 70’s and please stop the fear talk. We have more oil than we need!

  10. Since the markets are to forecast the future, perhaps you can explain why falling EROI, increasing
    national debt, China and India importing tons of silver, the mint printing millions of coins worldwide and, production costs heading north in our future, yet the silver market’s forecast is $18.00 per ounce in 2020? Must we now read doom and gloom about oil or our currency or our national debt in order for silver rise past $20? Today it fell below $19, And the the gurus like Cloud, Morgan, Schiff etc. keep hyping yet the market doesn’t see what these men who earn a living selling gold and silver tell us. Folks, theyhave been wrong for almost a decade. If you stack silver, take your time. Then end is many, many years down the road.

    • I concur, with one exception Things will change if someone pulls a trigger at the wrong time or purely by accident.. But are there really accidents in world affairs.

    • Joe,

      Pundits and gurus are a dime a dozen. Whomever is forecasting $18 silver by 2020 is just not in touch with reality. You have been following this site long enough to remember when we were talking about silver dropping to $13.XX before heading up. Well, it did that and is now on the road to higher and higher prices but don’t expect it to happen overnight just yet. As long as the central banks are in play, they will do EVERYTHING they can to retard the process but they cannot stop the coming tsunami.

      Falling EROI is part and parcel of increasing debt (national and worldwide) because it now takes more than $5.00 of increased debt to increase the GDP by $1.00. This ponzi house of cards is nearing its collapse and is not “many, many years down the road”. When it comes you may very well wish it was years down the road because it will be very ugly for most of the world.

      Keep on stackin, buy for cash and stash as long as you can, you will be very thankful that you did.

      SteveW

    • “If you stack silver, take your time. Then end is many, many years down the road.”

      Joe I hope your end is many, many years down the road, but collapse of this economic system is not. You say the same things over and over and over.

      • I want to be wrong, because electronic money pays the bills. I love refrigeration of fresh plentiful food, the Brown Truck with instant deliveries, and orderly people.

        Hope is not a plan. I have met too many “hope-fulls” and not enough planner / preparers.

        I always ask them about their earthquake kit & plan, like the FEMA commercials advise. “Trust Your Leadership”: they are telling you to PREPARE. They are minimizing the threat for their own reasons, so take the calming voices as a warning tone to get going RFN while it’s cheap and easy. Warm, dry. fed, together, safe, in a minimal-undesirable way, is the objective.

        You may have to flee home on short-notice to have this good outcome. Know some places to go.

        Look back at the first 2 weeks after Katrina or Sandy. You are the First Responder, and likely Only Responder. What if this happened in 10 regions at once, and initial response/relief began later than 6 weeks? The geologists are saying we are well past-due in geology-time (+/- 500 years).

  11. “There is massive capital investment happening… and Politics and world issues will determine oils future, not the lack of availability.”

    Bigoil sounds like a Central Banker who claims to have ALL the answers to our ills. You know… we just need more printed currency or more fools to invest in a venture that never ever paid for itself nor ever will.
    You forgot the other side of the equation Bigoil, the consumer side, you know, the people who are all tapped out with debt they’ll never be able to repay. As usual, we always get the same mantra about how prices will eventually rise and how magically vast amounts of energy will simply appear and it will be BAU. Not this time, not with $250T of worldwide debt hanging over our heads. That train left the station and I don’t care how long you were in the oil industry or how much of an insider you claim to be. The debt’s not going away unless there is a massive default on it and if that’s the case, the already insolvent oil companies will truly be gone for good as every last over inflated asset evaporates into the ether.
    Political gamesmanship… that’s all that’s happening here… are you frickin serious? All of the analysis, credit markets, research, warmongering, murdering etc., boils down to some insider gamesmanship! WTF!! Sure, I wouldn’t doubt that most of our illustrious leaders and psychotic banker class likely believe they truly are in control, but I can assure they aren’t. The so-called basic rules of economics are complete bullshit- voodoo, formulated by a bunch of witch doctors who never even factored biophysical components into the supply/demand equations! But… I digress! I suggest you throw out all of those garbage ridden economic and financial textbooks along with the rest of the energy bullshit propagated by the likes of Daniel “The Snake Oil Salesman” Yergin and his lot. Sit back and watch the Dark Hole of Energy Deflation unfold before your very eyes and maybe in a couple of years you can report back to us with your take on what will then be ‘current events.”

    • I enjoyed reading all that BILL SODOMSKY !! … Lol

      Well said…. 🙂 and yes it’s a compliment. 🙂

    • Just got in to my supposed insider refinery desk today. I am not disagreeing with most of what has been said, as I stated in my first post. All I know is my end of things. I stand by my statements. And yes I do look and live the consumer side, debt or no debt. I totally understand your position, I just disagree for my own reasons. History will show who is in the right, Just to let you know, I have no economic and financial textbooks, just history and real world work, (off topic, I have watched 7 of my co-workers die in this business, so don’t lecture me on my insider status) and experience. Ya, the world is headed for some very dark times because of debt, not just the US debt. And for what it’s worth, I believe war is coming, and all of our thoughts and comments, yours, mine, others, the infamous (them) will mean absolutely nothing.

      • War is Big Politics. This will affect fuel prices and availability. Tankers are a #1 priority target, followed by land-based tank-farms, refineries, pipelines. CONUS at half of current liquid fuels (N. American production only) would be instantly at rationed war-footing, with economy “learning to deal with it” not very well (fooked).

        The Japanese failed to target Oahu and Long Beach fuel stocks in favor of old boats (that do not move without fuel), to the of historians. WWII Soviets realized that Germany ran on Just-In-Time not-from-here fuel, and prioritized accordingly to run them dry. Allied Command may have also had this info, yet were “otherwise prioritized”.

        Nuclear-powered carriers and subs may be the last runners, but without (oil-fueled) support vehicles/supplies, they don’t matter enough to keep the empire going. Do sub Commanders have millions of dollars in gold coin on-board “just in case”? If not, why not? Classified topic? Okay.

        If I’m lucky, I’ll qualify for an “A” sticker and 12 gallons of ersatz-gasoline or 8 gallons of bio-Diesel (per month), if I can afford to buy it. I’m getting the Diesel and Sta-Bil because I can burn it in a kero camp stove, portable tent heater, IDI diesel vehicle or IDI 24v/100A battery-charging genset. Solar pv and hot-water heat, plus occasional genset run is nice luxury at camp.

        Got locking fuel storage?

    • Opps, forgot one thing, do you think that I am not telling you the truth about capitol investment? I am here and watching it everyday?????????? Do the oil companies invest in empty holes, with no ROI, we just call it return on investment.

      • I think you need to read some of the prior articles for additional comprehension of the situation we find ourselves in. There was an article a couple of weeks ago that showed non-conventional oil companies used 60-65% of their income to fund their debt levels. All these investments you see are funded with debt. The debt becomes a burden because oil prices cannot increase. If they do…then the consumer is forced to decrease his consumption level. They can’t afford the higher prices at the pump and all the other must have consumables touched by oil. They cut back which forces the price of oil below where it can be sustained by the oi companies. I’d be curious to know how much debt your company has.

        “The U.S. Energy Sector is saddled with $370 billion in debt. In 2015, the U.S. Energy Sector paid 48% of their operating profits just to pay the interest on their debt. This ballooned to 86% in Q1 2016 when the oil price fell to $33. If the oil price remains between $40-$50, the U.S. Energy Sector will likely have to fork out 60-70% of its operating income just to service its debt in 2016.”

        https://srsroccoreport.com/the-subprime-u-s-economy-disintegrating-due-to-subprime-energy-debt/

  12. where did you get the figure that average white person is 58 years old, i realize our time is over but did not realize it was that bad.

  13. Apparently, it is not just USA. I am reading a Russian government report on “mineral strategy till 2030”, which is not looking good at all. For example, several items:
    1. The conventional oil reserves are at 20 years of supply, unconventional (65% of total) are at 35 years.
    2. Producing wells are 55% depleted, meaning over the peak.
    3. Current production rate is impossible to sustain beyond 2020 with the current reserves.
    4. Major and complex problems with new discoveries, with timely resolution unlikely.
    5. Unavoidable transition from mineral exports to a flexible export-retainment-import economic model.
    6. A list of minerals already in short supply.

    Overall, the document leaves an impression of long-term impending doom: an inevitable, patchy, slow but terminal decline in energy and minerals availability with shortening planning and forecasting horizons. Very much a chapter from the 1972 book.

  14. just to follow up on that age thing looked it up 2016 census average age hispanics 9,asian27, black 25,white 56. Back on that oil thing i drive a supercharged corvette i’m doing my best to help out that energy thing 6 miles to the gallon, hell i’m way past the 58 year white thing so what’s the difference.

    • Ethnic makeup of US population
      “demographics are destiny”

      The world likes what Europe and N.America were in the 1960’s and are bringing what they made in the old country to take advantage of the new. Expect here to be just like there, crowded, poor, desperate, Islamic, with oligarchs and a small enforcement class. Don’t like it? Die.

  15. The Bakken production is dropping even though more wells are producing. The State of North Dakota has a table.

  16. Thanks Steve, good work.

  17. how can there be real wealth in a ponzi scheme?

    • A: I’m worth 5 digits!
      B: I’m worth 6 digits!!


      CB: We will create as many digits as it takes…

      On a more seriously note, health, happiness and owning tangible assets are all forms of wealth that count, not their price tags.

    • Suckers contribute real wealth to a Ponzi.

      Starter & Early “investors” who get out early win big.

      Later “investors” may recover some of their “real assets” that are not spent/stolen/paid-out.

      Over-all loss for the general economy since no new wealth was made by making widgets or productive capital investments.

      Social Security is the Biggest Ponzi. FedGov won HUGE for 80+ years of “free money!”, retirees before about 1975 did great. Women did GREAT! People born since the 1965 peak are net losers and born since 1990 are greatly being raped on all fronts, as well as being told that it’s enjoyable.

  18. OK, as someone who has lived in the “Oil Patch” for the last 40 years, I have seen 4 boom/bust cycles.
    The ONLY thing different about this one is how fast it crashed. Oil was over $100/bbl and people were drilling like mad, producing like mad and created an oil glut. OPEC wanted to put “tight oil” out of business. Combine those two and it’s a recipe for disaster. Why has production fallen off so much? Because oil lost 60% of it’s value. If oil went back up to $100/bbl tomorrow, within two months, we would be at it again.

    WE ARE OUR OWN WORST ENEMY! We never learn. GREED is why oil dropped so much. “I’m going to get mine first” attitude is what killed it. If there was a way to slow the cycle down, it would be much a much slower crash. In fact, we may have never had one.

  19. Sorry…That reply made no sense at all. Exploration has “ALWAYS” been the spear head to new oil…You ignore all the capped wells…Reserves in Alaska…Blocked exploration to Federal lands and off shore that have also been blocked by “OBAMA.” This reeks of maligned opinion. So…Tell me “WHY” is CHINA drilling just beyond the 12 mile limit in the GULF OF MEXICO and pumping new oil in the millions of barrels…LOL…LOL…This just blows me away….The DEKOTA FIELDS are NOT the “END ALL” to America’s oil….There is enough UNCLAIMED OIL in the so called DEPLETED WELLS to keep America going for another 100 years…This report is rife with under estimates on “ALL” fronts….

    • You are a very uninformed person about oil, the economics of oil, and what EROI [or EROEI if you prefer] means and out-front with your ignorance.

  20. For adamantly ignorant people like Jean, I just got an email from a friend touting the wonders of a new oil find.

    It started out like this; if I had a link I would provide it, but I think it went out like a stock advertisement to lure investors, and may not be accessible from a link.

    “U.S. oil and gas exploration and production (“E&P”) company Apache (APA) announced a huge new discovery in West Texas’ Permian Basin last week.”

    To which Steve provided this link:
    http://www.artberman.com/saudi-permian-a-race-to-the-bottom-for-tight-oil/

  21. Great data and analysis as usual, I get the EROI issue, and that some commodities are in locations that make extraction uneconomical. Energy use has evolved over the years, from fire, water powered mills for flour, coal, steam (still coal), oil & gas, nuclear, solar, wind, geothermal, and more ideas, including Tesla’s theories (no, not the cars) being explored every day. For instance, there’s a guy in Mexico who fuels his motorcycle with water and it runs – he made the modifications himself, but more seriously there are many forms of energy being researched right now.

    While I see the EROI problem, I also see the opportunity for new forms of energy driven by human ingenuity and necessity. Is it not reasonable to think that as EROI falls this will drive even greater determination to find alternatives? If that is the case then will it be a classic ‘old world’ decline and ‘new world’ advance? The question then is can the new energy sources overtake oil.

    The focus on EROI is useful to identify the problem but doesn’t really take into account outside influencers or game-changing technological advances. Certainly we’re going to run out of recoverable oil eventually, so the challenge is to find the alternative before that.

    • “…… Is it not reasonable to think that as EROI falls this will drive even greater determination to find alternatives? If that is the case then will it be a classic ‘old world’ decline and ‘new world’ advance? The question then is can the new energy sources overtake oil.

      The “old world” decline will be a massive drop in population and what transpires as we get there, because the new energy sources you dream of don’t exists and are not even being talked about [outside of science fiction]. I hope we find an energy savior but…

      The earth’s other natural resources can’t sustain 7+ billion either; something has to give.

      • Glad you know what I dream of, cuz I never remember.

        SRSRocco brings a tremendous amount of analysis and value to the oil discussion, but it is a discussion purely of oil in today’s context. Valuable and useful, but things do change.

        The massive drop in population is also science fiction, I agree there are a few scenarios that concern me, but like the end of oil, the end of population isn’t here yet. For those who choose to look there are many opportunities being explored and tested, including Tesla towers and other forms of energy production. For that matter, there’s lots of coal too, and with a little effort to eliminate emissions, coal could still contribute to energy needs. Diversification is what counts, not putting all our eggs in the oil basket.

        Keep thinking inside the box though, it is entertaining.

  22. “the Bakken was going to peak and decline in 2016-2017 irregardless of the price.”

    “IRREGARDLESS”

    ??

  23. I largely agree with mos tof your premises, Steve. However, this Thermodynamic collapse is so counterintuitive as to render me quite skeptical.
    As a friendly challenge to your formidable analytical skills, would you kindly write an article breaking down that theory in your own words. I looked at the Hill Group article and glazed. Perhaps you can streamline it so some of us here could get a handle on it.
    K

  24. I guess I’ll write one more response. Decades ago they said the atomic bomb was going to catch the sky on fire, the Bikini Atoll test was going to blow a hole in the bottom of the ocean. Not so many decades ago we were supposed to be frozen block s of ice right now. I beginning to just live, and come what may I’ll deal. Ta ta, have fun discussing an total unknown outcome.

  25. Those of us that are native to Western North Dakota understand the boom and bust nature of our oil patch. Some of us remember all the way back to the 1950s. Our booms usually last about 7 years and our busts about 12 to 15 years. We are NO where near “peak” oil – just peak stupidity (again). High rollers come and go but we will survive and start the cycle again. Actually, no big deal.

    • True. We were literally sketching up well pads on copier paper and handing it to the contractor to build. No engineering, no bidding, no cost control When a contractor flew up for a meeting in his private jet, totally serious, I knew things were nuts. Well I already knew, but that confirmed it.

  26. Can’t the drop in production be linked to the collapse in natural gas prices and consequent reduction in drilling? Maybe there wouldn’t have been a drop in production if prices had remained stable at a profitable level?

  27. Please accept my apology for using a not very polite expression

  28. There are a couple of things I question regarding EROI? As the price of oil rises past $60 towards
    $100+ how many wells will be pumping? Secondly, in 2015 we had 13.44% renewable energy i.e.
    dams. solar and wind turbines. We are now putting wind turbines of the coast of the USA. What will
    be their input by 2020? 2025?

    • First of all, the oil price is not at $60.

      Second, wind turbines are a product of burning oil, and they do not economically supply electricity.

      This has been covered many times on this site.

      If in the future they are producing a larger % of total electricity, it will be because the ammount from oil or gas is significantly down.

      And no one without grants, nearly interest free loans, and subsidies can saty operational; they bleed money. In other words they lose a lot of money so companies are not going into business with wind farms.

    • joe lindell,

      I advise you listening to our upcoming interview on the THERMODYNAMIC COLLAPSE of the oil industry as the price of oil falls to $12 by 2020. The gentlemen I will be interviewing don’t believe the price of oil will rise, instead it will continue to fall.

      If this is true, then we can KISS GOODBYE more expensive oil wells coming online at $70-$100.

      steve

  29. This, what’s happening with US oil production, is incredibly important! RK points out the role of debt. Please let me take that one big step further. Unpaid debt hurts banks, and with a Fed that’s out of steam, the only dirction is down.
    In 2008 the trigger was Icelandic banks. Could US oil be it the next time?

  30. I agree CT, it’s definitely about much more than the present. The 4th Industrial Revolution is upon us, and there’s not enough talk about it.

    • yngso,

      4th Industrial Revolution is upon us??? That was a GEORGE CARLIN joke correct?

      I highly recommend you listen to our upcoming interview on the Thermodynamic Collapse of the oil price and industry by Louis Arnoux of nGeni and the Hills Group.

      steve

      • Find the recent paper by Louis Arnoux. Read and understand, then listen to the interview a few times. I would like him to be wrong, but operating with his outcome in mind is decent insurance for a person/family.

        • The 4th Industrial Revolution! Where everyone has a future in Ag Supplements and Bio-Fuels! Steel is free, when you pound it from the limitless concrete with your bare hands.

  31. So, what about debt? Venezuela – important oil country, on the back burner right now – has to make some payments, and revenue poor and heavily indebted US oil by June 2017. It’s getting interestinger and interestinger!
    Steve pointed out that it takes a lot of energy to produce robots. Then I ask, how much energy does it take to produce a productive human being, and how does the comparison work out specifically for the tyoe of tasks that industrial robots perform?

  32. CT, again I must agree with you. Population is an important subject. We humans may morph into something very different or even disappear, but not anytime soon.
    Today I heard even Jim Rogers talk about the end. Yikes, it’s disgusting!
    Energy, mass and light never go away, they just change a lot how they interact with each other.

  33. Steve, I have no idea who George Carling is, and I didn’t invent the 4th Industrial Revolution.

  34. All I’ve tried to do so far is to do so far, is to put the future into this discussion about energy. Sure, I’ll see the Arnaux interview. That may give us something to talk about.

  35. Joe and Steve, the oil glut is increasing ever more rapidly as the world economy weakens. Look no further than next year for possible high drama.

    • It’s time to trade your extra digits/paper for a full and extra home heating oil tank. Go nuts and install a “fuel polishing system” if it’s more than 5 years worth at the current burn rate, since it might be a lifetime buy.

  36. Moreover, if they do believe in Peak Oil, then they think there is a wonderful “Silver-Bullet Energy Technology” that will save us all.

    The Silver-Bullet Energy Technology is right here in this video. https://www.youtube.com/watch?v=lEV5AFFcZ-s The only reason why it has not come to market is because big oil and big government pushes it down

  37. The Glenlivet sounds like a good idea to give the nerves a rest. The govts and central banksters are so dead set on fully introducing the NWO, that they will step in pdq to hinder hunger, social unrest and that they lose control.

  38. By the time EROEI kills oil-fueled transportation, there will ber plenty other of ways to power vehicles, some which exist already. Coal- to-liquid is interesting since there still is a lot of it around, and just burning it isn’t so smart.
    We humans don’t do backwards, we progress in spite of ourselves. Technology helps us do more with less energy.

  39. The 4th Industrial Revolution isn’t a joke. It’s happening, and new tech is constantly making the way we use energy more efficient.

    • More efficient things we don’t need. Improvements in soil fertility? More individual freedom?

      Automation of war. Automation of population control. Remote control.

      iPhone Seven! Mind-control for herds, with extra-fast-rise-time RF pulses (G4-WiFi-BluTooth) in your pants or or against your brain. Surprise-‘splody Li-Ion batteries!

  40. So it seems that EROEI-induced oil death will happen sooner rather than later. Natgas is excellent vehicle fuel, bu that too won’t last long if used instead of oil. Good then, that there are other ways to produce energy.

  41. I have a theory about why Venezuela is going through hell right now: Slick Willy told Col. Chavez that he could have his little socialist experiment if he’d just ease up on oil production to keep the price high. “Slick” himself could say that “naah that’s gawn out the winda”.

  42. Efficiency isn’t about making more stuff that we don’t need. That’s just wasteful.

  43. The more I hear about this Arnaux guy, the less I want to hear from him. What is it with all of you people here? Are you wannabe or in-the-closet or Fifth Columnist Amish or something? There are well-established societies out there that you maybe can join, or you can create your own, with your nearest neighbours the Arian Broz or somebody else that’s nice.
    The rest of us don’t want to revert, but find a balance. That’s what nature does, and don’t come and tell me that nature is stupid or wrong…

  44. The future of oil. or any other energy source for that matter, is about EROEI. The rest is games people play.

  45. Right fazsha, and there’s a very important correlation between the US oil industry and debt. The negative efect threaens the banks and maube cause the next crash?

  46. The one thing is not too much mentioned here is the elephant in the room and that is of course The FED
    which enabled this insane crazy satanic debth system to evolve in the global mess. By the time the world resets the scheiss dollar won,t be around anymore. New technologies will come around globally
    100% guaranteed just the monopolists hate competition as it will kill their profits. Gloom and doom
    is not what will bring this world in balance it will in fact the closing of the fiat debth system called central banking which will be the way forward.

    • pieter,

      Try something different for a change, if you can. NEW TECHNOLOGIES are only dependent on CHEAP HIGH EROI Oil. Do you understand? The GLOBALISTS or ELITE using High Tech surveillance and robots disintegrates when globalism is destroyed by the Falling EROI and global oil production.

      Just a smart phone today needs the complex supply chain of 55 countries. So, when liquid fuel production collapses, so will the complex supply chain…. THUS… HIGHLY COMPLEX TECHNOLOGY DISAPPEARS.

      Sure, there will still be technology around, but not the highly complex stuff.

      LASTLY… I want everyone to think about all the high tech stuff today. Yes, there are lots of cameras taking pictures of us all over. However, these cameras made up of HIGH TECH materials are very fragile. They don’t have a long lifespan. Now compare that to an 1800’s metal shovel. You can put in a new wooden handle and the shovel still functions.

      This is not the case with HIGH TECHNOLOGY. So, don’t worry about BIG BROTHER. BIG BROTHER will disintegrate under the Falling EROI. However, there still will be corrupt local and regional leaders we will have to deal with.

      steve

  47. Don’t worry pieter. They can shovel and toil and use lots of energ inefficiently and break their bodies and have short life spans, while the rest of us get on with it and create new tech that gives us more using less energy. Threre are other energy sources than oil, and more are being discovered.
    We humans are like bumblebees in this: The bumblebees have wings that are too small, and shouldn’t be able to fly, but they don’t know that and keep on flying anyway. We humans don’t realize that nature has too many challenges for us to overcome, so we just obstinately keep on rising above the obstacles.
    – And oh, by the way, did anyone ever take a picture or make a video with a shovel? The doomsdayers always get it wrong.

    • yngso indeed there are so many various ways of energy , fusion, thorium reactors, hydrogen etc.
      Steve makes a lot of sense that there will be a urgent need to look for other sources of energy. Another fact is that many countries in middle east can produce very cheap oil 2-3 usd max clearly
      a reason for all the wars in the middle east. The whole picture is a lot more complicated and it
      involves more then eroi of oil and gas. Graphene is the area where now globally the race is on and
      ask around in your family and friends how many ppl ever heard of graphene. Hydrogen is to me still
      one of best ways forward clean and very powerfull just need to produce it cheaper. Time will tell but
      as long the Pentagon burns 5 million bbls per day and a trillion $ or more per day there is still lots
      of cheap energy around.

      • Pieter,

        All those energy technologies take oil, coal and natural gas to extract the materials, transport and manufacture. That’s the BIG problem most can’t understand.

        Furthermore, hydrogen is not an energy source, rather it’s an energy carrier. You need some type of energy source to create the hydrogen fuel.

        Steve

  48. OIL EROI is falling. Energy doesn’t disappear, that’s just basic physics. There are other energy sources than oil.

  49. pieater and yoyo yougso make a great duo trolling clown show , don’t you think so ?

  50. Steve,

    Really I understand the Eroi very well. I am convinced new technology will evolve globally
    as long it is not supressed by our elites. This technology of http://www.nanoflowcell.com and
    many others based on graphene technology will enable to produce cheap hydrogen etc.
    Advanced Algea technology will provide unlimited bio diesel and food as there are many
    more area,s where research can create breakthough. Fact is that last 100 years not much is
    invested in new revolutionair energy technology. Those countries with sunny climate can capture
    so much energy that they can basicly sustain themself very easy. Not for nothing is Toyota now
    building cars with hydrogen technology. Clearly why would we just accept the doomsday fait but instead use our knowledge to power the world properly. I like to bet with you that the scenario
    you are predicting will not materialise. I enjoy your analysis though.
    @Silvrwllwin I am not a troll btw

  51. Right Pieter, new tech always helps us do more with less energy. You’re right about sunshine too. “Poor” countries have lots of that. The doomsdayers are only dooming themselves, and make sure they’ll miss out on all the fun the rest of us will be having!

    • Yngso,

      New technology does not help us to do more with less energy. Actually, its quite the opposite. The more technology that is used, the more energy is consumed…. thus, lowering the EROI.

      The only way if technology would do more with less energy, is if it violated the laws of thermodynamics. It doesn’t.

      Steve

      • Can you prove that, Steve? You really didn’t know that we humans can’t live without technology? Also, are you ignorant of the most basic laws of physics, that teach us that energy is never lost? It can always be found somewhere, so the doomsdayers lose as usual.

  52. O Swirling One – around the drain it seems – trolls operate very differently. In fact, it seems that the’yre in charge on this site. No, it’s about keeping the doomsdayers in check for myself and a few others.

  53. “Well done…. hat’s off to the new wonderful fracking technology.” With that comment you have totally discredited yourself with anyone in the oil business. Everyone knows fracking is old technology. That being said, your article has good points, but we need to separate the hype from the facts.
    1. A typical Bakken well will give you 250,000 bbls and cost $7.5 million installed and online. It will also give you 500 MMSCF of gas. So if you use the gas to pay for operating expenses and royalties, $30/bbl. is gross break even. Throw in taxes and it’s around $40. Throw in the $12 for Buffet to ship it, and you ain’t drilling at less than $52 if you want to make a return.
    2. The Bakken boom was insane, and expenses were double. That has now been wrung out.
    3. A lot of the upfront cost was pipelining, especially gas. Those pipes are now in.
    4. Most Bakken players are walking corpses. They were counting on $100/bbl, so they are bust. However the assets remain and whoever picks them up for pennies on the dollar will make a killing and will produce the oil.
    5. Well results keep getting better. People are experimenting with 50 stage fracs and increasing the sand. It is working. I’m still sticking with 250,000 bbls. per well, but there is upside. Drilling in shale is still in its infancy.
    6. Peak Bakken production is probably around 1.5 MM bpd. With these prices, we’ll never see it. However the original doom porners were saying 400,000 bpd.
    7. Energy independence is a pipe dream. The real goal is Mid East independence. We can import from Canada, Mexico, and Ven and satisfy our needs.
    8. Speaking of Ven, they have huge reserves. They can get to 10 MMBPD production. The problem in Ven is purely political.

    I believe in Peak Oil, but put the problem time starting around 2035. We should be investing in thorium while we have this time. Liquid fuels can be supplied with coal.

    • JamesD,

      Yes, I know Fracking Technology is old as dirt. I wrote about that years ago. I was just being sarcastic. Regardless, peak oil will be a BIG PROBLEM way before 2035. I advise you to listen to the gentlemen I will be interviewing in a few weeks about the Thermodynamic Collapse of the Oil Industry and Price.

      Also, if we see $12, and you want to celebrate that, then we can destroy about 75-80% of Global oil production.

      steve

  54. The ultra-low oil price will help the world economy revive eventually, after half a decade or so. The estimates I’ve seen of how much oil there’s left, go to much further than two decades.

  55. Ok, we get it, gasoline, diesel etc are all energy carriers, so there are many ways to make energy available. The fallacy is that EROI killing off one carrier, means that it’s the end of everything. New, viable carriers exist to replace the old ones.
    I would be happier to receive 99$ for every $ invested like in the 1930es, but hey getting 4, or 400% today still ain’t bad at all! Still that great industry would have to fall by more than 300% to kill it.

    • yngso,

      Actually, gasoline and diesel are ENERGY SOURCES, not carriers. While oil is refined into those products, it was an ENERGY SOURCE from the beginning. Making hydrogen as a fuel you must use some energy source to make the fuel. So, hydrogen is NOT AN ENERGY SOURCE, rather its an energy carrier. Diesel and gasoline are ENERGY SOURCES, not carriers.

      That is the difference.

      As for your notion that getting 5/1 EROI or four profitable barrels is not that bad, fails to take into consideration that our modern society needs an energy EROI of 20/1 minimum or 30/1 to be prosperous. So, as the U.S. EROI has fallen way below the 20/1 minimum, massive amounts of debt have been injected to try to offset it.

      yngso… this is the problem. Please check out our upcoming interview and you may realize just how bad of a MESS we are in.

      steve

  56. Steve, it’s nice that you engage with us that comment, but when you try to refute a “supposition” of ours, you need to show us why it is so. Your authority as editor or site owner isn’t enough.
    I see your point though: The energy imbalance or shortfall is one of many that we humans have created over millennia. The overreach has become tremendous in many ways, so a reset needs to happen.

  57. Steve,

    This new project in middle east just shows you that new technology is advancing and changing
    the mix of various energy sources. Same as nuclear power we have reserves for hundreds of years
    of uranium /thorium

    http://fuelfix.com/blog/2016/09/20/companies-offer-to-build-cheapest-solar-plant-ever/

    2.42 cents per Kw is pretty efficient

  58. What’s your take on this?

    http://oilprice.com/Energy/Energy-General/Bad-News-for-the-Anti-Fracking-Crowd.html

    The analysis indicates that the EROI ratio of a typical well is likely between 64:1 and 112:1, with a mean of approximately 85:1. This range assumes an estimated ultimate recovery (EUR) of 3.0 billion cubic feet per well. This is similar but significantly higher to the EUR of coal, which falls between 50:1 and 85:1.

  59. anti_republocrat | September 25, 2016 at 8:07 pm | Reply

    Gee, you mean Hubbard was right after all? I believe “conventional” oil probably peaked around 2010. People didn’t notice it because of the foolish money-losing production from the Bakken and oil sands resources and also the post 2008 recession. I can’t imagine why this author foresees oil prices not rising again. They will rise, but not enough to bail out the banks and oil companies that made these investments. He’s right about that. Oil prices will be constrained because alternative fuels are now competitive with oil, even for transportation, and as hydrocarbon prices rise, wind and solar will become even more competitive.

    There will be disruptions and hard times. I’m certainly not qualified to determine how bad things will get, but neither is this author. There are too many non-linear relationships for anybody to make that determination. However, I think land in North Central US and Canada, and apartment buildings (none leveraged with loans) are probably a better investment than precious metals. IMHO.

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