The Hill’s Group Response To The USGS Wolfcamp Shale 20 Billion Barrel Deposit

(The Hill’s Group),

Yes, the magic words; “technically recoverable”. I wonder how much “technically recoverable” oil is on Mars? There may be a lot, but oil that will ever see the surface of the Martian landscape is a different matter. Those would be reserves, and at $45/ barrel there is exactly zero. The same that can be said for the Wolfcamp.


I asked The Hill’s Group what they thought of the recent USGS announcement of the 20 billion barrel Wolfcamp shale Deposit in Texas:

Release Date: November 15, 2016

This is the largest estimate of continuous oil that USGS has ever assessed in the United States.

wolfcamp-shale

The Wolfcamp shale in the Midland Basin portion of Texas’ Permian Basin province contains an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids, according to an assessment by the U.S. Geological Survey. This estimate is for continuous (unconventional) oil, and consists of undiscovered, technically recoverable resources.

The estimate of continuous oil in the Midland Basin Wolfcamp shale assessment is nearly three times larger than that of the 2013 USGS Bakken-Three Forks resource assessment, making this the largest estimated continuous oil accumulation that USGS has assessed in the United States to date.

This was The Hill’s Group Response:

“the U.S. Geological Survey assessed technically recoverable mean resources of 20 billion barrels of oil and 16 trillion….”

Yes, the magic words; “technically recoverable”. I wonder how much “technically recoverable” oil is on Mars? There may be a lot, but oil that will ever see the surface of the Martian landscape is a different matter. Those would be reserves, and at $45/ barrel there is exactly zero. The same that can be said for the Wolfcamp.

Some geologists at the USGS did some investigation (because that is what they get paid to do) and found some liquid hydrocarbons that no one could ever make money producing. The USGS team are not engineers, they are geologists, they just want to acquire knowledge about the quantity of liquid hydrocarbons in the earth’s crust. As far as they are concerned whether or not it would ever benefit the economy to extract them is beyond the point. In other words, that is not their department!

We then find this non event (just the acquisition of the zillion’th piece of scientific information) plastered all over the media. To an uniformed public it is a bonanza of wealth. Of course, in reality it is a big puddle of black goo that will never do anyone any good. Which of course the public doesn’t know.

Someone is selling snake oil, but who? Could it be the same bunch that convinced investors to part with over 1$trillion to construct an industry that produces $362 billion per year in gross sales. Which means that if they generate a 10% profit margin (which they don’t) on those sales the investor will never get their money back. They will have just transferred it to some other pocket besides theirs.

What we are dealing with is one of the biggest, best funded, sneakiest con jobs in history. We shouldn’t be surprised! It is the type of thing that one would expect to happen at the end of an era. That is, the vultures showing up to feed on the carcasses!

TheHillsGroup.org


I asked The Hills Group if they would be interested in providing articles from time to time on the oil industry, their ETP Oil Model, oil depletion and other aspects of the energy industry.  They agreed.  I look forward to publishing their articles as they submit them to the SRSrocco Report site.

Lastly, if you are interested in checking out The Hill’s Group Report 67 page report, CLICK HERE.

Check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

Enter your email address to receive updates each time we publish new content.

I hope that you find SRSroccoReport.com useful. Please, consider contributing to help the site remain public. All donations are processed 100% securely by PayPal. Thank you, Steve

38 Comments on "The Hill’s Group Response To The USGS Wolfcamp Shale 20 Billion Barrel Deposit"

  1. I SUPPOSE WHEN THEY FIND THE NEXT RECOVERABLE MAJOR DEPOSIT..YOU WILL STICK TO YOUR NUTTY REJECTION OF THE TRUTH…RECOVERABLE OIL IS OUT THERE..RESERVES NOT DISCOVERED ARE OUT THERE..WHEN GOVNMENT LANDS ARE “RE-OPENED” FOR EXPLORATION WE WILL FIND MORE OIL….YOUR FORMULA FOR DECLINE IS FULL OF HOT AIR…LOL….LOL…LOL….LOL…

    • JEAN,

      Ah… your comment is in ALL CAPS. Excellent use of the tool. Well done.

      Anyhow, I gather you even didn’t read The Hill’s Group response. If you didn’t, please read this paragraph:

      Someone is selling snake oil, but who? Could it be the same bunch that convinced investors to part with over 1$trillion to construct an industry that produces $362 billion per year in gross sales. Which means that if they generate a 10% profit margin (which they don’t) on those sales the investor will never get their money back. They will have just transferred it to some other pocket besides theirs.

      JEAN, I gather you did read my article on the DEATH OF THE BAKKEN where the estimated Free Cash Flow was a NEGATIVE $32 billion. So, in all the investment into the Bakken, no one made any money. Matter-a-fact, they lost $32 billion.. SO FAR.

      I’ve spoke to a President of his own small oil company in Texas. He has been looking for “Conventional” oil for 35+ years and knows just about everyone doing the same thing in Texas, Louisiana and Oklahoma. None of these folks would ever dream about drilling for “Unconventional” shale oil. They knew early on it was a Ponzi Scheme.

      This President estimated that the Barnett Shale Gas Field has come in at a loss of $34 billion… SO FAR. I could go on and on.

      The massive amount debt in the U.S. Energy Sector means that it STOLE ENERGY from other sources to produce the oil. Thus, most of U.S. oil production today, does not pay for itself.

      Thus, The Hill’s Group assessment of the “supposed” Wolfcamp Shale Deposit is SPOT ON.

      steve

      • A short article today Steve eh? BUT it says a lot. I bought a copy of the Hills Group Report today on this basis. I get sick of reading sometimes especially anything of length. I think that is where a lot of the arrogance comes from today, people read too many headlines and not enough content.

        • GrahamB,

          Yes. Actually, The Hills Group response was just an email reply to my question. I asked them if they wouldn’t mind me publishing their reply. They said, “No problem.”

          I agree with you. Even though THE HILLS GROUP wrote a brief reply, they said a lot.

          steve

    • A big mistake oil analysts — and citizens — make is they pay too much attention to the extraction side of the industry and not at all to the consumption side, which is where most of our problems lie.

      Petroleum use in general is non-remunerative. Only about 5% of total is used for commercial purposes which offers a return to the user: agricultural, delivery, transit, construction, emergency, etc. The rest — 95% — is entertainment, it does not pay to drive.

      What pays instead is credit and lots of it. Because of diminishing returns on driller investment, increased percentages of credit must be deployed to drillers, this starves the customers of funds => they cannot support the bid needed in the marketplace to meet the top-line cashflow demands of the drillers. Even more loans/bailouts to drillers => more starvation of customers => lower bid => declining price as drillers dump fuel what appears to be an excess of fuel to meet their collapsing markets. The customers are broke; the entire oil industry is insolvent, the country has been ruined by its toys.

      The harder the drillers try … the more they drill expensive plays like Wolfencamp (the reserves of which may have already been counted as part of Permian Basin play) the less solvent the industry becomes. Drillers are the new subprime; the structured finance is the same, the lenders are the same, the fraudulent narrative of endless growth and the outcome is also turning out to be the same.

      Everything the management tries or will try … will make matters worse. There are only two outcomes/solutions: stringent resource conservation: – or –

      … Conservation by Other Means™.

      There is no third way.

      • All bleeding eventually stops. Your only outcomes/solutions can only slow the bleeding. The patient is terminal, there is no solution. This is the third way.

        • Spoken like a true surgeon. I was wondering how much money has gotten sucked in by the brokers on just drilling permits, real estate sales, speculation, royalties and commissions, you know, all the stuff before the first truck pulls up to the site to start drilling?

      • Not sure what you mean. 95% of energy the energy from burning FF is used in its production? Here in old Europa most of the money you pay for filling your tank goes straight to the government. Hard to credit that the state can cream off so much off the top of this process if as you imply the net benefits are mostly imaginary. Even here alternative energy is subsidised by billions of dollars taxed from the fossil fuel industry.
        As an aside I worked on offshore oil rig for several years. Even when the reservoir was more or less finished, we produced 99% of our own power and still exported a million scf methane daily. Of course a fair amount of energy went into building the rig, but it is designed to redeployed to another field and should last a good 15years or so. In the early life of the field gas export payed for the rig, and the 25000bbl of oil per day was pure profit. (It was primarily an oil field, the entrained gas was a side benefit) That’s £1000000 profit per day from a marginal field in one of the most high cost oil provinces in the world.
        As one who’s worked at the sharp end of energy I find your figures questionable. Sounds like you’re a desk bound theoretician to me.

      • Awesom summary Steve. There’s no third way. Maybe Brexit and Trump are managed ways to localized economies. Spreading the word will crash everything in an eyeblink. For now, my opinion is the ivory towers are working on degrowth. Managed degrowth. I hope so.

  2. Steve, any idea when you’re going post the interview with hills group? The good news is my wife is slowly beginning to understand this and its ramifications

    • Adam,

      Great question. The Hills Group, Louis Arnoux and another gentlemen have been very busy working on that Thermodynamic Oil Collapse White Paper for the U.K. Royal Society. I do believe the Hills Group now may have some time, so I will ask them.

      steve

      • Thank you for the your response I look forward to the interview! I just saw on the rice farmer blog( he also believes in net energy decline) solar panel roads that will power the future allegedly. I think it’s a total joke as in it’s not practical at all but I was wondering what your take on this is bc 2 yrs ago I was with a group of millennials for my brothers in-laws bachelor party all fresh out of major colleges celebrating this idea of solar panel roads I bit my tongue and remained silent.

  3. There are a lot of people praying physical gold and silver will “go to the moon”. Ever since oil was discovered gold and silver have been linked to the price of oil. The bull market in the late 70s was an oil crisis.
    For gold and silver to “go to the moon” oil would either have to “go to the moon” too or gold and silver would have to decouple from oil.
    If either of these occurrences happened the people praying for high gold and silver prices might change their minds because of the catastrophic implications of of either gold and silver decoupling or high oil prices.
    Physical gold and silver are hedge against currency and that is why I own them. But if you make a lot of money from them the world will be in a very bad place indeed.
    Be careful what you wish for.

    • What the people who have stolen the savings of generations seeing their fiat benefits cut off will be bad?

      Why isn’t it bad that the debt abusing user hasn’t yet been called into account?

      Your fear of a correction in debauchery is unfounded.

  4. DisappearingCulture | November 19, 2016 at 3:46 pm |

    “Physical gold and silver are hedge against currency and that is why I own them. But if you make a lot of money from them the world will be in a very bad place indeed.
    Be careful what you wish for.”

    But what is going to happen has nothing to do with wishful thinking. What is going to happen, will happen. What has already been set in motion can’t be changed by anything I can think of. Although some actually believe a new president or some other hopium will change things into a utopian future.

    • Unlike you I am not psychic. That is why I hedge for all possibilities. Gold and silver are one possibility. That is why I own some. But for mine it is the worst possibility and I would be happier if my gold and silver appreciated at it’s present rate for me of around 10 per cent per year.
      Steve thinks gold and silver will decouple from oil. He has not given enough evidence for this conclusion. He might be right. Or he might be wrong. There is always a danger in saying it’s different this time.
      I went sailing a couple of months ago in the bay of Islands New Zealand with a guy who bought a lot of silver @ $40 an ounce. In that time he has lost over 50%. I won’t tell you how much I made shorting it on the futures market in the same time period.
      That is why I hedge.

  5. There is more gold dissolved in the ocean than on dry land. Fritz Haber of Haber Bosch fame developed a process for extracting gold from sea water. The only problem was the cost of extracting the gold far exceeded the market price of gold.

    If the production price exceeds the market price you need one of two things to stay in business, a subsidy or a. loan (credit). To pay off the loan or if there are no more lines of credit available you have to have the price of your stock rise. For the price of your stock to rise you have to convince “investors’ you’re Company has a bonanza coming and your Company is a good investment.

    The best way to increase investor interest is to embellish prospects (lie). Others have seen this game before and get in on the ground floor and confirm the lie and push the stock price up but bail out before the bubble bursts.

  6. If we have a reset and all assets are repriced, say 20%of the top in oil which is about 30.00 a barrel. Won’t we be able to extract oil for another generation at an economical price. If so, it will give us time to create alternatives. Solar for cheap. Like the Chinese are doing now. This deflation cycle is not complete.

    • efskeletor,

      Actually, The Hills Group work on their ETP Oil Model suggests that we have very little time left, maybe 10 years. The only ENERGY alternative that I have seen that could be a SERIOUS OPTION, is Louis Arnoux’s nGeni technology. All other renewables just won’t work. And that is based on Thermodynamics.

      steve

  7. The public who invest understand the price of a barrel of oil and the price they paid for the stock, what few understand or know is what’s the real “all-in” cost to produce the barrel of snake oil ?

  8. Bill Sodomsky | November 20, 2016 at 6:42 am |

    What a pleasure, what a privilege to have a site where we have the confluence of the Hills Group, Steve Ludlum (a.k.a. Steve from Virginia), Louis Arnoux and Steve St. Angelo.

    We’re getting somewhere now albeit too little too late from a Modern industrial Society perspective. In the meantime, imagine Gail Tverberg, Louis Arnoux, Steve Ludlum, Steve St. Angelo, Alice Friedemann, Ted Patzek, Norman Pagette and a few others, gathering together on a common ground website sharing their insights. Let’s hope! Way to go Steve!

    • Bill Sodomsky,

      Thanks for the Kudos. However, Gail Tverberg has made it clear on her site that the work of The Hills Group and Louis Arnoux on the Thermodynamics is rubbish. So, it may be difficult for those folks listed above to see things the same way…. FOR NOW.

      The reason Gail does not understand the Thermodynamics of oil depletion is that she is too focused on a very small aspect of the oil industry. So, I am not put off by her disagreement, just that she doesn’t see the entire picture yet.

      More about this in future articles.

      steve

      • With all due respect Steve you keep using this term “thermodynamics” but what does it really mean? I’ve read the Hills Group and to put it in the clearest and simplest terms it means “waste heat.” The waste heat of energy consumption was apparently not accounted for in projections of production/consumption therefore the future projections of supply are overstated. Yet I’ve not seen evidence that this is true, only speculation that it might be true. So for for me the Hills group analysis is interesting but theoretical until I see credible consumption projections that actually came up short because of waste heat, if they even exist. Thanks.

        • Mossmoon,

          The reason the Hill’s Group decided to formulate their Oil ETP Model is that measuring the falling EROI, depletion rates or financial on oil companies balance sheets is imprecise. Thus, the thermodynamic Oil ETP model fills in the blanks.

          You will notice the price of oil chart or the OIL ETP chart trend line accuracy was R = 0.945, or pretty damn accurate.

          So, we will see just how bad things will get because most people don’t understand the science.

          steve

  9. Thanks, Steve and all for your work and comments. I live way out in the sticks, starting to research electric vehicles. Steve, simple explanation of the n-Geni technology, please.

  10. Northwest Resident | November 20, 2016 at 10:44 am |

    “Someone is selling snake oil, but who?”

    In my opinion, at the highest levels of industry, finance, defense and intelligence, there has been an acute awareness of the approaching energy collapse for many years. The selling of the snake oil in the instance is merely part of a well planned and deployed propaganda effort on a massive scale to keep the general public ignorant of the dangers that lie ahead and to keep the illusion of “all is well” alive and viable. The only possible reason for doing all this is to buy time — time to prepare for what is to come, exactly what we have seen the U.S. government and other governments quietly but steadily doing. Maybe time to come up with a technological miracle that replaces fossil fuel energy? In any case, I do not believe that the selling of this and a whole lot of other snake oil is anything other than a coherent centrally-directed plan to keep this shit show going for an indeterminate amount of time with full knowledge that it must and will end, badly. Just my POV.

    • Agreed NR. They know. Degrowth seems impossible, so they keep pushing. They should try an inversed worldwide Marshallplan.

  11. Was well said from Hills group, and good to know they ready to let you publish their research based articles…win-win scenario for everyone….for Hills Group because their message would be reaching to many people (I am sure they would love as many people as possibly understand their concept of Thermodynamic collapse) and for readers (like myself) “well researched material” at their finger tips to learn and stand in front of billions…who did not learn….thanks Steve.

  12. Looks not good for gold and silver.HUI from 285 to 170.Such a crash in the stocks?Unbelievable.
    All the analysts totally wrong.Maybe i should change my profession.Such predictions should be no problem.

  13. Benito Camela | November 27, 2016 at 9:36 am |

    And remember, nuclear energy is a scam.

    https://www.youtube.com/watch?v=iGkMRAq4kzQ

  14. Steve,

    The majors will drill the Wolfcamp and turn a profit at $30/bbl. This is fact.
    You are not following the ‘step-change’ that has occurred in the industry.
    Please elaborate on why the Wolfcamp is not economically viable?

    • Rytis,

      I gather you did not read my email response or are you paying attention to the facts out there. You are more than welcome to believe the majors can produce the Wolfcamp at $30 a barrel to the cows come home, but the fact remains the U.S. Oil Industry is in BIG TROUBLE.

      Don’t you understand that Chevron spent $18 billion more on CAPEX and DIVIDENDS than they received in operating Cash in 2015. Thus, they had to borrow money to pay for CAPEX and dividends. Exxon has spent $8 billion more in the first three quarters of 2016 to pay for CAPEX & DIVIDENDS than operating cash.

      rytis… again, where in the living hell have you been? You really believing the MAINSTREAM ENERGY HYPE???

      Shame on you.

      steve

  15. Steve,

    Not talking about the oil industry as a whole, not talking about CAPEX, etc.

    lol

    Talking about the Wolfcamp and its viablility or its non-viability..

    Take care 😉

  16. What I don’t understand is this: how do you guys stay positive?

    I’ve read the Hills Report twice and most of Steves output, it’s pure Doom. I’ve no idea how Steve does it! And I’m a doomer 😉

    Ok, theoretical question, by 2025 what’s the carrying capacity of the planet without oil?

Comments are closed.