What Will The Death Of The Great Bakken Oil Field Look Like??

Very few Americans realize just how bad the domestic energy situation will become in the next several years.  While U.S. shale oil production has surged over the past five years giving Americans a false sense of energy security, the next five years will certainly destroy this myth once and for all.

Unfortunately, there still seems to be no shortage of articles pushing for U.S. Energy Independence.  One article that provided me with a good laugh was, Why American Energy Independence Makes Sense.   Here were the two best jokes in the article:

1) Oil is sucking hundreds of billions of dollars a year out of the U.S. economy. If we became energy independent, our trade deficit would be cut tremendously. Not only that but our money could begin to go to American-owned energy producers.

2) With technological breakthroughs, we have been able slowly rise again to our feet, but we still have a way to go. The U.S. needs to free itself from the dependence of foreign oil. Call your Congressman and Senators and let them know that you are for energy independence!

The author states that energy independence would allow money to flow to American-owned energy companies.  I find this simply hilarious as the majority of U.S. shale oil and gas companies haven’t made any positive free cash flow and are hemorrhaging from increasing levels of debt.  And, this took place when the price of oil was more than double the current price today.  Can you imagine what will happen to the balance sheets of these shale energy companies this year with an oil price of $50?

The second joke was even more amusing.  The author finishes the article asking Americans to call their Congressmen and Senators and let them know, “You are for Energy Independence.”  LOL.

This kind of thinking reminds me of the famous line from the movie Aliens when Sigourney Weaver (found after being in suspending sleep lost in space for quite a while) attended a meeting with the typical business suits saying, “Did IQ’s drop sharply when I was away.”

So, why will the U.S. not become energy independent?  Well, if we look at the chart below, it should give us a pretty good idea:

Bakken Peak JEAN

This chart from Jean Laherrere, is U.S. Bakken oil production based on using Hubbert Linearization.  Jean sent me this chart which estimates the peak and decline of the Bakken using a total of 4 billion barrels (Gb) of ultimate reserves.  As you can see the peak takes place shortly, and by 2025 the Bakken is producing a mere pittance compared to its current rate.

The Eagle Ford shale oil field will also follow the same sort of peak and decline trend as the Bakken.  There are two huge problems with notion of U.S. energy independence based on shale oil production:

1) Shale oil well annual decline rates are 40-50% per year.

2) Shale oil needs very high prices to be commercial

Shale oil will not allow the U.S. to become energy independent due to the fact that peak and decline of the Bakken and Eagle Ford were forecasted to take place by 2015-2017.  This was according to the work of David Hughes in his excellent report, Drilling Deeper.

Unfortunately, Mr. Hughes based his forecasts at the time when the price of oil was much higher.  Thus, the peak of U.S. shale oil may occur even sooner.

To get a good idea of the short lifespan of the Great Bakken Oil Field, here is another chart by Jean Laherrere from August 2014:

bakken-peak-jean-laherrere

This chart of the Bakken is over a longer period of time.  Shale oil production at the Bakken started to take off in 2007, and is projected to peter out twenty years later by 2027, and be a stripper play by 2035.  So, how the U.S. becomes energy independent based on this sort of production profile baffles me to no end.

The United States will be in serious trouble by the turn of the next decade.  As shale oil production declines, the U.S. will have to import more oil.  However, the U.S. Dollar may lose a great deal of its world reserve currency status as more countries move to alternative trade systems with the BRICS countries.

How will the U.S. purchase oil with worthless Dollars if no one wants paper Dollars anymore??

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33 Comments on "What Will The Death Of The Great Bakken Oil Field Look Like??"

  1. Hahahahaha. This is just another silly peak oil forecast. I mean how many times will these idiots say the world is going to peak? I’ve been hearing that we would peak for 30 years. What a crock.

    • TJcook,

      Thanks for the laugh. Do me a favor, stick around here for a few more years and get back with me on the subject of PEAK OIL. LOL.

      steve

    • Steve – good work, as always.

      TJ – peak oil is a fascinating topic…so many cross currents all taking place at once. It’s clear the world (x-US/Canada) has hit peak production as of 2005. From ’05 ’til now, world production (x-US/Canada) increased 3mbpd while US/Canada rose 11mbpd. What is so strange and telling about this is that the price of oil nearly quintupled over this same period and yet no region but US/Canada were willing or capable of taking advantage of the higher prices with higher production?!?

      Don’t know bout you, but if I have extra oil available and prices rise from $35 to $140…I’m a seller. So either you have to believe they don’t have it or there is a global conspiracy not to produce (I can actually see a case for either one).

      Now demand is falling across the board in advanced economies and perhaps even starting to wane in BRICS as global credit creation is waning and a depression washing over the global economy…so, now we have too much oil based on declining credit available…but if we needed more, doubt we could get it.

      Link shows global oil demand and production details and breakdown.

      http://econimica.blogspot.com/2015/02/fundamentally-flawed-chapter-9-oilas.html

      Case for global depression in next link…

      http://econimica.blogspot.com/2015/03/are-seeds-of-depression-sprouting.html

  2. A rude awakening awaits the celebrity enamored, twerked-out, super size me, ignorant, population that is expecting things to just carry on as before. The upheaval across all segments of society will be epic.

    What technological breakthroughs? Amazon deliveries by drone? iPhone #18? Virtual reality vacations? Or how about driverless cars and ultra big, huge, wall size flat screens, with reality based surround sound? lmao!

    Money to American owned energy companies? lmao! Bank revolver raids have already commenced! All those shale oil energy junk bonds have long since been packaged up into collateralized loan obligation derivatives, stamped with a triple ‘A’ rating and sold into the global markets! Time bombs!!

    There are so many black swan events, instruments, moral hazards, political/financial malfeasance, geopolitical and military saber rattling, going on all simultaneously, that one just does know where to look, or expect from which direction the triggering event will come from. About all that is universally agreed on, is the fact that it will be epic.

  3. I never believed the shale /fracking idea, as it is typical for “if things are too good to be true, they possibly are”. But in Central America, where I live as a german guest, people believe ev.thing, what US sends out. A week ago we had an “expert” here who told the audience about the bright future of USA. Oh dear…
    I could be of some arrogance and say the “latins” or the “gringos”, but in Panama lives a german, who spreads the lie (and a lie it is!) on his homepage and believes it as well. When I contacted him two years ago, he wrote: “I am an engineer and that is what my engineer collegues tell me and so I believe them!”
    (BTW: I have an MBA and I would NEVER believe one word of my MBA collegues.)
    What makes me real nervous is the fact ,that still now, people believe the “better-tomorrow-story”, so instead of preparing and saving, they do exactly the opposite. The wall will hit them with a big selfmade surprise.
    Rob Kirby likes to mention that big guys want to kill 90% of worlds population. Is this the way – telling us there is plenty of all and all of a sudden there is nothing???? But why on earth don’t I hear any outcry from waterfree California?
    Thanks for all you write Steve.

    • Wanderer,

      Great comment. Thanks for the insight in Central America.

      I have to say, I am not the brightest person on the block. However, the one thing that I try to succeed at doing is KNOW WHO TO LISTEN & READ and THOSE TO STAY AWAY FROM. I find this the most fascinating aspect of life.

      I come across a lot of highly intelligent people who make some of the most IGNORANT BLUNDERS. For example Karen Hudes who works with Antal Fekete and supposedly has the ear of several high ranking Military Generals, believes there’s 200,000 tons of gold hidden in some vaults in Hawaii (or somewhere).

      Hudes states that when the time is right, they will take this gold and back the U.S. Dollar and everything will be rosy. For a very smart individual, that claim is totally ridiculous. If 85% of all the Gold ever mined in the world was done since 1900 at 144,000 metric tons of the 170,000 mt, how in the living hell did we mine another 200,000 mt in ancient times??

      If we take a 2,000 year chart of World population, Gold, Silver, Copper and Oil Production, they all move up exponentially since 1900. There is no way, humans were able to mine another 200,000 metric tons of gold without the use of Modern Energy and Technology.

      Sure, we may have missed 20-50,000 metric tons AT THE MOST.

      Anyhow… I truly believe the Peak of U.S. Shale Oil will denote the time in history when the U.S. Empire began its collapse in earnest.

      Lastly, the idea that the ELITE want to get rid of 90% of the population is an interesting one indeed. I don’t believe we will need the assistance of the ELITE for this to occur. It will probably take place all by itself. Furthermore, the ELITE will likely suffer just as much as the typical JOE-BAG-OF-DONUTS.

      steve

      • Hello Steve,

        I got this.
        Probably all that gold has been dug by another species now hiding in Vatican. Ha Ha Ha…

        http://starshipearththebigpicture.com/2014/03/21/karen-hudes-exposes-another-species-hiding-in-the-vatican-video/

        • giorgio,

          LOL… I stand corrected. Can’t believe she said that on a Future Money Trends interview. I just did an interview with Dan at Future Money Trends on Wednesday. It comes out tomorrow, Saturday.

          And, I did discuss GOLD CONSPIRACIES briefly…. LOL

          steve

      • “Lastly, the idea that the ELITE want to get rid of 90% of the population is an interesting one indeed. I don’t believe we will need the assistance of the ELITE for this to occur. It will probably take place all by itself. Furthermore, the ELITE will likely suffer just as much as the typical JOE-BAG-OF-DONUTS.”

        *Some of the financial elites are preparing their bug out locations, with their own air strips.

        *Some are buying gold.

        *Some are so sure they have enough assets and security they will be fine.

        Fair or not the financial oligarchs will have a lot of angry people looking for them if the majority of the people have their financial security wiped out, and particularly if they are hungry. Some government officials too.

      • Steve, Karen Hudes offers practically no evidence for all her wild claims and that leads me to think she does not believe them herself. Her motivation might be attracting viewers or getting people to believe her claims that gold is not a good investment because gold is not rare. I don’t think she’s a nut. She is attempting to deceive for some reason.

        Mike

    • Wanderer:

      I am a Gringo. There is no stigma with the phrase anymore like in the days past. It simply refers to an American. “Hispanic” “Latino” “Latina” not stigma either. I am married to a beautiful Panamanian.

      I also LIVE in Panama AND in the U.S., and I disagree that Panamanians believe everything the U.S. says. The media in Panama reports the same media as the main stream controlled by The Powers That Be all over the world.

      There are two factors in play here you need to take into consideration:

      (1) Ricardo Martinelli – in my opinion Panama’s greatest president and I don’t care about the B.S. “probes” happening right now as it happens every time a new president is elected. Remember, whoever loses a presidential election in Panama, becomes the Vice President, so Varela was Martinelli’s VP. It is all are dog and pony show.

      When Martinelli assumed office, he requested a much larger stimulus package from “el gobierno” than what was expected to the surprise of many.

      EVEN MORE SHOCKING is that the business man spent the stimulus on INFRASTRUCTURE!!! Where did the the $800B in the U.S. go? Tocumen Airport is phenomenally better and larger now, and privatized. There are new ports. The canal is in the final stages of expansion. A lot of land handed out for free during Noriega’s time was reclaimed by Martinelli’s government or the people occupying it had to pay up for it. He canceled the B.S. contract with Mexico where Mexico was supposed to be “maintaining” the corredor’s and where they are allowed to collect tolls from drivers FOREVER! And, of course we cannot forget the subway that was built that tens of thousands of Panamanians are using every day. Oh, also, if you have visited Panama Viejo lately, you’ll notice how awesome it is being cleaned up and becoming an awesome tourist draw. Martinelli also improved tourism dramatically by requiring cabbies to have licenses and yellow colored cabs, and he started a program to get the “Chiva” school buses off the road, and new natural gas buses running to move Panamanians and tourists around.

      AS A RESULT of this stimulus spending – Panama has enjoyed double-digit GDP growth since 2008, when all other economies were in a recession. They are predicting GDP growth of 8% this year. ALSO, Panama experiencing FULL EMPLOYMENT – which is why there are so many non-Panamanians street vendors from Venezuela to Nicaragua. There are more jobs than qualified people, and it has been that way for years.

      THEREFORE, I can understand and see why Panamanian’s are upbeat on the future. Panama’s official currency, as you know, is the dollar, so they are also benefiting from the strength in the USD and consumer consumption growth has been high.

      (2) I’ll be brief on this one, because it is just a “cultural” thing. No Latinos save money, PERIOD!!! The ones that do are rare. They live paycheck to paycheck. That is why all bills are deducted from their pay BEFORE they have access to it. In the culture, you graduate school and start to work and have kids. Then your parents retire and become your full-time nannies, unless you have a nanny/maid already. And you take care of the parents until they pass away.

      They don’t save money like the Chinese or Japanese PERIOD.

      So, Panama is an aberration, in a sense, given their great former president, and their AWESOME invaluable resource, the Panama Canal. Other Hispanic countries are dealing with their own problems. Venezuela has a currency crisis. Mexico has vigilantes fighting Drug Cartels because the Mexican Army are a bunch of pansies, corruption, etc…

      Ich spreche Deutsche, aber meine Deutsche ist nicht besonders gut, but you need to get out there. Lots of investment opportunities in Panama. I strongly suggest you IMMERSE yourself more into the culture! But we can definitely agree to disagree my good friend.

      P.S. I use all-caps for emphasis, not because I am trying to be an @ss hole or I am angry or anything. Just stressing the point.

      • Jackson:
        “I also LIVE in Panama AND in the U.S., and I disagree that Panamanians believe everything the U.S. says…”
        -> I never said I lived in Panama. I have no special knowledge about Panama.

        “I strongly suggest you IMMERSE yourself more into the culture! But we can definitely agree to disagree my good friend.”
        -> No worries, but I speak fluently spanish – is that not deep enough? I lived many years in the Andes as well (and other places). So I guess for a non native I understand a lot.

        Let me add this:
        Many people think that Panama has a bright future. Jim Willie (my favorite ex-gringo ;-)) as well. But we all have our own brain and unfortunately mine disagrees with Jim.
        The reason is, that when things will downturn, I want to be with people, who do not even notice any change. Panama is (almost?) on a peak, Argentina in the nadir, Bolivia is rising from a nadir, Venezuela crashing, CR in crisis…. so I take Argentina or Bolivia as a good place right now, because people are already used to a situation, which other Americans still have to adapt to.
        I tell you what. Get the main security switch out, so that your house has no electricity. Then live in that house for 8 hours and count how often you will (automatically) try to switch something on.
        I lived many years in diff. so called 3rd-W.countries – maybe a good training for bad times. 😉

        So I see a big difference in the latin-way-of-life between south and center America. The Central-Americans are way more gringo-like, then the South-Americans (no McDonalds, Wendy,s Kentuckys in Bolivia – fattest people are not in US anymore but in Mexico etc.).

  4. Thanks again Steve!!

    @TJCook, you’re too effing embarrassing I don’t even know what to say.

  5. The research shows what could be some lean times in the next few years in oil, but the larger problem may very well be significant water/food shortages ahead.

    • Saxon,

      You are correct. However, we could cut out watering lawns which accounts for a significant amount of water consumption. You just have to think about all the suburban lawns and add it up. It has to be a huge amount.

      Chile is already constructing 12 Desalination plants. This is not a solution, but just another way of not living in balance with the natural world around us.

      I see serious DARKNESS on the horizon. It’s not something I want to say, but if we look at all the data… it’s a forgone conclusion.

      steve

  6. The resources of the earth are not going to last forever, we waste what we have. Shale oil was and is a scam. “The money is for nothing and the chicks agree”

  7. I have no doubt the USA will be “Energy Independent” very soon and will be importing hardly any oil at all. They just aren’t going to like it very much is all.

    • Jimmy,

      Are you hinting that U.S. oil consumption will fall so far that we won’t need to import any oil? Or are you falling for the notion of a continued surge in U.S. Oil production?

      steve

      • I took his comment to mean this – – – – that when PRICES RISE SO HIGH ( after all, “Peak Oil” means the “cheaper” and “easier to get oil” has been used first ) and DEMAND FALLS SO LOW ( due to extremely high prices ) . . . . . . THEN . . . . . ( wait for it )

        (1) Supply and demand will be finally in balance on-shore
        (2) The USA will be freakin’ ENERGY INDEPENDENT ! ! ! ! !

        Well, that’s how I read it, but I am not 100% certain that’s how it was meant.

        GREAT WORK STEVE ! !

        SnowieGeorgie

  8. Johny Comelately | April 3, 2015 at 9:58 am | Reply

    What you say regarding shale makes perfect sense. However I read that the U.S. is sitting on large reserves of light sweet crude oil, both in Alaska and in the mid-west. The conspiracy theory is that the petro dollar was set up so the U.S. could consume foreign nations oil with “cheap money” and at a later date when foreign oil passes peak production, the U.S. would exploit their domestic oil at much higher prices.

    Is there any truth to this kind of energy independence scenario?

    • Johny Comelately,

      This theory is one that precious metal analyst Bix Weir believes in. While I respect Bix for being on the right side of the precious metals war, this conspiracy theory doesn’t pass the smell test. Furthermore, Pastor Lindsey Williams continues to say the Elite are hiding oil reserves in Alaska at some place called Gull Island. Unfortunately, this is another lousy conspiracy if we go by the data.

      Lindsey states the Liberty Rig was the largest rig in the world that was set up to extract oil from the Liberty Field off Gull Island. BP was the company in charge of this operation. Lindsey states the Liberty Rig was the largest in the world because it was going to tap into one of the largest oil fields in the world.

      This is complete nonsense. Some of the largest oil fields in the world were drilled using very simple oil derricks. The reason the Liberty Rig was so large because it had to drill the longest horizontal well in the world to reach the Liberty field more than 5 miles away.

      BP stopped the operation because the technical challenges were too great and the chance of an accident like the Blowout and fire at the Horizon in the Gulf of Mexico in these pristine waters off Alaska were just too much of a risk. Anyhow, the Liberty Field didn’t have all that much oil.

      You can read my old article on this subject here: http://www.silverdoctors.com/are-the-elite-misleading-the-public-through-folks-like-alex-jones-lindsey-williams/

      Alex Jones is another KOOK. While many of his conspiracies he talks about are true, he doesn’t believe in PEAK OIL or CLIMATE CHANGE…LOL. That sends off alarms to me.

      Lastly, Major Oil companies would not allow UNTAPPED oil to be untouched because they are INTERNATIONAL and don’t care about silly politics. The reason we are seeing these companies trying to extract Shale oil in the Bakken & Eagle Ford at an EROI of 5/1 proves there aren’t LOTS of high quality untapped light sweet crude hiding in the U.S.

      Johny… if you haven’t listened to my interview with Doc at SilverDoctors last weekend, you might find it very informative on this subject.

      steve

  9. Mark in Denver | April 3, 2015 at 9:09 pm | Reply

    Steve,
    I love reading your deconstruction of such obvious nonsense as an oil independent US. My question is this. How much effect on shale oil production will the coming bankruptcies of the production companies have? Those curves in the plot are just based on the depletion of a limited resource over time, but what about the effect of the oil price at $40-50 for the next two years? Does the production just stop? Will it ever start again if the price of oil remains less than $80?
    Thanks.

  10. Mark in Denver | April 3, 2015 at 9:17 pm | Reply

    Sorry, but one more comment. I have been waiting for the calls to build desalination plants in California. I know that these would require huge amounts of energy just to run the plants, plus a lot more to pump the fresh water all over the state. Have you seen any estimates for how expensive the fresh water would be? I can’t imagine that it could be used for agriculture, just too expensive.

    • Mark,

      You bring up a good point about desalination plants in California. They simply MUST get going on these. In Southern Ca. at least the many sunny days may make solar a less expensive option for partially powering these plants.

      • Mark in Denver | April 4, 2015 at 10:17 am | Reply

        I think it will be just too expensive. Someone is going to have to raise the capital to build these and to make a profit. I think the resulting price for the water will be prohibitive. I think it is much better to recycle the grey water. Much of the treated water that is dumped into the ocean can be reused.

        • The water shortage will hit agriculture particularly hard. They use a LOT of water and sell a commodity product with thin margins.

          Mike

  11. Hello Steve,
    I’m no expert in fuel and am wondering what your views are on hemp bio fuel for ‘energy returned on investment’?
    My understanding is that it an under researched area due to the potential de-centralisation it could bring about and is therefore kept out of common knowledge.
    Gareth

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