U.S. Petrochemical Industry Future - Upstream - Crude Oil - Logic Versus Faith and Hope (Appendix...

U.S. PETROCHEMICAL FUTURE - UPSTREAM - CRUDE OIL - LOGIC VERSUS FAITH AND HOPE(APPENDIX A)

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MAJOR TIGHT OIL PLAYS

EIA 2013 UNPROVED

TECHNICALLY RECOVERABLE

RESERVES, BILLION BBLS (NOTE 2)

TIGHT OIL PRODUCTION FROM 2000 TO

JUNE 2016, BILLION BBLS

(NOTE 6)

NO. OF TIGHT OIL PRODUCING WELL SITES AS OF JUNE

2016 (NOTE 6)

EIA TOTAL PRODUCTION

2014 THRU 2040 -AEO2014, BILLION

BBLS (NOTE 3)



BBLS (NOTE 4)



BBLS (NOTE 5)

J. DAVID HUGHES TOTAL

PRODUCTION ESTIMATE 2014-

2040 PER DRILLING

DEEPER 2014, BILLION BBLS (NOTES 6 &20)

MONTH/YEAR PROD PEAKED (NOTE 6)

APPROX PROD RATE JUNE 2016,

MILLION BBLS/

DAY (NOTE 6) NOTES

BAKKEN 22.7 2.00 11600 7.90 14.50 18.65 5.70 12/2014 1.05 7

SPRABERRY 10.6 1.22 30356 6.15 4.42 5.35 4.43 0.73 8

EAGLE FORD 10.3 1.94 ABOUT 15000 9.70 10.20 8.67 7.00 3/2015 1.20 9

WOLFCAMP 6.1 0.46 6543 2.50 4.90 5.98 5.98 0.32 10

AUSTIN CHALK 5.5 0.24 4913 4.90 1.06 2.85 3.53 12/2015 0.03 11

BONE SPRING 2.9 0.33 3535 0.63 2.25 3.26 0.45 3/2015 0.23 10

NIOBRARA 0.4 0.40 17880 1.70 3.26 2.90 1.22 2/2015 0.13 12

OTHERS (NOTE 1) 19.7 1.64 ? 7.57 7.62 9.29 5.45 1.12 13

TOTALS 78.2 8.2 ? 41.05 48.21 56.95 33.76 4.81 15

YEAR 2015 (NOTE 15) AVG 2014-2040 AVG 2014-2040 AVG 2014-2040 AVG 2014-2040 2017 4.54 14

AVAILABLE FOR CONSUMPTION RATE BBLS PER DAY

16,763,000 (NOTE 15) 15,629,000 16,355,000 17,242,000 9,157,500 20

CONVENTIONAL OIL PRODUCTION RATE BBLS PER DAY OVER 27 YEAR PERIOD

4,100,000 (NOTE 15) 4,100,000 4,100,000 4,100,000 2,050,000 18

IMPORTS AVERAGE BBLS PER DAY OVER 27 YEAR PERIOD

7,363,000 (NOTE 15) 7,363,000 7,363,000 7,363,000 3,681,500 19

TIGHT OIL PRODUCTION AVERAGE RATE BBLS PER DAY OVER 27 YEAR PERIOD

5,300,000 (NOTE 15) 4,166,000 4,892,000 5,779,000 3,426,000 17

NO. OF YEARS OF TIGHT OIL LEFT 85.7 (NOTE 16) 27 27 27 27

THEORETICAL RUN OUT WITH NO PRACTICAL CONSTRAINTS

2099 (NOTE 16)


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NOTES:

1. Other catergory includes Monterrey and Woodford plays and other unnamed plays that the EIA thinks contains unproved recoverable reserves.

2. Data that Hughes extracted from the Energy Information Administration's "Oil and Gas Supply Module". Hughes says: The EIA uses a program known as

the National Energy Modelling System (NEMS) for forecasting. The program is complex: a statement at the EIA’s NEMS link says,

“Most people who have requested NEMS in the past have found out that it was too difficult or rigid to use.”

3. Energy Information Administration, "Annual Energy Outlook 2014". Expected total production from all plays from 2014 to 2040.



6. From J. David Hughes "Tight Oil Reality Check 2016".

7. Bakken production peaked in December 2014 at about 1.26 million bbls per day and had declined to about 980 thousand bbls per day as of September 2016.

See Figure 4.

8. Spraberry is an old field in the Permian Basin. Drilling has been ongoing since the 1940s with a total of 42,000 conventional vertical wells and newer horizontally

fracked wells.

9. Eagle Ford production peaked in March 2015 at about 1.7 million bbls per day and had declined to 1.1 million bbls per day as of September 2016.

See Figure 5.

10. Wolfcamp is one of six formations in the Permian Basin in West Texas. Spraberry and Bone Spring are two other notable formations. Crude oil production

has been ongoning in the Permian Basin since the 1930s. Horizontal drilling and hydraulic fracking has allowed some of the old plays in the Permian

to be redeveloped.

The USGS recently announced 20 billion barrels of "undiscovered" technically recoverable crude oil in the Wolfcamp play.

The USGS makes clear that the 20 billion barrels have a roughly 50% probability of existing and are not necessarily economically recoverable.

Based on USGS assumptions, the oil would cost some $1.4 trillion dollars to recover, or $500 billion more than they are worth at $45 per barrel as initially

pointed out by Art Berman and reiterated in Richard Heinberg and J. David Hughes, “Howling at the USGS’s Wolfcamp Announcement,” Post Carbon Institute,

December 1, 2016;

11. The Austin Chalk play extends from southern Texas into Louisiana. Drilling in this formation has been ongoing since the 1920s. Horizontal drilling and

hydraulic fracking has allowed production to continue.

12. The Niobrara is one of the largest plays in the Denver-Julesburg (D-J) Basin, although most production has been from the Wattenburg Field in Weld County of

Colorado. Production via vertical drilling has been ongoing in the "Denver" basin since the 1970s.

13. The other category includes the better known Monterrey in California and Woodford in Oklahoma as well as other smaller less known formations in the oil

producing regions of the "lower 48" states.

14. The EIA December 2016 "Drilling Productivity Report" indicates that tight oil production will level off at 4.54 million barrels per day.

15. Data is from Energy Information Administration Site, "Petroleum & Other Liquids Section". See Figures 1 & 2 for total crude oil production and tight oil production,

respectively. Conventional oil production can be assumed by subtracting tight oil production from total production.

BP Statistical Review of Energy reported U.S. 2015 consumption rate was 19,396,000 bbls per day, but as they say in their notes, the number includes ethanol,

biodiesel, and derivates of coal and natural gas.


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16. 85.7 years of remaining tight oil per EIA's 2013 unproven technically recoverable reserves is simply arrived at by dividing the reserves, 78,200,000,000 by the

2013 tight oil production (per Figure 2) in barrels per day times 365, (2,500,000 X 365). Theoretical run out year is 2013 + 85.7 = 2099. Of course, this has nothing

to do with reality since there are many practical, logical obstacles to recovering this oil even if you believe the estimate. However, this where the U.S.

energy independence nonsense comes from and part of the source for Obama's "100 years" comments and other comments I use to see about continuing

the Baby Boomer lifestyle for the remainder of this century.

17. The average daily production rate is simply the total estimated production 2014-2040 divided by (27 X 365).

18. The EIA reports total production, which is shown on Figure 1, and receives various estimates of tight oil production, which is shown on Figure 3.

Since I cannot find a source that clearly delinates conventional production versus tight oil production so I simply subtract tight oil production from total

production to get conventional production.

19. The 2015 average per day imports was about 9,448,000 bbls. I make two assumptions - one imports can continue at that rate from 2014 to 2040 or imports

will average half that rate from 2014 to 2040. I believe the latter is much more logical based on the declining reserves of trational U.S. oil importers, and even

that is optimistic.

20. The red numbers are the source for the blue numbers. Except for Wolfcamp, the blue number is 0.72 times the the red number. This is consistent with the ratio

of Hughes verus EIA's AEO2014 estimates of 2014-2040 production for Bakken and Eagle Ford.

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