- Estimates from EIA exaggerate impact of fracking technology
- New well output could undershoot EIA forecasts by 10% in 2020
Turns out, America’s decade-long shale boom might just end up being a little too good to be true.Related at Oilprice:
There’s no denying that fracking has turned the U.S. into a force in the global oil and gas markets, which has more than a few people abuzz about the prospect of energy independence.
But now, researchers at MIT have uncovered one potentially game-changing detail: a flaw in the Energy Department’s official forecast, which may vastly overstate oil and gas production in the years to come.
The culprit, they say, lies in the Energy Information Administration’s premise that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract.
“The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.”
Extrapolating from field studies Montgomery and his colleague Francis O’Sullivan conducted in North Dakota’s Bakken shale deposit, the research suggests that total U.S. oil and natural-gas production from new wells could undershoot the EIA estimate by more than 10 percent in 2020. Things would get progressively worse each year after that as wells in various sweet spots are exhausted and technology fails to close the gap.
“The same forecasting methods are used in other plays in the U.S., and the same dynamic is likely to be present,” Montgomery added.
Margaret Coleman, the EIA’s leader of oil, gas and biofuels exploration and production analysis, said in an email “the study raises valid points” and the administration is looking at ways to give its estimates a tighter focus. She added that many shale fields lack the detailed well data that informed the MIT study, which means EIA forecasters have to use known geologic information and assumptions about prices and technology to come up with estimates....MUCH MORE
Russian Oil Minister: U.S. Shale Production Jump Was No Surprise
Russia’s Energy Minister Alexander Novak told CNBC the increase in U.S. shale oil production since the start of the OPEC/non-OPEC production cut was expected, adding that it would have been worse for OPEC and its partners if they hadn’t agreed the extension they did yesterday.
Evidently irritated by a question he says he is being asked all the time, Novak said “This is not news for us. For some reason when people ask this question they seem to believe that we didn't think that shale oil would grow. Either you underestimate us or you think we lack professionalism. I think that if you think we are professional you need to understand that we are including all this in our calculations."....MORE