Some Truth about Oil Shales......

[Stewy]

....and their future effect on Oil prices.

I have written a few comments on articles on the website Oilprice.com, but people are fairly civil there and don't reply to comments, so even though my comments have been published, it's far too civil as i say so no one really discusses anything.

Anyway, my purpose for posting this is that there is a lot of misunderstanding even in the so called "oil" press as to the immediacy and relative reaction speed of the shale industry. They are essentially full of crap in their understanding. Everyone in the press literally gives the impression that oil shales are something that can have an immediate impact on oil prices, by the price nudging UP just a little bit leading to a recovery in drilling rig number. This one premise alone shows a complete lack of understanding of the basics of the oil shale business.

Here is what I wrote in one comment that was published:

Quote:It is truly baffling to me how little research people who write article for major web sites actually do. Over and over I see flippant remarks as to the supposed ease with which the Oil Shale companies can “turn the tap back on” (paraphrasing). It shows a complete lack of understanding of unconventionals and Oil Shale specifically. Having worked for a big Eagleford player in South Texas, let me enlighten people. Oil Shale oil production requires MASSIVE CAPEX. Not just to drill, but to complete (fracs), and more importantly to re-complete wells that go down. Oil Shale wells have an up time on average from 9-18 months before the internal production tubing fails and companies have to go back in and fix them. This happens over and over. More drilling does not help this problem because it just means more wells to go back and fix. Variable up time coupled with lifetime low production rates are why Oil Shale Oil is so expensive to produce compared to conventionally produced oil. A 10$ or 20$ bump in oil prices will not fix this because these corporations are not run by explorationist risk takers but by engineering number crunchers. Which means unless the profits are stupid large, people aren’t going to jump back in with both feet. Finally, this leads to the real problem. Oil Shale companies have been losing big money, they haven’t been drilling but only re-completing the best wells, so their positive cash flow has been and continues to dwindle. Most of them are heavy HEAVY into debt, which means they can’t borrow another dime and their production has been hit so hard by natural decline that small 10-20$ jumps in oil prices aren’t going to make these engineering companies or the banks open their wallets back up. Summary: Spending 4 billion to make 5 billion sounds good at 100$ oil. However, spending 4 billion to make 3.5 billion at 50$ oil is never a good bet. No. Until oil is above 80$ for a sustained period of time, you’re not going to see a major recovery in the oil shale sector.

It all comes down to cash flow. Without prices over 80$ the companies themselves won't have the cash flow to do a major ramp up at any time in the near future. Additionally, these companies are no risk taking cowards. They've been bit hard by low oil prices and aren't going to take risks until they have some financial breathing room. Additionally, as I said, most of these companies have either already gone bankrupt or are in hock nearly to the max, so the banks aren't going to give them another dime. Finally, what no one considers is that the rig numbers dropped from 1300 to less than 300 today in south Texas. One cannot just snap their fingers and produce/train/implement 1000 crews again over night. Most of these are blue collar workers, but it is skilled labor. They have moved on to other industries after nearly two years out of work, so even if oil was 200$ a barrel it would take significant time to train the manpower if nothing else.

No. The quick recovery of the Oil Shale industry at 60-70$ oil is a complete fallacy, and in this aspect OPEC's attempt to cripple the Oil Shale industry actually worked IMO. OPEC didn't kill US Oil Shales, but it did create a deep long term wound requiring a significant recovery time.

[fredtoast]

I always thought of oil shale as a product that was mined, but since you are talking about drilling wells I assume you are talking about hydrofracking.

Or are there other ways to get oil from oil shale by drilling a well?

The price of oil produced from hydrofracking will never be low enough to pay for the earthquakes caused by it.  People will allow a little dirty air or water in exchange for cheap oil and jobs, but they won't accept earthquakes.

[Benton]

(12-29-2016, 03:09 AM)Stewy Wrote: ....and their future effect on Oil prices.

I have written a few comments on articles on the website Oilprice.com, but people are fairly civil there and don't reply to comments, so even though my comments have been published, it's far too civil as i say so no one really discusses anything.

Anyway, my purpose for posting this is that there is a lot of misunderstanding even in the so called "oil" press as to the immediacy and relative reaction speed of the shale industry.  They are essentially full of crap in their understanding.  Everyone in the press literally gives the impression that oil shales are something that can have an immediate impact on oil prices, by the price nudging UP just a little bit leading to a recovery in drilling rig number.  This one premise alone shows a complete lack of understanding of the basics of the oil shale business.

Here is what I wrote in one comment that was published:

It all comes down to cash flow.  Without prices over 80$ the companies themselves won't have the cash flow to do a major ramp up at any time in the near future.  Additionally, these companies are no risk taking cowards.  They've been bit hard by low oil prices and aren't going to take risks until they have some financial breathing room.  Additionally, as I said, most of these companies have either already gone bankrupt or are in hock nearly to the max, so the banks aren't going to give them another dime.  Finally, what no one considers is that the rig numbers dropped from 1300 to less than 300 today in south Texas.  One cannot just snap their fingers and produce/train/implement 1000 crews again over night.  Most of these are blue collar workers, but it is skilled labor.  They have moved on to other industries after nearly two years out of work, so even if oil was 200$ a barrel it would take significant time to train the manpower if nothing else.

No.  The quick recovery of the Oil Shale industry at 60-70$ oil is a complete fallacy, and in this aspect OPEC's attempt to cripple the Oil Shale industry actually worked IMO.  OPEC didn't kill US Oil Shales, but it did create a deep long term wound requiring a significant recovery time.

Thanks for the post. I didn't know some of that.

I was talking to a friend not too long ago about things to expect in the Trump world and I brought up gas, saying it would go to $3.50 a gallon before the end of next year (right now it's around $2.10-$2.25 in our area). He works in the ME some and said it wasn't likely, that OPEC would probably keep prices lower for at least 2-4 more years trying to keep the shale industry from gaining any more ground.

[Stewy]

(12-29-2016, 01:19 PM)fredtoast Wrote: I always thought of oil shale as a product that was mined, but since you are talking about drilling wells I assume you are talking about hydrofracking.

Or are there other ways to get oil from oil shale by drilling a well?

The price of oil produced from hydrofracking will never be low enough to pay for the earthquakes caused by it.  People will allow a little dirty air or water in exchange for cheap oil and jobs, but they won't accept earthquakes.

As this is not a thread about Fracking, I will not respond to this except to say the following:

Frac'ing isn't going away.  Do not delude yourself.  When done improperly or negligently, it needs to be corrected or stopped.  However, fracturing of rock has been and will continue to happen as a regular part of the oil and gas business.  This induced EQ problem ismost specifically happening in Oklahoma, where a long history of what is likely improper frac'ing technique or operator ngligence has caused a problem.  In the Appalachian basin various kinds of frac'ing has been going on for 70+ years, and there is no long history of induced earthquakes (though i think there are some up in west PA associated with the Marcellus).  Same for East Texas, West Texas, the Texas and Louisiana gulf coasts the entire North Slope of Alaska producing fields, the Bakken in Montana and Canada, the Eagleford in South Texas and pretty much every basin in the world where there are tight reservoirs that need a little help.  Frac'ing happens EVERYWHERE without inducing earthquakes, which makes Oklahoma the anomaly, not the rule.  Is it unique geology and reservoir conditions or oil company negligence?  Probably a little from column A and a little from column B.

But people who think this is a major problem and a technique that needs to be universally stopped are uninformed as to its long and SUCCESSFUL history and massively widespread use without incident.

Also, there are multiple types of fracturing, which work better in different kinds of rocks. 

Hydro-Fracs - come in several forms
Foam Propant
Acid - used in Carbonate reservoirs usually with no propant
Oil Propant
Water Propant

Air Fracs - using high pressure air to induce fracs (common in Appalachia)

Ballistic Fracs
- Drop a bomb in the hole (nitro glycerin) - seriously
- Commonly used in highly mobile shales, where shales just ooze around propants.  Most common completion technique today in the Devonian Shale of the Appalachian basin

[Stewy]

(12-29-2016, 01:19 PM)fredtoast Wrote: I always thought of oil shale as a product that was mined........

That's Oil Sands.  Completely different.

[fredtoast]

(12-29-2016, 09:48 PM)Stewy Wrote: But people who think this is a major problem and a technique that needs to be universally stopped are uninformed as to its long and SUCCESSFUL history and massively widespread use without incident.

There have been plenty of problems everywhere, not just Oklahoma.

I am guessing Oklahoma has more problems just because there are more wells there, but I'll have to do some research.  But I am 100% sure that the same companies that use fracking all across the country don't just mess up in one state.  That makes no sense.

I understand your opinion as an insider, but for years tobacco companies claimed they would never be held liable for the damages from smoking.  Same yhing will happen with fracking.  Like I said before, people will accept a little dirty air and water, but not earthquakes.

[Stewy]

(12-30-2016, 03:35 PM)fredtoast Wrote: 1 - There have been plenty of problems everywhere, not just Oklahoma.

2 - I am guessing Oklahoma has more problems just because there are more wells there, but I'll have to do some research.  But I am 100% sure that the same companies that use fracking all across the country don't just mess up in one state.  That makes no sense.

3- I understand your opinion as an insider, but for years tobacco companies claimed they would never be held liable for the damages from smoking.  Same yhing will happen with fracking.  Like I said before, people will accept a little dirty air and water, but not earthquakes.

1 - I conceded this, but you'll find that the majority of the press is from Oklahoma because I googled it myself.

2 - Most wells........not even close.  Areas of Texas, California, Alaska and Appalachia (and more) have as much or far greater well density with frac'ing compared to Oklahoma.  It actually makes plenty of sense if you accept it's a geologic issue unique to Oklahoma, and not the fault of the practice itself.  Thus accepting frac'ing isn't the boogey man, but frac'ing in particular Oklahoma geology.

3 - You're wrong.  Comparing frac'ing to smoking is ignorance, because all humans are physiologically the same to a 99.9% accuracy.  Geology from basin to basin varies dramatically for reasons you'll never take the time to understand.  Geologic time, depositional history, structural history, unroofing, erosion, denudation, reservoir type, total depth, thermal history and many more factors vary from basin to basin and change how rocks react to external stimuli like frac'ing or other completion techniques.

[fredtoast]

(01-01-2017, 05:55 AM)Stewy Wrote: 1 - I conceded this, but you'll find that the majority of the press is from Oklahoma because I googled it myself.

2 - Most wells........not even close.  Areas of Texas, California, Alaska and Appalachia (and more) have as much or far greater well density with frac'ing compared to Oklahoma.  It actually makes plenty of sense if you accept it's a geologic issue unique to Oklahoma, and not the fault of the practice itself.  Thus accepting frac'ing isn't the boogey man, but frac'ing in particular Oklahoma geology.

3 - You're wrong.  Comparing frac'ing to smoking is ignorance, because all humans are physiologically the same to a 99.9% accuracy.  Geology from basin to basin varies dramatically for reasons you'll never take the time to understand.  Geologic time, depositional history, structural history, unroofing, erosion, denudation, reservoir type, total depth, thermal history and many more factors vary from basin to basin and change how rocks react to external stimuli like frac'ing or other completion techniques.

Spare me the "I'm an expert.  You wouldn't understand." bullshit.

You oil industry geologist who claim you are experts are the same ones who just caused a 900% increase in earthquakes in Oklahoma.  And you are the same experts who tried to deny that there was any connection to the earthquakes and frac'ing for a long time. If you are so smart and fully understand the consequences of frac'ing then why did that happen?  Why did you dent the connection?  And why should we believe anything else you say about how safe frac'ing is?

The fact that nothing terrible has happened YET, proves nothing.  Is it safe to smoke all the way up to the point where you develop heart or lung disease?

[Stewy]

(01-01-2017, 02:10 PM)fredtoast Wrote: Spare me the "I'm an expert.  You wouldn't understand." bullshit.

You oil industry geologist who claim you are experts are the same ones who just caused a 900% increase in earthquakes in Oklahoma.  And you are the same experts who tried to deny that there was any connection to the earthquakes and frac'ing for a long time. If you are so smart and fully understand the consequences of frac'ing then why did that happen?  Why did you dent the connection?  And why should we believe anything else you say about how safe frac'ing is?

The fact that nothing terrible has happened YET, proves nothing.  Is it safe to smoke all the way up to the point where you develop heart or lung disease?

Says the man who's internet search clearly came up with nothing that could contradict me.  Your anger makes my day Fred.  Happy New Year and God Bless you.


Now if anyone has any question about Oil Shales, which was the topic of this thread and which Fred tried to derail and talk about frac'ing, I'd be happy to share my knowledge.

[JustWinBaby]

(12-29-2016, 01:42 PM)Benton Wrote: ... that OPEC would probably keep prices lower for at least 2-4 more years trying to keep the shale industry from gaining any more ground.

Not even that - fossil fuels have a limited shelf life.  Natural gas, windmills and other alternative sources are all chipping away....and in the next 30-50 years we'll have economically viable fusion reactors and then nuclear and fossil fuels are dead.

I don't think a single cutback has ever held with OPEC - they have always more or less pumped as much as they could sell.  And they haven't really been able to control the price of oil for at least 2+ decades.

[Rotobeast]

(01-02-2017, 01:53 AM)JustWinBaby Wrote: and in the next 30-50 years we'll have economically viable fusion reactors and then nuclear and fossil fuels are dead.

10 years ago, a friend of mine (a nuclear engineer/physicist at the NRC) told me they were estimated at about 20 years to perfecting fusion.
So, let's hope she was right and we have 10 or less to go.

[JustWinBaby]

(01-02-2017, 02:40 AM)Rotobeast Wrote: 10 years ago, a friend of mine (a nuclear engineer/physicist at the NRC) told me they were estimated at about 20 years to perfecting fusion.
So, let's hope she was right and we have 10 or less to go.

It's really exciting stuff.  I can't remember if anyone has achieved positive net energy yet (I believe so), but it's not scalable or sustainable.  While battery/storage tech is probably not where it could be, it will get the job done.

And every article I've read makes the point "it's always been 10 years away...for the past 50 years".  30-50 years is, hopefully, a rational expectation.  Not sure it's merely theoretical at this point - I think there's an identifiable path forward.

[Bengalzona]

(01-02-2017, 02:40 AM)Rotobeast Wrote: 10 years ago, a friend of mine (a nuclear engineer/physicist at the NRC) told me they were estimated at about 20 years to perfecting fusion.
So, let's hope she was right and we have 10 or less to go.

Was she hot?

If she was, you could have told her: "Hey, babe. You and I could perfect fusion right now!"

[fredtoast]

(01-01-2017, 05:41 PM)Stewy Wrote: Says the man who's internet search clearly came up with nothing that could contradict me. 

My internet search proves that the same oil industry geologists who claim frac'ing is safe also caused a 900% increase in earthquakes in Oklahoma and tried to deny that it had any connection with frac'ing.

What part of that is not true?

[Rotobeast]

(01-02-2017, 08:22 AM)Bengalzona Wrote: Was she hot?

If she was, you could have told her: "Hey, babe. You and I could perfect fusion right now!"

I told her that her father must have been a butcher, cause SOMEONE done stuffed two fine hams in the back of her pants.

Then I was like.....Hey sweet-thing, can I buy you a fish sandwich ?

[Stewy]

(01-02-2017, 01:53 AM)JustWinBaby Wrote: Not even that - fossil fuels have a limited shelf life.  Natural gas, windmills and other alternative sources are all chipping away....and in the next 30-50 years we'll have economically viable fusion reactors and then nuclear and fossil fuels are dead.

I don't think a single cutback has ever held with OPEC - they have always more or less pumped as much as they could sell.  And they haven't really been able to control the price of oil for at least 2+ decades.

A couple of things:
#1 - Natural Gas is a fossil fuel - hehe
#2 - Even if we have economically viable fusion reactors for power plants, that doesn't account for the fact transportation depends on oil at a 92% clip.  Are we going to convert the whole world to electric engines, including trains, tractor trailers, airplanes....anything that uses diesel or heavier fuels, in 50 years?  I seriously doubt it.
#3 - Just an FYI - Electricity production by fossil fuel type - https://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3
#4 - Oil Usage by product - http://instituteforenergyresearch.org/topics/encyclopedia/fossil-fuels/ - scroll down - lots of good info here.

The problem as I see it is multi fold. 
First you have to achieve, control and perfect fusion, safely.
Second you have to make it viable on a large scale
Third you have to make it economic for power generation
Fourth to get it economic for everyday use requires an entire change in the world infrastructure, and THIS is what will take time and why fossil fuels have not just a life past 50 years, but will be required for centuries to come unless you want no lubricants, no plastics, no chemicals, no Styrofoam, etc.

What I'm trying to point out is that getting rid of fossil fuels, isn't just about fusion.....it's about changing just about every aspect and convenience of our every day lives.  Fusion is just one innovation, but completely replacing fossil fuels would require separate and equally challenging innovations in multitudes of separate disciplines.  With that said my guess is that there are several cases where a particular chemical or lubricant or plastic can be created in ways that do not require fossil fuels, but they aren't economic.  It follows that if you remove natural gas from power generation (33% of total electricity comes from natural gas), that doesn't make the worlds reserves of natural gas go away, but just makes it cheaper, making it even more viable for heating, home use and industry, thus making it even more difficult for "other" products to replace them (Yes that was an awful sentence - sue me I'm wasn't an English major).

The way I see it, fusion will extend the life of fossil fuels, not end them.  But if fusion delivers on it's promise we can certainly generate of electricity in a much more clean manner and make electric cars much more viable options.  I'd say we're at least 150-200 years away from the personal use fusion seen in Back to the Future and Fallout 4 however.

(01-02-2017, 02:40 AM)Rotobeast Wrote: 10 years ago, a friend of mine (a nuclear engineer/physicist at the NRC) told me they were estimated at about 20 years to perfecting fusion.
So, let's hope she was right and we have 10 or less to go.

(01-02-2017, 03:27 AM)JustWinBaby Wrote: It's really exciting stuff.  I can't remember if anyone has achieved positive net energy yet (I believe so), but it's not scalable or sustainable.  While battery/storage tech is probably not where it could be, it will get the job done.

And every article I've read makes the point "it's always been 10 years away...for the past 50 years".  30-50 years is, hopefully, a rational expectation.  Not sure it's merely theoretical at this point - I think there's an identifiable path forward.

I've been a fusion junky myself.  It's fascinating and frankly scary stuff.  It's kinda like when they detonated the first A-bomb and some were seriously worried about a chain reaction setting the atmosphere on fire (or was that the hydrogen bomb....or both).  No one really knows what will happen when we achieve true fusion.  My guess is likely nothing catastrophic because of the conditions and containment needed to induce true fusion (tremendous pressure, temperature and magnetic fields, etc.).  What I'm saying is the fusion reaction might run out of control, but once the containment conditions fail, the reaction will likely stop.....I hope.

[Rotobeast]

(01-04-2017, 08:55 PM)Stewy Wrote: I've been a fusion junky myself.  It's fascinating and frankly scary stuff.  It's kinda like when they detonated the first A-bomb and some were seriously worried about a chain reaction setting the atmosphere on fire (or was that the hydrogen bomb....or both).  No one really knows what will happen when we achieve true fusion.  My guess is likely nothing catastrophic because of the conditions and containment needed to induce true fusion (tremendous pressure, temperature and magnetic fields, etc.).  What I'm saying is the fusion reaction might run out of control, but once the containment conditions fail, the reaction will likely stop.....I hope.

I was worried about the Hadron Collider, too.
We're not spaghetti-fied yet, so somebody has a pretty good handle on experimental physics.

[NATI BENGALS]

I was always a fan of just sitting on our natural resources and using everbody elses. Especially with the projections when i was in elementary school that claimed we would run out of oil soon.

If we can make a nanoparticle sheet that turns CO2 into ethanol maybe leaving the earth lube in place prolongs our stay on this planet.

[SteelCitySouth]

(01-02-2017, 03:27 AM)JustWinBaby Wrote: It's really exciting stuff.  I can't remember if anyone has achieved positive net energy yet (I believe so), 

No...None that have withstood the rigor of inspection.  I've seen some articles claiming but never any corroboration.  Fusion reactors still consume more energy than they produce.

[Rotobeast]

(01-05-2017, 05:20 PM)SteelCitySouth Wrote: No...None that have withstood the rigor of inspection.  I've seen some articles claiming but never any corroboration.  Fusion reactors still consume more energy than they produce.

There's a mother joke here, but I'm going to let it go.