Fracking Foes Cringe as Unions Back Drilling Boom

[Spider Jerusalem]

1. Energy independence isn't happening, anyway

shale oil production tends to peak very rapidly and decline, here is the decline curve for wells in the Bakken shale, for instance:



Conventional oil production probably peaked in 2005:

Production of crude oil increased along with demand from 1988 to 2005. But then something changed. Production has been roughly constant for the past seven years, despite an increase in price of around 15% per year (at Brent crude (London) prices) from about US$15 per barrel in 1998 to more than $140 per barrel in 2008 (see ‘Oil production hits a ceiling’). The price still reflects demand: it declined to about $35 per barrel in 2009 thanks to the 2008–09 recession, and recovered along with the upturn in the global economy to $120 per barrel before declining to its value today of $111. But the supply chain has been unable to keep pace with rising demand and prices.

(snip)

Production at existing oil fields around the world is declining at rates of about 4.5% (ref. 4) to 6.7% per year5. Only by adding in production from new wells is overall global production holding steady. In 2005, global production of regular crude oil reached about 72 million barrels per day. From then on, production capacity seems to have hit a ceiling at 75 million barrels per day. A plot of prices against production from 1998 to today2 shows this dramatic transition, from a time when supply could respond elastically to rising prices caused by increased demand, to when it could not (see ‘Phase shift’). As a result, prices swing wildly in response to small changes in demand.

We are not running out of oil, but we are running out of oil that can be produced easily and cheaply. The US Energy Information Administration optimistically projects a 30% increase in oil production between now and 2030 (ref. 2). All of that increase is in the form of unidentified projects — in other words, oil yet to be discovered. Even if production at existing fields miraculously stopped declining, such an increase would require 22 million barrels per day of new oil production by 2030.
If realistic declines of 5% per year continue, we would need new fields yielding more than 64 million barrels per day — roughly equivalent to today’s total production. In our view, this is very unlikely to happen.

Non-conventional oil won’t make up the difference. Production of oil derived from Canada’s tar sands — sometimes called the
‘oil junkie’s last fix’ — is expected to reach just 4.7 million barrels per day by 2035 (ref. 6). Production from Venezuela’s tar sands is currently less than 2 million barrels per day7, with little prospect of a dramatic increase.

http://www.washington.edu/research/.SITEPARTS/.documents/.or/Nature_Comment_01_26_2012.pdf

Some estimates I've seen indicate that we could see the crossover point when unconventional production from shale and tar sands is no longer sufficient to make up the decline in conventional production as soon as next year.