Monday, October 22, 2012

Middle Age of Oil

This post is a little bit off topic, but it's worth writing about.

The following chart is from the book Beyond Oil: The View from Hubbert's Peak--it blew my mind. Note that the book was published in 2006 and these statistics fluctuate per year, so current figures are certainly different--though the proportions will be about the same.

CountryProduction (millions of barrels/day)Number of Wells
Saudi Arabia 7.7 1,560
Russia 7.4 41,192
USA 5.8 521,070

This chart prompted me to look at current data. Here's a chart compiled from data at the United States Government Energy Information Administration ( web site. This chart is based on 2009 statistics.

The 2009 average US production per well was 12.9 barrels per day (call it 13). The average well in Saudi Arabia (based on the 2006 book figures) produces 4,935 barrels per day. (A barrel, by the way, is 42 US gallons). If you want to increase oil production in the USA by 1 million barrels (and dent our need of 19 million barrels per day) you need to drill:

1 million / 13 bpd = 76,923 wells. Assuming a 100% success rate and the average production per well is about the same.

I wondered how shale oil production has changed the picture. North Dakota oil production is still climbing. Currently, the oil fields there produce more than 700,000 barrels of oil per day--around 3% of US daily oil consumption. (The US military uses somewhere between 300,000 and 800,000 barrels per day.) However, the current average production per Bakken Shale well is around 140 barrels per day. So, to replace all foreign oil--let's call it 15 million barrels/day, you need to drill around:

15 million barrels per day / 140 barrels per day = 107,142 wells.

There are currently 4,458 wells in the ND Bakken shale (from here). Between 2010 and 2011 754 new oil producing wells were added. To drill 107,142 wells at that rate would take 142 years. (Of course, the oldest wells would be long depleted, plus you'd run out of places to drill!)

You can gaze into the future of ND oil production with the chart, below, from the EIA that shows Montana oil production per year. Montana oil production (from the same geological formation) boomed early in the 2000s, then production declined, and new drilling activity shifted to ND. Check out an animated GIF here.

If you remove the supply of cheap oil from the middle east, is it feasible to drill thousands of wells per year in places like North Dakota?

Unfortunately, it looks like we reached the beginning of the end of cheap oil from the middle east, and maybe we're already into a new era. I think the chart below (from here) sums up the story. The IEA (International Energy Agency) said we probably hit that peak in 2006. (that report predicts total oil production including sources like tar sands will peak in 2035.)

In spite of persistently high oil prices (especially up to the implosion of the real estate market in 2008) and a booming economy world wide from 2005 up to 2008, world oil production was flat. That really means middle east oil production was flat. The chart below (from EIA) shows "spare" OPEC oil production capacity was below 2.5 million barrels per day during the period. Was that the peak? If that was the peak, then things will muddle along for a few years before OPEC oil production starts to decline.

Every aspect of our economy and the habits of people in the US have been conditioned by 100+ years of cheap oil. The assumption that cheap oil will last forever is baked into government planning, every loan that's made by a bank, etc... Hopefully, we can make a transition to using substitute fuels--like natural gas--before some crisis hits.

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