Thursday, August 1, 2013

Peak shale oil? What peak?

A graphic contributed by Jean Laherrere indicating that shale oil production in North Dakota may soon peak and start declining.

This figure, made by Jean Laherrere, deals with oil production from the "Bakken Shale," a geological formation existing in large part in North Dakota. Shales may contain oil deposits, in most cases in the form of "tight oil." This is oil is trapped in a porous matrix which cannot flow to the surface without the help of sophisticated fracking technologies (you can find a nice illustration of the process here). The recent revival of oil production in the United States, which gave rise to so much optimism on the future of oil production, is almost solely related to use of these technologies for the exploitation of the Bakken Shale. 

The problem is, of course, for how long it will be possible to maintain the rapidly growing production trend from the Bakken deposits. In the figure, Laherrere shows the oil production in North Dakota (ND prod) in thousands of barrels per day (kb/d) as well as the number of exploration rigs (nb rigs). Laherrere has also shifted the rigs curve forward of about one year, in order to match the production curve.

Now, it is clear that you cannot produce anything that you haven't previously found. So, it is well known that production in a certain area mirrors exploration, but it is shifted forward in time. With conventional oil, the time lag between discoveries and production is of the order of 30-40 years. With oil from shales, it seems to be much faster: wells are rapidly put into production but also have a short lifetime.

In the figure, Laherrere finds a time lag of just around one year. And, since we see a drop in the number of exploration rigs in 2012, it seems likely that production will start declining soon, perhaps during the present year.

This is a conclusion that has to be taken with caution since the drop in the number of exploration rigs could be just a temporary phenomenon. But it is also true that the exploitation of shale oil is expensive in terms of resources and energy required. In the end, as always, it is a question of EROEI: we can only have the oil we can afford to extract.

On this subject, see also a post by Stuart Staniford on the Bakken Shale production that arrives to conclusions similar to those of Laherrere. See also a post of mine which examines shale gas production using the same method. See also an extensive article by Jean Laherrere on the recent trends of oil production.

Also, I am adding a second graph, kindly provided by Jean Laherrere, that examines production in Montana using the same method. It shows that it makes sense to shift the number of rigs of one year forward to match the production curve.


Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)