Friday, February 8, 2013

How Fast Does Bakken Shale Oil Wells Decline

Arthur Berman is not the only shale gas skeptism. I am probably the most outspoken critic Shale Gas among all people who wrote on Seeking Alpha. They have now imposed worse censorship on me because I spoke out on the truth of shale gas. Not only they banned me from writting any article or instablog on Seeking Alpha. They banned me from making any comment or even communicate privately with any Seeking Alpha readers. In communist countries at least people are free to communicate privately.

This tells you that they feared people to hear the truth on shale gas. I intend to complaint to SEC about Seeking Alpha's blatant market manipulation by supressing truthful information. Some vested interest group played a dirty hand in getting me, Mark Anthony, completely banned on Seeking Alpha. My previous articles are still there. But I bet they will ultimately remove all traces of them eventually.

Now, Arthur Berman first got my attention to the potential scam in the US shale gas industry. But unlike most people, I do not take Arthur Berman's words on face value. I dig out data myself and do my own data analysis.

Here is what I find out by studying data from several thousand Bakken wells. Bakken is a good study candicate thanks for excellent public data release by North Dakota Department of Mineral Resources. They have month by month production statistics of ALL Bakken shale wells. So you can track each well and see how the production declines.

My study shows that Bakken well declines MUCH FASTER than even Arthur Berman claimed. For example I summed up production from 3062 Bakken wells that has been continuously producing in all the months from May to Nov 2012, including 128 wells that only started in May 2012. That's the entirety of all wells I can find that has been producing continuously, but excluding a few that produced for a while and then shut down.

In May 2012, those existing wells produced at average of 506869 Barrels per day (BOE), with gas and oil production lumped together as Barrel of Oil Equivalence (BOE).

In Nov 2012, only six months later, these same 3062 wells produced at 353040 BOE/day. That's a drop of -30.35% in merely six months. That's averaging at -0.2% drop per day, or -5.9% drop per month, or -51.5% drop per year.

That's how fast the collective group of existing wells drop, with newest and oldest wells all included. That's losing slightly more than half of production rate in a year.

Identifying only the newest 128 wells which only started in May 2012. These 128 wells dropped from 62067.67 BOE/day to 27950.77 BOE/day, or losing -55.0% in six months. That's a -0.436% drop per day, or -12.5% loss per month, or losing 80% in a year. Here are just some of the well numbers in this group:




Now looking at the oldest wells within this group. There are 1244 Bakken wells that has been producing continuously since Dec., 2009. These wells produced at 111911 BOE/day in Dec. 2009. They dropped to 54539 BOE/day in May 2012 and further dropped to 50234 BOE/day in Nov 2012. So these vintage wells more than three years old were dropping at -7.9% every half year, or losing -15.2% per year. These wells show that even after more than three years, the well decline is still very steep.

Singling out wells first started in Jan. 2010, no early and no later. There are 31 of them:





These wells that started in Jan 2010 produced at 8052.68 BOE/day in that month, dropped to 2433.77 BOE in May 2012 and then to 2007.77 in Dec. 2012. So these three year old wells dropped at losing -17.5% in half a year, or losing -32% per year, or losing 0.1% per day.

At such steep decline, even Bakken shale, perceived as most profitable due to its high content of oil and high oil price, is NOT profitable currently. They need $20 or $30/barrel higher oil price to break even.

The US shale gas industry has created a Ponzi Scheme from over a trillion dollars of investor money. This is a bubble that will burst soon. What do they get after spending over a trillion dollars and accumulated half a trillion dollars of debts? They drilled roughly 36000 shale wells and produced roughly 23 TCF of shale gas. And they are left with shale wells that produce gas at 27 BCF/day and decline at roughly losing -0.2% per day.   If they stop spending money and stop bringing any new wells onto production, the existing wells, producing at 27 BCF/day and continue to decline at losing 0.2% per day, will produce another 13.5 TCF of gas before they are exhausted.   So that means the entire shale gas adventure so far, which counted the industry one trillion dollars, brings in 23 TCF pas production and 13.5 TCF future production, total 36.5 TCF of gas. At today's gas price of roughly $3.5/mmBtu that would be worth $128B of revenue. The shale gas industry is losing their collective arses and their collective minds.


Anonymous said...

Quality posts is the key to be a focus for the viewers to go to see the site, that's what this web site is providing.

Here is my weblog; led high bay lights Pretoria

Anonymous said...

Thank you for the auspicious writeup. It actually was once a enjoyment
account it. Glance advanced to far introduced
agreeable from you! By the way, how could we keep up a correspondence?

Here is my weblog: fireplace Installations

Anonymous said...

The other day, while I was at work, my cousin stole my iPad and tested to see if it can survive a
30 foot drop, just so she can be a youtube sensation.
My apple ipad is now broken and she has 83 views.
I know this is completely off topic but I had to share it with someone!

Here is my homepage :: home decor

Anonymous said...

I have read so many posts concerning the blogger lovers however this post is
actually a good piece of writing, keep it up.

Feel free to visit my weblog click here

Anonymous said...

Howdy! I could have sworn I've been to this website before but after checking through some of the post I realized it's new
to me. Anyhow, I'm definitely happy I found it and I'll be book-marking and checking back often!

My page ... visit here

Anonymous said...

Hey! Do you know if they make any plugins to assist with SEO?

I'm trying to get my blog to rank for some targeted keywords but I'm not seeing very good gains.
If you know of any please share. Cheers!

Feel free to surf to my blog post ... architects

Anonymous said...

I always used to study article in news papers but now
as I am a user of web thus from now I am using net for posts, thanks to web.

Stop by my homepage ... signage Cape Town

Anonymous said...

Fastidious respond in return of this matter with real arguments and
describing all about that.

Feel free to visit my web site: check out

Anonymous said...

Hey, I think your website might be having browser
compatibility issues. When I look at your blog site
in Chrome, it looks fine but when opening in Internet Explorer, it has some overlapping.
I just wanted to give you a quick heads up!
Other then that, amazing blog!

Feel free to surf to my webpage :: power Steering and brakes

Anonymous said...

It's a shame you don't have a donate button!
I'd certainly donate to this outstanding blog! I guess for now i'll settle for
bookmarking and adding your RSS feed to my Google account.
I look forward to brand new updates and will talk about this site with
my Facebook group. Talk soon!

Also visit my web-site; decor and vintage pieces for the home

Anonymous said...

I'm no longer sure where you're getting your info, but good topic.
I needs to spend a while learning more or working out more.
Thanks for great info I used to be looking for this info for my

My webpage: aerial devices

wowgold said...

If they stop spending money and stop bringing any new wells onto production, the existing wells, producing at WOW Gold Kaufen Billig
Billig WOW Gold Kaufen

our website said...

Apple can get away with this due to the fact its smartphones and tablets run precisely the same operating program, and thus adobe photoshop extended cs5 developers can target the precise same APIs. Windows 8 and Windows Phone 8 share a lot of related attributes, as well as some low-level code, but it is office professional plus 2010 retail pack nowhere close to the identical degree of similarity as an iPhone and iPad.

Anonymous said...

smokeless cigarettes, ecigs, electronic cigarette, electronic cigarettes, e cigarette, e cig forum

Anonymous said...

smokeless cigarettes, electronic cigarette, ecigs, e cig reviews, electronic cigarette reviews, electronic cigarette