When will US LTO(light tight oil) Peak?

The rapid rise in oil output since 2008 has the mainstream media claiming that the US will soon be energy independent.  US Crude oil output has increased about 2.8 MMb/d (56%) since 2008 and about 2 MMb/d is from the shale plays in North Dakota ( Bakken/Three Forks) and Texas (Eagle Ford). My modeling suggests that a peak from these two plays may be reached by 2016, other shale plays (also known as light tight oil [LTO] plays) may be able to fill the gap left by declining Bakken and Eagle Ford output until 2020, beyond that point we will see a rapid decline.


US Light Tight Oil to 2040

There are two main views: 

1. There will be little crude plus condensate (C+C) output from any plays except the Bakken/Three Forks in North Dakota and Montana and the Eagle Ford of Texas.
2. The other LTO plays will come to the rescue when the Bakken and Eagle Ford reach their peak and keep LTO near these peak levels to about 2020 with a slow decline in output out to 2040.

Where are these “other LTO plays”?  There are a couple of these in Oklahoma and Texas (in the Permian basin, Granite Wash, Mississippian basin), the Appalachian, the Niobrara in Colorado, and others (see slide 17 of the USGS presentation link below).  Is it possible for these LTO plays to offset future declines in the Bakken and Eagle Ford?  I hope to answer that in this post.

Exploring Future Bakken Decrease in Estimated Ultimate Recovery (EUR)






Fig 1

In this post I will explore a number of different scenarios for future North Dakota Bakken crude oil production using an updated interactive spreadsheet which can be downloaded here.  More details can be found later in the post (scroll down to fig 12 and read the paragraph above that figure).  The new spreadsheet allows the user to change when the decrease in new well EUR begins and the length of time from the start of the decrease in EUR to the maximum monthly rate of decrease.  The earlier spreadsheet presented in my previous post had these two parameters fixed at 6 months after June 2013 for the start of the EUR decrease and 18 months for the length of time for the rate of EUR decrease to reach its maximum.

Cool Tools for considering Future Bakken Output

Webster Hubble Telescope (WHT) has a new blog called Context Earth with a cloud hosted server with some of his oil reserve models. See the Red Queen tight oil model 2.  This inspired me to create an interactive spreadsheet which does something similar. 

The spreadsheet is called bakken2.xlsx and can be found here on Google Drive.

One difference between WHT’s “red queen tight oil model 2” and my bakken2 model is that the EUR of new wells is about 280 kb in his model and 340 kb for my model at 30 years. 

A second difference is that my model allows the new well EUR to decrease at any annual rate from -0.1 to .99 (10 % increase to a 99 % decrease) starting in Jan 2014 and rising to the maximum monthly rate by June 2015.

Update to North Dakota Bakken / Three Forks Scenarios

http://www.rigzone.com/news/oil_gas/a/126179/USGS_Estimate_of_Bakken_Three_Forks_Double

The link above is to a Rigzone article discussing the April 2013 USGS Bakken/Three Forks estimate, which was referenced by Robert Rapier at

http://www.energytrendsinsider.com/2013/05/07/estimate-for-williston-basin-oil-resources-is-doubled/#more-13934

The USGS slide presentation can be found at

http://energy.usgs.gov/Miscellaneous/Articles/tabid/98/ID/247/USGS-Releases-Updated-Bakken-and-New-Three-Forks-Oil-and-Gas-Assessment.aspx

and click on the slide presentation pdf link near the bottom of that page.

 Near the end of that slide presentation it breaks out the 7.4 BBO for all of the US Bakken/Three Forks into Montana and North Dakota sections of the play.  North Dakota has a mean estimate of 5.8 BBO of undiscovered technologically recoverable resources (TRR) in the Bakken/ Three Forks.

I had been ignoring the "undiscovered" and was incorrectly interpreting the estimate as the full TRR, until I read the following in the Rigzone article:

Eagle Ford Shale may soon reach 1 million barrels per day(C+C)

I have made a number of comments about the Eagle Ford Shale (EFS) and possible underreporting by the Texas Railroad Commission (TRRC) of crude plus condensate (C+C) output. See my comments at peak oil.com (fourth comment by dcoyne78 on that page) and at peakoilbarrel.com  (see my response to Mike's comment in the comments section.)

The first point is that the TRRC data for Texas(TX) statewide C+C is quite different from the data reported by the US Energy Information Administration (EIA) for TX C+C.

Which data should we believe? 
Edit (Jan 16, 2014) see new chart at bottom of post.

Future Bakken Output and the Average Well Profile

In my June 14 post I discussed future decreases in average well productivity based on a single average well profile to create scenarios which would match the range of technically recoverable resources (TRR) in a recent USGS estimate for the Bakken/ Three Forks.

A recent discussion at the June 15, 2013 Drumbeat at the Oil Drum was very interesting with Rune Likvern providing  great insight (as usual) into recent data on Bakken output in North Dakota.

Mr Likvern believes that we may be seeing a decrease in average well productivity because a simulation with wells added at a rate of 125 well per month from Jan 2013 to April 2013 is showing greater output than recent data with 70 fewer wells added (500 for simulation vs 570 actual).  A decrease in average well productivity is one possible explanation.  An alternative possibility is that the average well profile may be different from the average well profile that Mr. Likvern has chosen.

I have created various well profiles in an attempt to match James Mason's work, Rune Likvern's work, the NDIC typical well, and the actual production data from the NDIC.  I have recently created some newer well profiles by using a minimization of the sum of the squared residuals between the model and data over the period from Jan 2010 to April 2013.  When no constraints are put on the minimization we get qi=11070, b=0.41, and d=0.078 (I call this model 7).

Future Bakken Crude Oil Output, Oil Price, USGS Estimates, and Decreases in Well Productivity

Summary Chart ND Bakken/Three Forks Scenarios

There is quite a bit of optimism in the US about potential future crude oil output.  Due to the media reports that the US will become self sufficient in oil output, many Americans believe that oil prices are likely to decline in the future due to the abundance of oil resources.  This view may be too optimistic.

The enthusiasm is based on the success in the North Dakota portion of the Bakken/Three Forks play since 2008. The high oil prices over most of the period from 2008 to 2012 has made the high cost oil from North Dakota profitable. Bakken/Three Forks output in North Dakota has expanded from 43 kb/d in Mar 2008 to 719 kb/d in Mar 2013, a 16 fold increase over 5 years. The media believes these increases will continue, but the rate of increase is slowing considerably.

As a cautionary tale, consider Bakken/ Three Forks crude output in Montana (at link click on formation code in left most drop down box and type "bak" in search box, most output is from the Elm Coulee fields (all charts can be clicked to enlarge):

Real Oil Prices and the Effect on Future ND Bakken Output

I often read The Oil Drum blog and pointed readers of the Drum Beat to my most recent post here.  Rune Likvern asked a question about how future oil prices will effect my scenarios.  This is an excellent question because it is often claimed that the recent surge in US oil output may lead to lower oil prices.  I expect there is a little too much optimism about future output from the Bakken/Three Forks and Eagle Ford plays, but let's consider two scenarios proposed by Mr. Likvern.

Scenario 1 considers a slower rise in real oil prices than I proposed in my previous post, real oil prices rise to $120/barrel (Jan 2013$) by Jan 2018.



Figure 1

Figure 1 requires some explanation.  Break even oil prices rise to the real market oil price by Sept 2016 at $115 per barrel and the wells added ramp down to zero by Dec 2017.  It is assumed that real oil prices continue to rise at 3.29 % per year and that the decrease in well productivity slows to zero as no new wells are drilled.  Eventually the real oil price rises above the break even price and it is assumed that when the real oil price is 110 % or more of the break even oil price that new wells are added and well productivity then continues to decrease.  This cycle repeats 3 times between 2018 and 2037 and explains the bumps in output in 2021-2, 2027-8, and 2033-4.

Updated Well Profile for the North Dakota Bakken and the Effect on future scenarios

Note that all of the "Bakken" Scenarios I have presented, in this post and previous posts only cover the North Dakota portion of the Bakken/Three Forks play.

A recent post by Rune Likvern at the Oil Drum entitled, Is the Typical NDIC Bakken Tight Oil Well a Sales Pitch? has provided some new information which I will use to update my recent scenario for future Bakken output.

Another post by Mr. Likvern from which I gathered considerable knowledge is entitled Is Shale Oil Production from Bakken Headed for a Run with “The Red Queen”? . In addition a post by Heading Out at the Oil Drum had a number of helpful comments by both Mr Likvern and Webhubbletelescope, the entire thread has comments of interest. There are also a number of posts on the Bakken at The Oil conunDRUM  blog(written by Webhubbletelescope) from which I have learned much. I am indebted to both Webhubbletelescope and Mr Likvern for sharing their knowledge.

Bakken Model Suggests 7 Billion barrels total, enough for 1.3 years of US Crude inputs

 

Note that all images can be enlarged with a mouse click.

 

Above is one possible scenario for future output from the Bakken which suggests a total cumulative output of 7 billion barrels (Gb) from 1953 to 2073.  Current US crude oil inputs to refineries is about 15 million barrels per day  (52 week average above 14.9 MMb/d for past 6 months) which is 5.475 Gb per year, the total Bakken output of 7 Gb would supply current refinery inputs for 1.27 years.  When we account for the 0.57 Gb of Bakken which has been produced we are left with about 1.2 years of crude inputs at current levels.

 

The above estimate is based on  a presentation from the North Dakota Industrial Commission (NDIC) Oil and Gas Division (see slides 25 to 30).  This presentation suggests about 41,000 wells will be drilled in the Bakken at a rate of 1500-3000 wells per year, I chose 2460 wells per year and a total of 42,000 wells drilled by Sept 2028.