1.5 million barrels per day is a lot of oil to replace
The decline rates that are so often discussed in the MRR are beginning to become really big numbers as this excerpt from a recent Houston Chronicle article points out.
Because shale-oil wells deplete about 10 to 15 times faster than the country’s original sandstone reservoirs, producers have to replace 1.4 million barrels per day – more than the amount South Texas’ Eagle Ford Shale produces – just to keep the nation’s production levels flat, said Art Berman, a petroleum geologist in Houston and director of the Association for the Study of Peak Oil… [subscription required]
On a global scale to maintain level global crude oil production the world needs to replace a Saudi Arabia volume of production every 3 years given global decline rates in the 5% range. Now the US can look at its decline rates with a similar reference to the Eagle Ford or the Bakken, both of which now produce at or above the 1 million barrel per day level. The US needs new volumes every year that are equal or greater to the current production of either of these tight oil plays.
Importantly as these tight oil plays come to dominate US domestic production their much faster declines rates will come to dominate the domestic decline hurdle that must be met every year to maintain static production.
The speed of the drilling treadmill needs to be turned up another notch in the race to stay ahead of legacy well declines. It took both of these tight oil plays years to reach their current production level and the 1.4 million barrel per day replacement requirement is an annual event not decade event. Does that really sound like “Energy Independence”?
We strongly recommend that individuals following the oil markets put events in Iraq very high on their must follow screen. If the country continues down its current path civil war becomes a very real possibility with far reaching consequences for the global oil markets.
Charlie Rose had a very good discussion on the risk of a “Sectarian War in Iraq” this week that is worth viewing.