What Does It All Mean? Only Time Will Tell

A famous physicist once said that prediction is hard, especially about the future. I usually have to check whether it was the theoretical physicist Niels Bohr or the applied physicist Yogi Berra.

(It was Bohr.)

But predicting is a favorite pastime of pundits around the country, generally on the basis of too few data – like deducing the state of the climate from this week’s weather. Even their interpretation of what is going on today commonly misses the mark.

A recent story about Shell’s withdrawal from a long-lived project on in situ production of shale oil from oil shale was an interesting example of over-interpretation of a small dataset.

The writer portrayed Shell’s retreat as sounding the death knell for another era of interest in commercializing shale oil production; what he missed was that Shell continues its oil shale work in Jordan – and while both Chevron and Shell have now dropped Colorado projects, ExxonMobil, American Shale Oil and Independent Energy Partners continue in situ projects in Colorado.

In Utah, Red Leaf Resources and Enefit American Oil are actively pursuing surface shale oil production.

Indeed, for the moment, oil shale appears to be making important advances in many parts of the world.

The same writer also ignored Shell’s dropping of two unconventional oil projects in August in Colorado, one in September in Kansas, and putting up Eagle Ford acreage for sale at about the same time as the oil shale announcement. Clearly, Shell had been forced to retrench due to a less-than-satisfactory performance, and Colorado oil shale was just one of the casualties.

Another pundit recently said Shell had focused too much on gas and missed the unconventional oil opportunity – but again, clearly, it wasn’t for want of trying but rather perhaps coming to the table too late.

Despite the Shell announcements, no one is out there proclaiming the end of Shell, or the end of the era for oil-bearing shale plays – least of all the Eagle Ford.

Yet even here, a closer reading of technical data shows that, whatever the pundits say, the Eagle Ford is moving toward maturity.

The figure on page 56 shows a plot of the 12-month percentage increase in oil production from the Eagle Ford. In the early days of the play, the increases were extreme, and even in July a 12-month increase of 36 percent was remarkable (and likely to be revised upward). But on the logarithmic scale it is evident that the growth rate is declining very regularly.

If the trend continues, growth will be less than one percent in another three years, and production will peak somewhere in the range of 750,000-850,000 barrels per day.

It would be nice to think I could predict the peak so simply, but the trend probably won’t continue. Production might decline, price fluctuations might cause rates to fluctuate or a new spurt of infill drilling might drive it up again. The change might happen abruptly, or so gradually as to go unnoticed for months. Thirty-five data points are not a lot unless you are a politician.

And when the trend changes, it will look radical to the pundits – but less so to those of us who spend our lives squinting at the details, trying to get an idea of what really is going on.

One of the pleasures of interacting with my colleagues in the Energy Minerals Division and AAPG as a whole is that I am exposed to the kind of information and insight that enables me to read through the hype and pontification about our industry. While we all wax speculative once in a while, I do find that the flights of fancy are better grounded in reality.

Sometimes we miss the grand changes by being so rooted in the details, but on the whole, I think the technical focus puts important constraints on the extreme predictions on the jazzy Web pages of energy wizards.

The effort to make available the best technical information in a variety of formats to as wide a community as possible is one of the most valuable efforts AAPG and its technical divisions contribute to our understanding of the future, however unpredictable it might still be. 

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Division Column-EMD

Division Column-EMD Jeremy Boak
Jeremy Boak, P.G., EMD President 2013-14.

Division Column-DPA

Division Column-DPA Charles A. Sternbach

Charles A. Sternbach, DPA President.

Division Column-DPA

Division Column-DPA Marty Hewitt

Marty Hewitt, DPA President, is an employee of Nexen Petroleum USA Inc.

Division Column-EMD

The Energy Minerals Division (EMD), a division of AAPG, is dedicated to addressing the special concerns of energy resource geologists working with energy resources other than conventional oil and gas, providing a vehicle to keep abreast of the latest developments in the geosciences and associated technology. EMD works in concert with the Division of Environmental Geosciences to serve energy resource and environmental geologists.

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