How much faith can we put in our ability to decipher all the numbers out there telling us the United States is closing in on its cornering of the global oil market? There's another side to the story of the relentless U.S. shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it's all that's left. There are some good things happening behind the fairy tale numbers, though—it's just a matter of deciphering them from a sober perspective.
In a exclusive interview with James Stafford of Oilprice.com, energy expert Arthur Berman discusses:
- Why US gas supply growth rests solely on Marcellus
- When Bakken and Eagle Ford will peak
- The eyebrow-raising predictions for the Permian Basin
- Why outrageous claims should have oil lawyers running for cover
- Why everyone's making such a big deal about shale
- The only way to make the shale gas boom sustainable
- Why some analysts need their math examined
- Why it's not just about how much gas we produce
- Why investors are starting to ask questions
- Why new industries, not technologies will make the next boom
- Why we'll never hit the oil and gas ‘wall'
- Why companies could use a little supply-and-demand discipline
- Why ‘fire ice' makes sense (in Japan)
- Why the US crude export debate will be ‘silly'
Arthur is a geological consultant with thirty-four years of experience in petroleum exploration and production. He is currently consulting for several E&P companies and capital groups in the energy sector. He frequently gives keynote addresses for investment conferences and is interviewed about energy topics on television, radio, and national print and web publications including CNBC, CNN, Platt's Energy Week, BNN, Bloomberg, Platt's, Financial Times, and New York Times.
Oilprice.com: Almost on a daily basis we have figures thrown at us to demonstrate how the shale boom is only getting started. Mostly recently, there are statements to the effect that Texas shale formations will produce up to one-third of the global oil supply over the next 10 years. Is there another story behind these figures?
Arthur Berman: First, we have to distinguish between shale gas and liquids plays. On the gas side, all shale gas plays except the Marcellus are in decline or flat. The growth of US supply rests solely on the Marcellus and it is unlikely that its growth can continue at present rates. On the oil side, the Bakken has a considerable commercial area that is perhaps only one-third developed so we see Bakken production continuing for several years before peaking. The Eagle Ford also has significant commercial area but is showing signs that production may be flattening. Nevertheless, we see 5 or so more years of continuing Eagle Ford production activity before peaking. The EIA has is about right for the liquids plays--slower increases until later in the decade, and then decline.
The idea that Texas shales will produce one-third of global oil supply is preposterous. The Eagle Ford and the Bakken comprise 80% of all the US liquids growth. The Permian basin has notable oil reserves left but mostly from very small accumulations and low-rate wells. EOG CEO Bill Thomas said the same thing about 10 days ago on EOG's earnings call. There have been some truly outrageous claims made by some executives about the Permian basin in recent months that I suspect have their general counsels looking for a defibrillator.