Resilience

Mitigation or adaptation? It’s usually an either/or choice: either we work on ways to reduce the amount of greenhouse gases in the atmosphere or we find ways to adapt to new conditions created by climate change, including reducing society’s vulnerabilities and raising its resilience. Fighting to close a coal plant or developing green energy alternatives, for example, is a different job than translocating an imperiled species or planning for inevitable sea level rise. Same problem, separate responses. Different tribes. Mitigation and adaptation even have separate conferences!

•Peak oil isn’t dead: An interview with Chris Nelder •What If We Never Run Out of Oil? •‘Peak Fossil Fuels’ Is Closer Than You Think: BNEF

I’ve been advancing my guerilla gardening efforts recently, with a significant new raised bed now beautifying my nature strip, as seen in the featured picture. I thought in this post I could provide a brief overview of how to build a cheap raised bed, either for use on your nature strip or in your front or backyards. This overview might seem a bit basic for the handy builders among you, so I direct this post to those who are beginning their journey into guerilla gardening and urban agriculture.

Peak oil does not occur when we run out of oil. Peak oil occurs when the marginal consumer is no longer willing to pay the cost of extracting and processing the marginal barrel of oil. And we can actually calculate what the related numbers are.

Cities everywhere are working to improve transportation options to reduce reliance on automobiles and for this reason bicycling as another mode of transport is taking off. But there’s a lot of push back because in the U.S. car culture is king, and the hidden argument against bikes is rarely made public.

Today's shale gas boom has brought a surge of drilling across the US, driving natural gas prices to historic lows over the past couple of years. But, according to David Hughes, geoscientist and fellow at the Post Carbon Institute, in the future, we can expect at least the same frenzied rate of drilling – but less and less oil and gas from each well on average.

In The Descent of Man, Charles Darwin wrote that “ignorance more frequently begets confidence than does knowledge.” This single line succinctly describes a recently conceptualized psychological phenomenon called the Dunning-Kruger Effect. David Dunning and Justin Kruger, two researchers from Cornell University, have concluded that there is an inverse relationship between a person’s knowledge and skill level in a particular area and the person’s self-rated ability to perform in the area. Dunning and Kruger argue that people who are unknowledgeable and unskilled at performing an activity are also unable to recognize their own incompetence, which is why they tend to overestimate the quality of their performance when asked to self-evaluate. (Likewise, those individuals who are highly knowledgeable and highly skilled tend to underestimate their performance when asked to self-evaluate.)

A group of people will be walking through the Great Plains, along the proposed Keystone XL route, for three months this summer. We hope to make connections with communities along the way.

A weekly update, including:
-Oil and the global economy
-The Middle East
-LNG Developments
-Pivotal pipelines
-Quotes of the week
-Briefs

Transition culture may be flourishing in the south of my county – Devon, we have Totnes there after all – but how is it progressing in the seemingly distant and rather overlooked north? Well, I offer the following sketch perspective.

 As soon as we begin using the word “farming” again, all of the implicit associations with farming begin to reemerge in our shared thoughts and language

From North America to Siberia, rising temperatures and drier woodlands are leading to a longer burning season and a significant increase in forest fires. Scientists warn that this trend is expected continue in the years ahead.

I have just returned from Spain, where we had to go at short notice to give a farewell kiss to our stranded asset. Yes, our farmhouse, which had been the focus of all my dreams and efforts a few years back, was finally released from legal limbo land and the keys handed over to the happy new owners. We got back around half of what it cost us to buy it and do it up, but speaking with other people in the same situation we know that we are among the lucky ones.

Ready (or Not?) for a Great Coming Shale Boom

The Cline Shale, thousands of feet underground in a roughly 10-county swath, is just one of many little-tapped shale formations in Texas and across the nation, geologists say. That means the potential for oil and gas discoveries is theoretically huge, and the reason is technology. The rock-breaking process known as hydraulic fracturing, coupled with the ability to drill horizontally underground, has allowed drillers to retrieve oil and gas from previously inaccessible areas.

Many shales will be too expensive or too small to develop, especially if oil prices fall or environmental regulations tighten. But in Texas, which is already the top oil-producing state, bullishness about a new era is pervasive.

“We’re back into another phase of wildcatting, like the old-timers,” said Jamie Small, the president of Icon Petroleum, a Midland-based company that has worked in areas including the Cline Shale and another early-stage formation, the Tuscaloosa Marine Shale. Barry Smitherman, chairman of the Railroad Commission of Texas, the state’s oil and gas regulatory agency, has said that oil production in Texas could roughly double by 2020.

Excluding the US, rest-of-world crude production in 2H2012 was not higher than in 2005

Excluding the US, rest-of-world crude oil production in the 2nd half of 2012 was on the same level as in the 2nd half of 2005, despite 85% higher oil prices. There are many reasons for this. Declining oil production in many countries which cancelled out growth elsewhere. The 2nd Russian oil peak petering out. Saudi Arabia’s swing role response to US shale oil. Financial crises impacting on oil demand. High investment costs in the oil sector to keep production going. Geopolitics around Iran. Oil wars and civil unrest in Iraq, Libya, Sudan, Yemen and Syria. Hurricanes impacting on offshore oil. Altogether, there simply were (and still are) too many problems, often one after the other.

WTI Crude Rises to Near Two-Week High; OPEC Basket Above $100

West Texas Intermediate crude advanced to near its highest closing level in more than two weeks. OPEC’s reference price rebounded above $100 a barrel.

WTI reversed losses of 0.6 percent as European stocks and the euro rose amid speculation central banks will maintain monetary stimulus. Brent crude traded near its highest closing price in two weeks as Italian Prime Minister Enrico Letta prepared to finish installing a new government.

e, to grow their dependence on coal in the long run is fundamentally unsustainable.

Crude prices drop on demand concerns, reports NBK

NBK’s Economic Update reports that after trading broadly flat through March, crude oil prices dropped sharply in early April. The price of Kuwait Export Crude (KEC) fell from a peak of $107 per barrel (pb) on 2 April to just under $100 ten days later. This was its first spell below the $100 mark since July 2012. Other global benchmark blends also scored notable declines. Brent crude fell $8 to $102, and stood some $17 below its February peak. The fall in West Texas Intermediate (WTI) was less steep – by $6 to $91 – and this blend remained slightly above its levels of early March.

The fall in prices seems to have been mostly generated by demand side factors, said NBK. Firstly, oil demand is believed to have softened for seasonal reasons: the (northern hemisphere) spring period is typically the maintenance season for refineries, which reduces the demand for crude feedstock. Historically, Q2 quarter-on-quarter oil demand has fallen by around 1.6 million barrels per day (mbpd) relative to its trend. These regular demand patterns – although predictable – seldom seem to be ‘priced in’ well in advance.

UK Gas Hit As Norway Pipeline Supply Cut

Fears are raised for gas prices as a key North Sea pipeline is hit by an outage - with supplies possibly affected until May 6.

Land-locked Alberta mulls oil pipeline to Arctic port

OTTAWA (Reuters) - Canada's oil-producing province of Alberta, trying to deal with a lack of pipeline capacity to the Pacific Coast and the United States, is mulling the idea of building a line north to an Arctic port, the province's energy minister said on Friday.

Ken Hughes said he has been talking to the government of Canada's Northwest Territories, which lie directly north of Alberta, about a pipeline to a port such as Inuvik or Tuktoyaktuk on the Beaufort Sea, a section of the Arctic Ocean.

Exxon Mobil Begins Production at Kearl Oil Sands

Exxon Mobil Corp., the world’s largest company by market value, began production at its Kearl oil sands project in Alberta, which is projected to produce 4.6 billion barrels of recoverable oil in the next 40 years.

The project will produce 110,000 barrels per day later this year and that’s expected to double by late 2015, the company said in a statement. The Kearl site is 46 miles (75 km) northeast of Fort McMurray, Alberta, and is operated by Imperial Oil Ltd., which is 70 percent owned by Exxon Mobil.

China's Sinopec threatens to quit Ghana gas project over funding: reports

Cape Town (Platts) - China Petroleum and Chemical Corp., or Sinopec, has threatened to pull out of the $700 million gas project in Ghana if the government fails to honor its financial commitments to the project, local news agencies said Friday.

KazMunaiGas eyes $10 billion investment to boost reserves

ASTANA/ALMATY (Reuters) - State-run KazMunaiGas, Kazakhstan's second-largest oil producer, will invest 1.5 trillion tenge (6.3 billion pounds) in exploration in the next 10 years as it aims to nearly double its reserves of crude oil and gas condensate, the company's head said on Monday.

KazMunaiGas Chief Executive Officer Lyazzat Kiinov said the company's current reserves stood at over 800 million tonnes of liquid hydrocarbons.

Namibia to Sell 49% Stake in $1.1 Billion Gas Power Plant

Namibia Power Corp., a state-owned electricity supplier, plans to sell 49 percent of the $1.1 billion gas-fired power plant it’s building.

CNOOC Revenues Grow on Higher Sales

Chinese offshore giant – CNOOC Ltd. reported first-quarter 2013 revenues of 56.18 billion yuan ($8.95 billion), up approximately 14% from the year-earlier level. The upside came primarily from growth in production volume.

Total Profit Drops 7% on Lower Oil Price as Production Falls

Total SA, Europe’s third-largest oil producer, reported a 7 percent decline in earnings as output fell and weakening fuel demand pushed down the price of crude.

Profit excluding changes in inventories retreated to 2.9 billion euros ($3.8 billion) in the first quarter from 3.1 billion euros a year earlier, the Paris-based company said today in a statement. That met the 2.92 billion-euro average estimate of 14 analysts surveyed by Bloomberg.

Iraq offers 3-month credit for Egypt oil deal - Sources

DUBAI/BAGHDAD--OPEC member Iraq has agreed in principle to offer cash-strapped Egypt 4 million barrels of crude a month on a three-month credit term, in a move that could ease the fuel shortage that has recently hit the Egyptian economy, officials from the two countries said Monday.

The officials told Dow Jones Newswires that Baghdad would supply Cairo with 2 shipments of Basra light crude each month at international prices but the payment will be deferred for three months with no interests incurred. The first cargo is expected in Egypt next month once the deal is finalized, they said.

State TV: Syrian prime minister escapes bomb attack

DAMASCUS, Syria (AP) — Syria's prime minister escaped an assassination attempt Monday when a bomb went off near his convoy in Damascus, state media reported, the latest attack targeting a top official in President Bashar Assad's regime.

Prime Minister Wael al-Halqi was unhurt in the bombing in the capital's western neighborhood of Mazzeh, state TV said. The TV showed footage of heavily damaged cars and debris in the area of the blast as firefighters fought to extinguish a large blaze caused by the explosion.

Beyond sanctions, Iran squeezed by higher edible oil costs

Iran is having to pay a premium for basic foodstuffs such as cooking oil, highlighting the increasing strain on Tehran from Western sanctions aimed at its disputed nuclear programme, even though the sanctions don't cover food, Reuters reported.

Putin and Abe play ‘Let’s Make a Deal’ on natural gas

Japanese Prime Minister Shinzo Abe is in Russia today for a sit-down with his counterpart, Vladimir Putin. Near the top of the agenda: Japan’s insatiable appetite for natural gas, which Russia has in abundance. Lurking in the background is China, which has a complicated history with both nations, and an intensifying need for natural gas imports of its own.

Japan is the world’s biggest importer of natural gas, and its needs have only grown since the nuclear crisis at Fukushima led to the shutdown of 48 of the nation’s 50 commercial nuclear reactors. Even if some of those power plants resume operations later this year as proposed, Tokyo is under pressure to find alternative sources of energy to replace nuclear power, which generated around 30% of Japan’s electricity before the tsunami.

BP seeks $1.5 bn incentive for deep sea gas

NEW DELHI: Europe's second-biggest oil firm BP plc has asked Prime Minister Manmohan Singh for a $1.5 per mmBtu additional "incentive" for deep-sea fields over and above the near doubling of domestic gas price suggested by the Rangarajan Committee.

Exxon Mobil’s Baytown Refinery Facing Labor Deadline, Union Says

Exxon Mobil Corp. and union steelworkers at the company’s Baytown, Texas, refinery and chemical plant face a June 15 strike or lockout after failing to agree on a contract at the largest petroleum and petrochemical complex in the U.S., United Steelworkers said today.

Problems choke India's coal industry

MUMBAI // India's coal industry is choking under a heap of problems, including inefficiency, corruption and environmental concerns.

With coal being India's main source of power, these issues pose substantial risks to the country's economic growth, analysts warn.

Norway oil industry rapped by Eva Joly

MEP Eva Joly castigated oil nation Norway when she spoke at environment Party De Grønne’s congress in Oslo, Saturday.

Amongst other things, Norwegian-French Joly pointed out the lack of coherence between Norway’s rainforest commitment on the one hand, and its Sovereign Wealth Fund and Norsk Hydro's investments in Brazil on the other.

600 hectares covered with oil wastes in Mangistau oblast

600 hectares of land are covered with oil wastes in Mangistau oblast in western Kazakhstan, Lada writes. According to the regional Akim (Governor) Alik Aidarbayev, 2.2 million tons of oil wastes are scattered across the territory.

He called oil companies to take better care to solve ecological problems. “Subsoil users have to deal with the issues of utilization not through some pilot project, but use solid approach and construct highly-effective units for soil treatment,” Aidarbayev said.

BP’s Ula Oil Leak Could Have Been ‘Major Accident,’ Norway Says

Norway said an oil and gas leak at BP Plc’s Ula field could have been a major accident with loss of life and substantial damage, and ordered the company to review maintenance procedures after discovering “serious breaches.”

The estimated 125 barrels of oil and 1,600 kilograms (3,520 pounds) of gas that leaked at the North Sea site last year was due to the fracture of corroded bolts on a valve in a separator outlet, the Petroleum Safety Authority Norway said today in a statement. While no one was injured, output closed for 67 days.

UK ministers consider offering communities fracking sweeteners

(CNN) -- The government is proposing to bribe communities with cheaper energy bills in exchange for dropping opposition to local fracking projects as part of plans to push ahead with shale-gas extraction.

Several options to cajole rural England to accept the contentious drilling schemes are being discussed as ministers prepare to announce that the UK's shale-gas reserves are much larger than previously estimated.

EPA report on methane further divides fracking camps

PITTSBURGH — The Environmental Protection Agency has dramatically lowered its estimate of how much of a potent heat-trapping gas leaks during natural gas production, in a shift with major implications for a debate that has divided environmentalists: Does the recent boom in fracking help or hurt the fight against climate change?

Oil and gas drilling companies had pushed for the change, but there have been differing scientific estimates of the amount of methane that leaks from wells, pipelines and other facilities during production and delivery. Methane is the main component of natural gas.

Keystone Pipeline Support Enlists Oil Firms to U.S. Jews

Almost 50 groups representing everything from oil companies to American Jews have stepped up their Washington spending as the proposed Keystone XL oil pipeline proves to be a bonanza for lobbyists.

The American Petroleum Institute, a Washington-based oil industry trade group, increased its lobbying spending on all issues, including Keystone, to $2.1 million in the first three months of the year from $1.8 million during the same period a year earlier, Senate records show. The American Jewish Committee lobbying costs rose to $40,000 from $30,000.

China cracks down on military use of luxury cars

HONG KONG (CNNMoney) - Top military officials in China might soon be forced to trade in their luxury cars for something a little less flashy.

China has banned the use of military license plates on expensive cars, according to official state media. The new guidelines were issued by the Central Military Commission, and are the latest anti-corruption measures undertaken by the image-conscious government of President Xi Jinping.

Hyundai pulls ad that plays suicide for laughs

NEW YORK (CNNMoney) - Korean automaker, Hyundai, has apologized for an advertisement that featured a man attempting to commit suicide with exhaust fumes from one of its SUVs.

The ill-conceived punch-line was that the SUV, an iX35, runs on hydrogen and, therefore, emits only water vapor, so the man can't kill himself.

6 greenest cars made in America

Buyers who want "green" cars carefully read the fine print pertaining to emissions and gas mileage, choosing between battery-powered electrics (EVs) and gas-electric hybrids. Buyers who worry about job creation in the U.S. pay attention to where the car was built.

Future-Proofing Energy Markets

In energy markets there are few more contentious theories than that of peak oil.

The idea was first posited by M. King Hubbert, a geologist for what was then known as Shell Oil—he asserted that oil discovery, and therefore production, would follow a bell-shaped curve.

Long-term focus needed for India's improved energy security

There are several dimensions to India's energy challenge. First of all, they have a great issue with access. Making sure that people have access to reasonably affordable energy is a very high priority for India, of course. They have a rapidly growing economy. They have an increasing energy demand in general. They have quite a large number of infrastructure investment needs, so they need to invest a lot of money into their energy system, regardless of what kind of system they're looking for. We believe that fundamentally to keep and, even wors

In Abu Dhabi's energy oasis, setbacks and progress

FORTUNE -- The last time we visited Masdar -- the green city being built in the desert sands of Abu Dhabi -- the project wasn't much more than an architect's scheme. Fast-forward and what you'll find is an operating university, the Masdar Institute, and nearby the energy-saving Middle East headquarters tower of Siemens, plus various shops and restaurants -- including a sushi joint, a bookstore, and an organic supermarket. To date, Masdar's buildings reduce energy demand by 56% and potable water demand by 54% compared to traditional Middle Eastern structures. What's perhaps most impressive is that the small city is currently powered 100% by renewables. Electricity is generated by a 10-megawatt solar PV plant located on-site and a rooftop solar PV installation totaling 1 megawatt.

Turkey to say in days who will build 2nd nuclear plant

(Reuters) - Turkey's energy minister said Ankara will announce by the weekend which country will construct its second nuclear power station, a project expected to cost around $22 billion.

Turkey, likely to overtake Britain as Europe's third-biggest electricity consumer within ten years, plans to build several nuclear plants over the next decade to reduce its dependence on imported oil and gas.

West Virginia: Lawmaker wants kids to work for ‘free lunch’

“I think it would be a good idea if perhaps we had the kids work for their lunches: trash to be taken out, hallways to be swept, lawns to be mowed, make them earn it,” said Ray Canterbury, a Republican from Greenbrier and a member of the West Virginia House of Delegates, during debate over Senate Bill 663, also known as the Feed to Achieve Act.

The bill — the first of its kind in the nation — would create a partnership between private donations and public funds to make breakfast and lunch available for free to every student, kindergarten through high school senior, in West Virginia. It’s based on a model program in Mason County that’s improved attendance and decreased discipline problems, according to the school district’s food service director.

When One Man’s Game Is Also a Marauding Pest

In 1990, fewer than two million wild pigs inhabited 20 states, according to John J. Mayer, the manager of the environmental science group at the Savannah River National Laboratory in Aiken, S.C., who tracked the state populations. That number has now risen to six million, with sightings in 47 states and established populations in 38 — “a national explosion of pigs,” as Dr. Mayer put it.

The swine are thought to have spread largely after escaping from private shooting preserves and during illegal transport by hunters across state lines. Experts on invasive species estimate that they are responsible for more than $1.5 billion in annual agricultural damage alone, amounting in 2007 to $300 per pig. The Agriculture Department is so concerned that it has requested an additional $20 million in 2014 for its Wildlife Services program to address the issue.

Carbon Markets Drive China, India Climate Efforts, Center Says

Carbon markets are a key driver for investment in the biggest emerging nations’ greenhouse-gas reducing efforts, and allowing them to collapse would be a “disaster,” according to the Center for American Progress.

The United Nations carbon market has spurred $356 billion of investment in emission cuts, encouraging climate-protection policies in at least 10 nations including China, India and Brazil, the Washington-based policy institute said in a study, citing UN data. More than 3,000 projects in China supported $202 billion in investment and seven pilot carbon markets.

PR smokescreen cannot hide the holes in climate teaching proposals

The new national curriculum provide a less in-depth introduction to climate change, and misses out vital information about risks.

What's climate scientist James Hansen's legacy?

Just a few weeks ago, one of the biggest names in climate science made one of the biggest announcements possible. Dr. James (Jim) Hansen said that he will "retire" from his duties at NASA to focus his energies elsewhere. This is a "retirement" that is anything but. Dr. Hansen has made clear that he will become more engaged in communicating climate science to the general public and he will continue to carry out the high-quality work which he is known for.

What does this mean for climate science and the future of the Earth? It is impossible to know now but instead of looking forward, I want to shine a light on what Jim has done for climate science, what he signifies to the larger public, and how he is viewed by current and upcoming scientists.

Along N.J. bay, rising sea draws ever closer

The night Meghan Wren got stranded by floodwaters and had to sleep in her car, she knew it was time for a reckoning.

She had been driving to her waterfront home along the Delaware Bay in South Jersey. As she crossed the wide marsh in the dark, the water rose quickly. It became too deep - ahead and behind. She had to stop and wait.

To her, no longer were climate-change predictions an abstract idea. Sea level has been rising, taking her waterfront with it.

“Beware the scale trap”. In a recent Letter To Philanthropists Parker Mitchell, a former CEO of Engineers Without Borders in Canada, advises potential donors that “scale is important, but don’t rush it. Most good ideas take time – to iron out the details, to bring down the costs, to be tested in different environments”. It takes time to focus on the little, programatic details, adds Mitchell. “Organic demand-driven scale will happen in time - – if you have the patience to find the right elements of a solution”. These lessons are exemplified by the 14-year story – so far – of The Nubian Vault Association. The writer spoke with is co-founder, Thomas Granier.

Ogg and Uck explain the pain of fossil fuels and emissions.

"Speaking truth to power" was originally a Quaker phrase. Many of us act in ways that might seem to go against common sense, against apparent rationality. This has to do with a belief in what has been called deep ethics, a belief, as I have written about briefly here, that what one does matters even if it might seem insignificant or hopeless at the time.

In this post I present the results from dynamic simulations using the typical tight oil well for the Bakken as recently presented by the North Dakota Industrial Commission (NDIC), together with the “2011 average” well as defined from actual production data from around 240 wells that were reported to have started producing from June through December 2011.

Sandor Katz lives a couple hours across Tennessee from us, so on a delightful April weekend we decided to spend four days attending his Wild Fermentation Intensive. Sandor is quite the celebrity these days — after profiles in The New York Times Magazine, The New Yorker, and Michael Pollan’s new book, Cooked, Sandor’s own encyclopedia, The Art of Fermentation, still in hardcover, has galloped through several printings for Chelsea Green. Readers of Resilience will find scores of references to Sandor over the past few years, as sustainability bloggers have come to recognize the importance of fermentation to sustainability.

In this post I present the results from dynamic simulations using the typical tight oil well for the Bakken as recently presented by the North Dakota Industrial Commission (NDIC), together with the “2011 average” well as defined from actual production data from around 240 wells that were reported to have started producing from June through December 2011.

This post is an update and extension to my earlier post “Is Shale Oil Production from Bakken Headed for a Run with “The Red Queen”?” which was reposted here.

The use of the phrase “Typical Bakken Well” by NDIC as shown in Figure 01 is here believed to depict what is to be expected from the average tight oil well.

The results from the dynamic simulations show:

• If the “Typical Bakken Well” is what NDIC recently has presented, total production from Bakken (the portion that lies in North Dakota) should have been around 1.1 Mb/d in February 2013, refer also to Figure 03.
• Reported production from Bakken by NDIC as of February 2013 was 0.7 Mb/d.
• Actual production data shows that the first year’s production for the average well in Bakken (North Dakota) presently is around 55% of the “Typical Bakken Well” presented by NDIC.
• The results from the simulations anticipate a slowdown for the annual growth in oil production from Bakken (ND) through 2013 and 2014.

Figure 01: The chart above is taken from the NDIC/DMR presentation Recent presentations “Tribal Leader Summit” 09-05-12 slide no 5 (pdf; 8.7 MB). The chart shows NDIC’s expected average daily oil production by year. The first number (on the y-axis) is the IP (Initial Production) number, and this is followed by the average daily production by year.

The well shown above has a first year total oil production of 156 kb (427 Bbl/d).

Similar well profiles may be found in other NDIC presentations.

In this post the term well productivity is used to describe total tight oil production from a well during the first 12 months of reported production.

In this case, the Bakken refers to tight oil production from Bakken (Sanish, Three Forks) as this is reported by the authorities of North Dakota.

As of February 2013 around 84% of North Dakota’s oil production came from 4 counties; Dunn, McKenzie, Mountrail and Williams. These 4 counties cover an area of around 8 700 square miles of North Dakota’s total area of 70 700 square miles.

Figure 02: The chart above shows monthly net additions of producing wells (green columns plotted against the right hand scale) and development in oil production from Bakken (ND) (thick dark blue line plotted against the left scale) as from January 2000 and through February 2013.
Approximately 1 770 producing wells were added during 2012, in Bakken (ND), but the timing was not distributed evenly throughout the year. The big ramp up began in the summer of 2011. There was an increase in general from 63 to 144 producing wells (more than 120%) on average each month from July 2011 and through 2012. From January 2010 and through June 2011 63 producing wells were added on average each month. During the winter months of 2010/2011 oil production growth slowed as a response to fewer well additions.

The acceleration of producing well additions from the second half of 2011 resulted in a steeper build up of oil production as shown in Figure 02.

With time, and as more actual data is published, more precise estimates of the decline rates will become feasible. In the current analysis the decline rates used beyond 2-3 years after the start of production are the ones derived from the typical NDIC well shown in Figure 01.

Presently there are lively discussions about future decline for tight oil wells that span from moderate declines (beyond year 3) to those who expect tight oil wells in general to become stripper wells 6 to 8 years after they began to produce.

A well producing 10 - 15 Bbls/d is commonly referred to as a stripper well.

Presently the number of actual data for a significant amount of tight oil wells and their later time decline rates (beyond year 2 of the well life) is very limited, and for this reason it was decided to use the decline rates beyond year 2 for the “2011 average” well as these were derived from the typical NDIC well shown in Figure 01.

Decline rates later in well life (beyond year 2) that deviate from what has been used in this study may affect developments in late life total production (decline). The wells’ first year production and net added producing wells were found to be the dominant parameters for development in near term total production.

THE TYPICAL NDIC WELL

Figure 03: The colored bands show total production (production profile for the typical NDIC well multiplied by net added producing wells during the month) added by month and its projected development (left hand scale). The yellow circles show net added producing wells by month (right hand scale). The thick black line shows actual reported production from Bakken (North Dakota) by NDIC (left hand scale).

The model was calibrated to start simulations as of January 2010.

The results from the simulation show that if the wells added as from January 2010 were like the typical well used in recent presentations by NDIC, total production from Bakken (ND) by February 2013 would have been around 1.1 Mb/d.

The thick black line shows actual production from Bakken (ND) reported by NDIC which was 0.7 Mb/d in February 2013.

If the NDIC typical well represented the “average”, the production build up would have been steeper as shown in Figure 03.

This supports earlier findings that the “average” well yields less than what has been reported, and actual well data from NDIC shows that the first year’s production from the average well presently yields around 55% of the typical NDIC well production used in several public presentations.

THE ”2011 AVERAGE” WELL

Figure 04: The chart above shows development in the sequential moving average of reported total production for the first 12 months for wells studied and that started to produce as of January 2010 and through January 2012 (yellow circles connected by black line). The dark red line shows the sequential moving average of the most recent 50 wells (50 WMA; 50 Wells Moving Average).
The blue line shows the sequential moving average of the most recent 200 wells (200 WMA; 200 Wells Moving Average).

Figure 04 illustrates that the well productivity (as expressed by total oil production for the first 12 months) has been in general decline since the summer of 2010. Presently it appears that the well productivity stabilized around 85 kb during 2011. Simulations with the “2011 average” well suggest now that the level of around 85 kb has been maintained through 2012, refer also to Figure 06.

Through 2012 it was observed from NDIC data that a high number of wells continued to be added in the “sweet spots” (like Alger, Heart Butte, Reunion Bay, Sanish, Van Hook to name a few). In areas/pools with wells that had a lower well productivity than the “2011 average” well, it was found that few or no wells were added during the second half of 2012.

Around 30 pools that show promising/good well productivity were also identified.

Future developments of well productivity

Presently it appears that companies give priority to drilling wells that have the potential to meet targeted returns within the boundaries of (oil) price, (well) costs and (well) productivity. This may cause the average well productivity (as expressed by first year total productivity) to improve for the near term.

More than 870 producing wells were added between June 2011 through December 2011 and the study included more than 230 (more than 26%) of these wells to develop the composite well which in this post is referred to as the “2011 average” well and which is shown in Figure 05.

Of the studied wells that started during 2010 around 14% were equal to or better than the typical NDIC well shown in Figure 01.

Of the studied wells that started during 2011 around 3% were equal to or better than the typical NDIC well shown in Figure 01.

Figure 05: The chart above shows the well profile and cumulative for oil from the “2011 average” well that was derived from 230 wells that started to produce as from June 2011 and through December 2011.

This “2011 average” well was used for the simulations shown in Figures 06 and 07.

Dry wells and wells with tiny and erratic production were not included for the development of the “2011 average” well. These wells were found to be 1 - 2% of the total number of wells studied.

NOTE: The decline from year 1 to year 2 has been derived from actual data (refer to Figure SD2). Decline rates later in the wells’ life according to those derived from the typical NDIC well shown in Figure 01.

Figure 06: The colored bands show total production (production profile for the “2011 average” well multiplied by net number of wells added during the month) added by month and its projected development (left hand scale). The white circles show net added producing wells by month (right hand scale). The thick black line reported production from Bakken (North Dakota) by NDIC (left hand scale).

The chart also shows forecast developments for total oil production with, respectively, 1 300 (dark blue dotted line) and 1 500 (red dotted line) added through 2013 and 2014.

The model was calibrated to start simulations as of January 2010.

Simulations with the “2011 average” well result in an almost perfect fit with total reported production by NDIC as from early 2011. The model comes in lower than actual production during 2010 and the explanation for this is believed to be due to higher well productivity for wells started during 2010, refer also to Figure 04.

If the model over time develops a growing deficit against actual reported production, this would suggest that newer wells have an improved well productivity relative to the “2011 average” well and vice versa.?

SOME FORECASTS WITH THE ”2011 AVERAGE” WELL

Table 1; Actual annual production and forecasts for tight oil production from Bakken (ND) with 1 300 and 1 500 “average 2011” wells added annually through 2013 and 2014.

NOTE: Forecasts should be viewed in the context of developments in well productivity, (well) costs, (oil) price, decline rates from the “older” population of wells and the strategies the companies deploy as they come to hold acreage by production.

PLATEAU OF 700 kb/d THROUGH 2013

Figure 07: The colored bands show total production (production profile for the “2011 average” well multiplied by net number of wells added during the month) added by month and its projected development (left hand scale). The white circles show net added producing wells by month (right hand scale). The thick black line reported production from Bakken (North Dakota) by NDIC (left hand scale).

The transparent colored bands shows a plateau of 700 kb/d through 2013 and the white (smaller circles) estimated number of “2011 average” wells added each month to sustain the plateau of 700 kb/d.

The model was calibrated to start simulations as of January 2010.

Simulations with the “2011 average” well found that around 1 200 wells were needed through 2013 to maintain a plateau of 700 kb/d. As shown in Figure 07, the number of wells added monthly will decline as a result of a “thickening” production base from a growing population of wells.

TIGHT OIL IN A GLOBAL SUPPLY PERSPECTIVE

Figure 08: The chart above shows development in crude oil and condensates (C + C) production for OECD split on Canada (red columns), North Sea (green columns), USA (blue columns) and the rest of OECD (yellow columns). (Data from EIA.)

Between December 2011 and as of December 2012 OECD had an annualized growth in (C+C) supplies of 0.71 Mb/d. This growth was facilitated through the rapid production growth from tight oil in USA and from oil sands in Canada that more than offset the decline in oil production from the North Sea and other OECD countries.

As shown in Table 1 a slowdown in the growth in tight oil production from Bakken (and other tight oil formations) should be expected through 2013. This needs to be seen in conjunction with production developments from conventional oil reservoirs in Alaska, Gulf of Mexico and the Lower 48 to get a complete understanding of what to expect through 2013 and beyond for developments in total (C+C) production for USA.

For 2013 it is expected that (C+C) production from the North Sea will continue to decline at an annual rate of 10%. Thus total OECD (C+C) production for 2013 may experience less growth than in 2012.

Figure 09: The chart above (based upon data from EIA International Energy Statistics) shows developments in (C+C) production for the world split on economic zones (plotted towards the right hand scale).

The economic zones are OECD (green), Russia (white), Rest Of World (ROW, which includes Brazil and China) (blue) [OECD, Russia and ROW is also referred to as Non OPEC] and OPEC (yellow).

Development in the oil price (Brent spot) is shown as white dots connected by the black line (plotted towards the left hand scale).

Figure 08 shows that annualized Non OPEC (C+C) production has been flat for recent years. The growth from tight oil (USA) and oil sands (Canada) has offset declines from the rest of the OECD and provided growth in OECD (C+C) supplies. Annualized growth in Russian (C+C) production has slowed to around 0.14 Mb/d during 2012. ROW (C+C) has seen an annualized decline of roughly 0.54 Mb/d since 2011.

Chances are that (C+C) production for Non OPEC may decline in 2013 (and beyond) despite the expected growth from tight oil.
Growth in global (C+C) supplies during the last 2 years has primarily come from OPEC.

If Non OPEC experiences a decline in (C+C) supplies in the near future, this leaves OPEC to offset this decline and also provide for any growth in global (C+C) supplies. This combination may put OPEC’s (C+C) capacity to a stress test during 2013 or later.

SUPPLEMENTARY DOCUMENTATION FOR THE “2011 AVERAGE” WELL

All the wells included in this study have verified full time production series.

Figure SD1: The chart above shows the first 12 months’ production for the wells studied against their reported start of production and the study included the production history of more than 440 wells that started to produce as from January 2010 and through January 2012. This represents around 22% of the wells meeting these criteria.

Around 2 060 wells were reported to have started to produce as from January 2010 and through January 2012 and thus had 12 months or more of reported production in January 2013.

443 of these 2060 wells were subject to in depth studies of the full time series of production.

The wells studied were from 30 companies and 89 pools in Bakken North Dakota.

The density of wells with a production above 200 kb during the first 12 months was found to decrease with time.

Figure SD2: The scatter chart shows decline rates for oil from year 1 to year 2 for 156 wells that started as from January 2010 and through February 2011 and thus had a history of 24 months of production or more as of January 2013.
A total of 860 wells started to produce during the studied period that met the criteria.

Figure SD2 illustrates that the decline rate is all over the place. A linear fit suggests that decline rates from year 1 to year 2 should be expected to be a function of first year (first 12 months) production. It appears that the higher the first year’s production the higher the decline rate from year 1 to year 2 becomes.

Figure SD3: The scatter chart above is a variant of the one shown in Figure SD2, and here first year (first 12 months) production has been plotted against the production of year 2 (months 13 through 24) of the wells’ life.

The production developments in Bakken and other tight oil plays are very much a function of monthly additions of producing wells, developments in well productivity, decline rates (for the growing population of “older” producing wells), development in costs, strategies deployed by the companies for development of their acreage, adequate infrastructure and not least the developments/expectations for the oil price.