Is mankind witnessing the slow arrival of Peak Oil?14-03-2015
Whipple claims the technology of horizontal oil drilling and "fracking" only played a part in the shale oil “miracle.” There were several unseen hands at work to bring us the illusion that all is well with the world's oil supplies. They are:
"It's important to understand that the concept of “peak oil,” the time when global oil production starts to decline, is alive and well despite the current, and very temporary oil glut. Conventional oil, the kind that comes shooting out of wells at thousands of barrels per day, stopped growing about ten years back. However, non-conventional oil (fracked shale, tar sands, deep water) is increasing.
These very expensive “oils” gave many the illusion that all was well despite the steep climb in oil prices, which had to be on the order of $100 a barrel or more before they made economic sense to produce."
~ It took lots of money to get shale oil out of the ground and a selling price of less than $70 or $80 a barrel was not enough to make it happen. He says only China’s rapid economic growth and ability to pay high prices forced them to unprecedented levels.
~ Moreover, the Federal Reserve and its very low interest rates made the shale oil revolution possible by permitting the drilling of "unprofitable shale oil wells using cheap money."
~ Last summer, the big bonanza came to an end: too much shale oil was being produced; the Chinese and other Asian economies slowed their demand; Europe ground to a halt; a glut developed and high oil prices were over — at least for a while.
~ The massive losses most shale oil and other non-conventional producers are facing (it takes a lot more money to get fracked-oil out of the ground) have resulted in a major cutback in the drilling of new wells and other energy production facilities. Within six months to a year these cutbacks in investment in new production will clearly result in a decline in global production of oil, which may not be possible to recover from. We just may be seeing the arrival of peak oil – conventional and unconventional – sooner than most believe.
Read the full report here .
Printer Friendly version...