Tuesday, November 13, 2012

How Long Will the North American Shale Boom Last?

The North American shale boom has shaken the global energy industry. From Russia to the Middle East to South America and Oceania, the unexpected burst of production of oil & gas from North American tight rocks has had an explosive effect. And the NA shale boom continues to grow and expand. The question remains, "For how long?"

Normally, the question of the extent of any given set of petroleum reserves would be left to geologists and engineers. But these days it seems that everyone from investors to pundits to politicians to doomers to faux environmentalists to climate catastrophists to corrupt journolists, are all weighing in on the question -- each in his own manner of personal bias and set of weighted assumptions.

Among the naysayers, we have geological consultants such as Arthur Berman, and investment oriented authors such as Bill Powers. Powers depends heavily on Berman's analysis, and predicts that the North American shale boom will collapse within 10 years.

Of course, analysts and consultants have been predicting the collapse of the North American petroleum enterprise -- "any time now" -- for the past 150 years, so one must take these dour predictions for what they are worth.

OPEC, Russia, and other interested parties have been active in spreading propaganda about the "safety" of fracking and the long term lack of viability of shale resources -- all the while preparing to develop their own shale resources in a semi-secretive manner. Take what they say about the issue with a tonne of salt.

Other pessimistic looks at the North American shale oil & gas phenomenon appear to be largely journolistic smokescreens for coming energy starvationist regulations from the US Obama administration. In other words, the public drone minds must be prepared for what their overlords tell them is best.

Still other predictions of the collapse of shale come from hard core peak oil and faux environmental / carbon hysteria sites. In those cases, the predictions are little more than a quasi-authoritative form of "wishful thinking."

There are also any number of cornucopian predictions, such as the EIA's prediction that the US will surpass Saudi Arabia as the world's biggest energy producer. ... More.

Al Fin analysts typically occupy the high middle ground. The consensus at Al Fin is that for the next ten years North American tight oil & gas is likely to continue to expand -- as long as Obama keeps his hands off. If Obama's green energy starvationists are let off their leashes to do their worst, all bets are off.

Still assuming the greedy, corrupt politicians keep their hands off: the second decade is seen as a plateau, where price and production achieve equilibrium. The third decade is likely to see a decline in North American shale production due as much to falling demand as to a more rapid depletion in a growing number of wells.

Source rock production can be seen as scraping the bottom of the barrel. Or it can be seen as what it is -- an opportunistic and innovative way of turning waste into wealth. And there is much more out there that has not yet been found -- both onshore and offshore. Think three dimensionally -- it will help you to break out of a flatland mindset.

As readers of Al Fin Energy understand, methane, ethane, and other short chain hydrocarbons are constantly being produced both in marine sediments and in the deep lithosphere. Understanding where hydrocarbons originate biologically and abiologically -- and why they are so abundant on other planets and within interstellar clouds -- may help us to find vaster quantities of the stuff. In a way it will be like tripping over our own feet -- much as the current shale boom has been.

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