The Illusion of Energy Independence … shale oil?

Shale Oil Observations

• Shale oil obeys the laws of physics:

 Considerable areas of commercial success in Eagle Ford & Bakken plays,

 Commercial oil is found in fields,

 Plays are not fields,

 Overall play results are marginally commercial to non-commercial,

 Largest fields usually found early in the exploration cycle,

 Later discoveries generally smaller and less profitable,

 Plays will contract to fields that will represent a smaller portion of the play area along with corresponding reserves,

• Fields will reach peak production in 3-5 years and then decline.

• The oil plays require very high oil prices to be commercial.

• The total contribution of shale oil to U.S. supply is presently 1.2 mmbo/d and will probably not increase to more than 2 mmbopd (14% of consumption) by 2020 because of high decline rates.

• Oil prices must remain high to sustain drilling required to replace annual base and add production.

• The shale oil plays we analyzed are commercially attractive.

• Their contribution to U.S. supply is notable.

• It is unlikely that oil from shale plays will result in energy independence.


Oil-Prone Shale Plays: The Illusion of Energy Independence
Arthur E. Berman
Labyrinth Consulting Services, Inc.
Houston SIPES Continuing Education Seminar
Halliburton Conference Theater
October 19, 2012
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