Peak Oil Theorist Art Berman Predicts Doom & Gloom for Shale

Hee Haw – “Gloom, despair and agony on me”

Month after month and year after year America’s shale plays produce ever more oil and gas (see today’s story about the latest EIA Drilling Productivity Report). But don’t tell that to Art Berman. Why anyone continues to listen to Berman, the world’s preeminent “peak oil” theorist, is beyond us. For nearly 20 years Berman has predicted that the world is running out of oil and natural gas. And yet the opposite is true. But that doesn’t stop Art from pedaling his particular brand of insanity. Last Thursday at the Texas Energy Council’s annual gathering in Dallas, Berman told attendees that the Permian Basin has another seven years, at most, and then it’s done–out of oil. Oh, and the Eagle Ford, about 350 miles from the Permian–that’s toast too. Why the Texas Energy Council would invite Art to pedal his nonsense is beyond us, except maybe they enjoy a circus side show. In contrast to Berman’s wild fantasies of Permian oil drying up, we have analysis (below) from Richard Zeits, founder of Zeits Oil Analytics, who says the Permian is only just getting started…
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Join MDN at RBN Energy’s “Summer in the City” Event July 23 – NYC

join usMDN invites you to join us in attending RBN Energy’s “State of the Energy Markets” one-day event in New York City on July 23. Before you hurry to say “yes,” a few caveats. It costs money (a lot of it). It’s aimed at executives working in the industry, as well as traders and investors. If that describes you (and we know that many of you read MDN), you may be interested in attending. We guarantee it will be a great event. Rusty Braziel & company will provide an overview of the key issues facing natural gas, NGLs and the crude oil market. They will explain how the markets for those three commodities interact and affect each other. They will also take a look at prices, where they may be heading, and how infrastructure affects price. If you are really “into energy” as we are, this is a must attend event. Details are below, along with a link to register…
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Steep Declines in Production for Some of Utica’s Top Wells

An excellent article by MDN friend and ace reporter Bob Downing appearing in the Akron Beacon Journal tackles the issue of decline rates in Utica Shale wells–that is, how fast production drops off. Bob’s deep dive into the data found that some of the Utica’s top performing wells in January had decreased output by 47%-70% by September. Yikes! No word on how that compares to the decline rate of the Marcellus layer. Here’s a sample of Bob’s analysis…
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Peak Oil/Gas Site Roots for Frack Bans – Gets It Totally Wrong

What happens when your theory is totally debunked as so much horse feathers? As in, the so-called “peak oil” and lately, “peak natural gas” theory? If you’re a website dedicated to propping up your discredited theories, like Oilprice.com, you just double down and keep publishing more “peak” articles–even in the face of overwhelming evidence that you’re wrong. The latest “peak” Oilprice article is a real laugher that says you ought to move away from investing in shale drilling companies cause one or two towns around the country (like Denton, TX) may ban fracking. The article attempts to turn that into a “trend” and, well, if you’re really really really smart and if you can read the stitches on a fastball, the ban fracking fastball is coming–fast…
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Guest Article: Decline Curves Demystified – Chris Acker

Chris AckerAck is back! MDN is pleased to bring you another guest post from our very good friend Chris Acker. Chris is a geological engineer with an MBA. He grew up in the oil fields of Venezuela where his father, a petroleum engineer, was a drilling contractor for all the major players, onshore and off. Chris’ interest in energy economics and policy found him working for Exxon, Petroleum Industry Research Associates and Petroleos de Venezuela. He bought a parcel of land in the PA countryside twenty-five years ago and later semi-retired to work on antique pianos (see www.PianoGrands.com). A few years ago, it was established that Chris’ property in Susquehanna County sits atop one of the Marcellus shale’s most prolific areas. He is now happily engaged once again in energy economics, with emphasis, naturally, on gas. In this post Chris gives us the lowdown on what every landowner with a well sooner or later wants to know: How fast will production from my well peter out? It’s called a “decline curve” and Chris gives us a great understanding of the fundamentals…
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Yet Another “Shale Gas Will Last Only 10 Years” Claptrap Article

We spotted a long (and we do mean long) article on the Seeking Alpha investors’ website about the Marcellus Shale. Titled “Marcellus Shale: Through A Glass, Darkly,” the article has lots of charts and graphs, and a lot of math (our eyes glazeth over). We read or scanned through most of it. The author, Moshe Ben-Reuven (a former aerospace engineer, which explains the charts and math and formulas), makes some good points. But when you dig deeper, you understand his overall theme and why he spins the story he does. Ben-Reuven’s theme is that the Marcellus won’t last all that long–10 years IF we don’t export any of it. We can make it last longer if we dump water-based fracking and use alternative (i.e. expensive) fracking methods. And oh yes, shale gas is just a little stepping stone on our way to the alternative energy nirvana future that awaits us all. Shale gas is good for weaning us off nasty coal, but once that’s done, we’ll need to wean ourselves from the less-nasty (but still nasty) shale gas fossil fuel too. That’s the rough conclusion he comes to (see it in his own words below).

It won’t surprise you to learn that Ben-Reuven heads up a “green energy” company that develops biomass fuels–a technology left behind in the proverbial dust of the shale gas revolution/miracle now taking place. Which explains all of the hocus pocus numbers and story spun by Ben-Reuven. And which brings to mind the old saying: If you can’t dazzle them with brilliance, baffle them with bull…
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Peak Oil Theorist Art Berman Says Shale Gas is Peaking Too

What do you call it when your theories are completely, utterly discredited, and yet you continue to put them forward in an attempt to reclaim your notoriety? Determined? Valiant? Desperate? Pig-headed? Pathetic? Perhaps all of the above. Art Berman is famous for peddling the “peak oil” theory that says, dang, the world is almost out of that black gold and ya’ll better think about what’s next cause them fossil fuels are dryin’ up. Then the shale revolution happened. Whoops. That theory went out the door. But not for Art. He’s still a peak oil true believer–a peak oil evangelist. And now he’s back, peddling (don’t laugh)…peak shale gas. Yessiree, if it weren’t for that darned Marcellus, shale gas production would already be headin’ into the crapper, according to Art.

Here’s a sample of Art’s wild yarns, part of an interview with Art posted on the appropriately named Motley Fool website:
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MDN Takes on Seeking Alpha Blogger over Marcellus Decline Rate

inside baseballThis is an “inside baseball” kind of article. For those with a casual interest in Marcellus Shale drilling, you’re free to move along. For the rest of us, this is an important issue–and that issue is how fast do Marcellus Shale wells (really any/all shale wells) peter out? After you drill a well, how long does it take before the gas quits flowing in economic volumes? It’s certainly important for drillers investing millions and billions–and for landowners who receive royalties. It’s also important for companies that invest big money in processing plants and pipelines (the “midstream” sector) because those fixed costs take time to recoup and you want to be sure the gas flows long enough to make a profit.

Increasingly the debate is turning to decline or “depletion” rates–how fast wells peter out. The U.S. Energy Information Administration (EIA) introduced a new drilling productivity report in October (a report we LOVE) that tackles the issue of decline rates. EIA lumps “old” wells together in a single number that they track–they call it “legacy production” or gas production from older wells. A freshly drilled well is considered “new” for precisely one month! After that, it’s production is lumped in with all of the other legacy or “older” wells. Sooner or later drillers will quit drilling new wells and all that will be left are legacy wells, so the sport in the investing industry is to guess when that will happen, and how productive those older wells will be. Enter an article on Seeking Alpha that does a deep dive into this issue by an admitted shale gas pessimist…
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