Hughes quoted on cheap oil at Grist
January 15, 2015
Post Carbon Fellow David Hughes was quoted in this article on the pros and cons of cheap oil at Grist.
From the article:
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Times are getting tough for the companies digging up expensive, unconventional crude in the Alberta tar sands and the fracked shale formations of the U.S. Last week I wrote about how the U.S. Energy Information Administration does not expect petroleum production to slow at all in North Dakota, despite the precipitous price fall. Turns out, those numbers might have been some optimistic fudging — something Hughes has seen from the U.S. government time and again. If you look at the database the EIA normally uses, says Hughes, “drilling permits dropped 50 percent year-over-year from October 2013 to 2014, [which] should equal a slowdown in drilling.” Production from shale-oil wells declines fast: Output drops 70 percent in just the first year of pumping. So the industry needs to drill thousands of new holes in the ground each year just to keep a steady stream of oil flowing, which means a slump in new activity could limit oil output pretty quickly. Even Fortune says the shale oil revolution is “in danger.” The chart below, from Vocativ, shows drilling rig decline over the past three months, evidence that the recent U.S. oil spurt has been only a fairy tale.