In Shale, Smaller Is Better
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  • Andrew Allison

    “This isn’t good news for China, which is desperately trying to replicate the US shale revolution.” Why not?
    This entrepreneurial innovation will likely develop the tools which they, and others, need in order to develop their resources.
    Incidentally, what the chart shows is that combined oil and gas production is rising in tandem for both fields.

    • f1b0nacc1

      China owns all the land, and all the minerals under the land. This isn’t likely to encourage the sort of small-scale wildcatting that WRM is pointing to as successful. China isn’t exactly the land of opportunity for small businesses, after all…
      As a secondary point, oil and gas production are rising in tandem for Bakken, not for Eagle Ford

      • Andrew Allison

        You misread my comment, which referred to the fact that China and others will be beneficiaries of the fracking technology being developed here and that (while the amounts of each are very different) the combined oil and gas production of each field is about the same, e.g. the conclusion that “In fact, drilling productivity has risen so much that the Energy Information Administration can no longer use rig count as an accurate metric for portraying overall production.” is not supported by the data.

        • f1b0nacc1

          Perhaps I am still misreading your comments, but from what I can see the PPR (production per rig) is not at all constant, either across sites or within sites. Could you please clarify?
          As to other users benefiting from the technology developed, I suspect that there is less here than meets the eye. Most of what is being developed is experience (business processes), and that is rarely transferrable across cultures and countries. An example would be trying to take what works for a small wildcatter and transfer it to a large state-owned enterprise. 10-20%, but unlikely to be much more than that….

          • Andrew Allison

            Add the two blue lines and the two red ones. What I see is that while the oil/gas ratios in the two fields are very different, both their sum ad their slopes are very similar. In other words (with the exception of a two-year decline in the Bakken, PPR has been increasing at a predictable rate. There’s obviously a finite limit, but we see no sign of it yet.
            Presumably, the PPR increasing as a result of either better location of drill sites or better extraction methods, technology which is readily transferable (by fair means or foul). The point made by the Quick Take is that nimble wildcatters have stolen a technological march on monolithic orgaizations; once the monoliths see which techniques work best where, they’ll utilize them.

          • f1b0nacc1

            I am looking at the same chart, and what I see is very different. First, the gas recovery for Eagle Ford and Bakken are nowhere near similar to one another, either in magnitude or in slope. Secondly, the structure of the curve (when it ‘took off’, or where it flattened) differs on each location as well. Finally, adding the two curves together makes very little sense, since the types of extraction (gas vs oil) are strongly dissimilar. As a simple point, if they WERE similar, wouldn’t it be reasonable to expect Bakken to produce roughly proportional amounts to Eagle Ford?
            There may be some things here that support your view, but they aren’t in the graph…

          • Andrew Allison

            What part of oil + gas escapes you?

  • Jacksonian_Libertarian

    “China’s biggest strength—the driver behind its phenomenal growth in recent decades—is its ability to mobilize its resources en masse.”

    This simply isn’t true, China’s biggest strength was its cheap labor, which brought in hundreds of billions in foreign investment each year which built new modern efficient factories. Foreign investment in China is now ending, as Chinese labor is no longer cheap, and the investments already in place seem more and more at risk. With costs and risks swiftly rising in China, other nations look like far better places to invest. Like the US with its shale oil driving energy prices ever lower, and the most efficient in the world American workers badly underemployed and Unions on the wane, all this with a solid “rule of law” in place.

  • Interesting. But if we have data on production per rig, that would mean that we somewhere have data on production, period, wouldn’t it?

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