By way of John Hawkins’ Conservative Grapevine, we get news that backs something Ive been saying for weeks now. I’ve been saying that we’re about to see a massive price drop… that even exclusive of any major finds, that the fundamentals are not there for $70.BBS, much less $100+/BBL…. and thusfar if anyone dared comment, it was in laughter. Well, laugh THIS off:
In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951. The USGS did an initial study back in 1999 that estimated 400 billion recoverable barrels were present but with prices bottoming out at $10 a barrel back then the report was dismissed because of the higher cost of horizontal drilling techniques that would be needed, estimated at $20-$40 a barrel.
It was not until 2007, when EOG Resources of Texas started a frenzy when they drilled a single well in Parshal N.D. that is expected to yield 700,000 barrels of oil that real excitement and money started to flow in North Dakota. Marathon Oil is investing $1.5 billion and drilling 300 new wells in what is expected to be one of the greatest booms in Oil discovery since Oil was discovered in Saudi Arabia in 1938.
And there ya go, gang. Exactly as it has in the past, the free market pops up and deals with shortages.When there’s money involved, people find a way to get it done. If there are shortages, it’s government doing. When free markets happen, shortages tend to disappear. It’s really that simple. (BBCT: Adam Smith)
PS; Here’s two more hints: We discovered this field back in 1951. Also, this isn’t the only ‘recent find’. Nuff said.
Addendum: (David L)
Is there an oil bubble which is about to burst due the (re)discovery of this vast Bakken oil field? No.
The question with the Bakken formation is how much oil can be recovered and at what cost. It seems that the technology to recover the Bakken oil can be developed considering the current price of oil That could well deflate the bubble, not implode it.
Tags: Bakken, BitsBlog, BO, drilling, Energy, John Hawkins, Men, Money, NY, oil, oil bubble, Oil find, Rice, Saudi Arabia, South, Technology, Texas
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March 31st, 2008 at 10:58
The article linnked suggests that the cost of extraction is low enough to make money with it, were the per barrel costs half of what they are.
The bubble is about to burst even absent Bakken. With it…..
March 31st, 2008 at 13:32
My fear is that if the Bakken find is credible the enviromental wackos, and the ‘rats, well seek and find some way to put if off limits. Maybe they will declare the Paire Dog an endangered species.
What is stopping us from being energy self-sufficient is not some laok of oil, or any techology, rather is the lack of national will power. We should make it a national priority to become energy self-sufficient. It would be easier and cheaper than putting a Man on the Moon, and a lot more valuable to boot.
March 31st, 2008 at 16:38
Well, there is always that. And when this report shows up, one of the first clues is the non-coverage we’ll see.
As to the rest of your objection, yes, I do tend to agree, here. Which is why I made it a point to experss a basic: If there are shortages, it’s government doing.
The one major objection I have myself is the lack of refining capacity, in general, and in particular a lack of capacity ourside tornado prone regions.
Great… we’ve got enough Crude for another 100 years or so. Witout the refining capacity, what the heck do we DO with it?
And there, I suppose and expect is where the liberals will have their way. We can’t stop people from finding oil… Just from drilling for it, and refining it. Save the snail darter!
March 31st, 2008 at 17:26
Gosh, darny, damg it. Ok, I’ll amend my nation objective to include adequate refining capacity. We are not about to get rid of petroleum any time soon. Would love to ditch the ethanpl, expect for the what they use to make Jack.