>>"What we will see is that "peaks" are followed by technological breakthroughs followed by ever larger amounts of oil discovered, such as the 200 billion Bakken Formation in the Dakota's now made available due to horizontal drilling techiques, large enough to make the U.S. energy independent."<<

I have been debating about whether it made any sense to educate you about this, since you have not demonstrated any ability to assimilate new information. The 200 billion barrels of oil in the Bakken formation is not recoverable or even potentially recoverable oil- it is potential oil in place. Recent estimates by the USGS have indicated there may be several billion barrels recoverable from the Bakken, but these are not proven reserves, only estimates of possible recoverable oil. The potentially recoverable amount from this large amount of oil in place is in the neighborhood of 1%. This is a very small number, so you might reasonably wonder why it is so small and whether perhaps it could be much greater. It is unlikely that it will be higher than this. Let me try to help you understand why.

First some very basic petoluem geology. Petroleum systems look something like this; you have source rocks, usually shales rich in organic matter, such as the Bakken, that generate oil when they are in a particular temperature and pressure region. Since these shales have almost no porosity or permeability, the oil cannot easily escape from them, but eventually pathways for oil expulsion are found in widely spaced fractures. The oil migrates into adjacent potential reservoir beds- porous and permeable sandstone and carbonate rocks. Because oil is bouyant in these water bearing rocks, it moves or migrates upward in these layers, until it reaches some high point were due either to structure or statigraphy, it is stopped and cannot move any further upward. This is an oil trap- a conventional oil field. The sandstone or carbonate rocks in these traps that hold the oil can produce at rates of less than ten barrels of oil per day to tens of thousands of barrels of day, depending on the nature of the porosity and permeability they have. Sometimes fractures in the rock aid the flow and allow for higher rate wells in otherwise poor reservoir quality rock. If more oil is generated by some source rocks than can be accomodated in all the traps or their are no traps, the oil will migrate all the way to the surface where it gets degraded by bacteria into tar. The Alberta tar sands are one example of this. So in a petroleum system we have three potential areas where petroleum might be recovered. Two of them, the oil that reaches the surface and becomes degraded to tar and the original source rocks are considered "unconventional resources". No one will ever argue that there is not a lot of oil in unconventional resources; we know the oil is there and we have known about it for a long time, so your characterization of the Bakken as a new discovery of oil is rather silly. The question is how much of it can economically recovered?

Before we discuss this question, since you are excited about the Bakken, let me tell you this formation is hardly unique. Black shales of Upper Devonian and Lower Mississippian age are common all over North America. The Devonian Appalachian Black shale has been producng gas in Ohio, Kentucky, and West Virginia for at least a hundred years. Low volume gas wells that produce where the shale is sufficently fractured are quite common. In recent years the Mississippian Barnett shale has become a hot play in the Fort Worth Basin in Texas. They are drilling wells for Barnett gas under the Dallas-Ft Worth airport as we speak. Advanced technology in inducing artificial fractures and horizontal drilling have made these wells economic, whereas in the past, they were not. We have Barnett in West Texas and this along with the Devonian Woodford shale is very similar to the Barnett in the Fort Worth Basin. A number of wells have been drilled and a lot of acreage has been leased, but so far it is unclear whether Barnett/Woodford shale in the Permian basin will be economic.

These source rock plays are tapping into the oil where it is generated and the formations are thick and widespread, so there is a lot of potential oil in place, but very little of this oil is recoverable as there is actually no real reservoir as in a conventional oil field. Oil is produced from widely spaced fractures. Vertical wells sometimes encounter a fracture or swarm of fractures and make oil or gas wells, but since the fractures are generally vertical and widely spaced, hitting a fracture or set of fractures with a vertical well is hard and even if you hit it, one fracture is unlikely to give you enough oil to make it worthwhile to drill the well. These problems are overcome by drilling horizontally to intersect multiple vertical fractures. In the Bakken play they have begun drilling multiple laterals. What you should be able to see is that if all your reservoir consists of are widely spaced sets of fractures through otherwise impermeable shales, there is no way to recover the large volume of potential oil in the shale between the fractures. This is why such a small volume of the potential oil in place is recovered in these source rock plays.

Wells in the Bakken, or any oil well where fractures provide all or an important part of the flow path show a typical pattern; they initially flow at relatively high rates that drop off very quickly, sometimes less than a year, no more than 2 years,and then produce at some very low rate for a long time. That low rate for a long time is a good thing, if you already have a well, but from an economic perspective it is not worth much; it has almost no impact on your discounted rate of return. We have Bakken wells that are over twenty years old now and the declining production rate of these wells gives us quite and accurate estimate of their ultimate potential production. What these numbers tell us is that the 1% of the potential oil in place is about the right number for Bakken recovery factors and there is no reason to suppose they will be much higher. Intersecting more fractures with horizontal wells increases the initial production rates, helping economics, but does not ultimately add much to recoverable reserves.

Now let us talk about the Bakken play and the potential recoverable oil of 3.65 Billion barrels that the USGS estimated. This number is based on looking at oil fields where the Bakken is currently being developed and figuring out how much of the entire Williston Basin might have similar conditions in the Bakken that might end up being developed into oil fields. I have not looked at the details of this estimate, but if it was done reasonably, the entire area were the shale is present should not be considered as having potential. The critical factor in the fields where the Bakken is being developed are the development of sufficient sets of fractures and this will vary with the structural and tectonic configuration of the basin. Fracturing is unlikely to be favorable everywhere. So you should see the the USGS estimate is really just a guess; they are guessing at how much area might have similar structural and tectonic conditions as those present in the currently producing areas. They could be right on with this estimate, or they could be completely wrong, so in no way can these potential reserves be considered proven oil reserves. The only reason to supply such an estimate is to show there may be a resource worth exploring for. Until the exploration has been done, nothing at all has been "found".

I think he was refering not to the amount of oil itself in the new "potential" field, but that it is a "lone-major" discovery. We would need to find another 20-30 of these "gushers" if we are to keep pace our dying fields.

Its not just like we can pop the plug and get oil tomorrow, it will take years to get drilling and excraction online, as our current fields that are all ready in decline drop off even more.