1st decline of US oil
US L48 conventional oil peaked in 1970. since that peak, it has declined 80%.
In 1970, crude oil cost just $3.18/barrel. Prices in 1973 were still $3.18, but they soared to reach $34/barrel by 1981. This was due to two oil shocks: the Arab oil embargo in 1973 and the Iranian revolution in 1979.
In 1973, President Nixon announced Project Independence. The American rig count jumped from 302 in 1970 to 993 in 1973 to 4500 in 1981. Oil production during that time fell 34% from 9.6 MMBD (1970) to 9.2 MMBD (1973) to 6.3 MMBD (1981). American Lower 48 production fell despite massively increased drilling.
I think this is the fate of the Permian and the other shales.
Mike can probably explain why the oil production fell better than I can, but I think it was due to declining pressure.
Thank you for this. Conventional reservoirs, structural and stratigraphic traps, fields, plays, tends, etc. eventually all deplete. Many from pressure depletion, many more from watering out and simply becoming uneconomic to produce. It's been that way for 165 years, all over the world...oil and natural gas depletes. It's a limited resource.
For some reason people today believe tight oil and tight gas from resource beds is infinite and will never deplete, never become unprofitable to drill, nor operate. I attribute that to the need for outside capital to drill marginally profitable HZ shale, the internet and a very successful propaganda campaign.
But it will deplete, shale; is already. The world is clearly not ready to accept that and is woefully unprepared for the ramifications. There is a full-on panic underway over $100 oil, we are just few years away from much higher oil prices, sustained.