David Hughes’ Shale Reality Check 2019
1.9 million. 13 trillion. 10 billion. These are the numbers that jumped off the page when I read PCI Fellow David Hughes’s latest “shale reality check” report on the U.S. government’s forecasts of domestic oil and gas production. To elaborate, these forecasts mean that by 2050:
- 9 million new oil and gas wells will need to be drilled;
- $13 trillion will need to be spent to drill all those wells; and
- 10 billion barrels of tight oil production will be “missing” from shale plays to meet the reference case forecast for cumulative production.
These are just some of the crazy numbers behind the Energy Information Administration’s (EIA) latest forecasts for U.S. oil and gas production through 2050.
Every year, the EIA releases a new forecasts of domestic energy in the coming decades. These forecasts—specifically the “reference case”—are virtually taken to the bank by policymakers, investors, and the mainstream media as the most likely scenario of future production, consumption, and prices.
This despite the fact that they are very often wrong and vary tremendously from year to year. Or the fact that for several years now David Hughes has published “reality checks” on the forecasts of tight oil and shale gas production (extracted through “fracking”) found in the Annual Energy Outlook—reality checks that have consistently shown that the EIA’s projections are, to be polite, extremely optimistic.
Hughes’s latest report evaluates the EIA’s reference case forecasts for the top tight oil and shale gas plays (accounting for roughly 90% of production) against:
- current and historical production;
- the number of producing wells;
- the decline rates for wells and fields;
- the distribution of wells in terms of their quality;
- definition of the relatively limited “sweet spot” areas in each play; and
- the projected number of wells, well density, and money required to meet the EIA’s forecasts.
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