Today’s Contemplation: Collapse Cometh CXCIV–US Peak Shale Oil & Gas: When the Walls Come Tumblin’ Down.
This Contemplation has been prompted by a publication (see summary below) focused upon the apparent peaking of shale oil and gas production within the United States. The commentary on US shale extraction by the natural resources investment firm of Goehring & Rozencwajg began making the rounds within some of the Facebook Group circles I frequent upon its publishing on December 19th.
Here are a few thoughts I have had as I’ve read through the G&R analysis and taken some time to digest its implications and some of the accompanying commentary by others.
It’s quite possible that the peaking of extraction from US shale deposits could usher in a speeding up of some trends (especially geopolitical and economic) as we travel ever-forward towards global, societal collapse–especially given the consequences this will have for the global hegemon that is the United States since shale deposits decline very rapidly. And as much as some in the US like to believe that it is energy ‘independent’, it is not. Not even close. Despite the ‘shale miracle’, the US continues to import just under 10 million barrels of oil per day–it needs to import heavy and sour oil since most of its extraction is of the light type and its heavy oil production has been in decline since 1970.
I say ‘possible’ regarding the impact of this eventuality since the following thoughts are not absolute. It is my perception and interpretation of evidence based upon my years of reading and writing about societal collapse and related topics–particularly the peaking of our master resource, oil. But as with virtually everything, observations (even of agreed upon ‘facts’) are interpreted through the eyes of the beholder and can result in different conclusions, even diametrically-opposed ones.
In addition, no one can predict the future with much if any certainty so any assertions that I make must be kept in perspective. It could be these thoughts of mine are all sound and fury signifying nothing, or it could be a fairly accurate Nostradamus-like prediction–only time will tell. The evidence that supports a story of inevitable and impending societal collapse due very much to the also inevitable and impending end of the oil age is very compelling.
And this is not even our most dire predicament since resource depletion is but one of several symptom predicaments of our far more significant predicament of ecological overshoot–a predicament that has been expedited very much by our leveraging of a one-time, finite cache of photosynthetically-derived and ‘stored’ hydrocarbon energy.
Putting all that net surplus energy into the opposable-thumbed hands of a story-telling ape with significant anxiety and highly-complex brains was probably not the best of evolutionary ‘decisions’. Especially since the species was already on the path towards overshoot once it began experimenting with large, complex societies. Again, time will tell.
I have emphasised previously that energy is everything. Without it there is no life. Without the tremendous amounts of net surplus energy afforded humanity via hydrocarbons, the vast array of societal complexities (i.e., political, economic, cultural) and technologies that our modern societies currently have, depend upon, and take for granted would not likely exist. The human-contrived world would be a much simpler and smaller version of itself, and without much in the way of what we would define as modernity. It might resemble, if we were lucky, the eighteenth or early nineteenth century–just prior to the discovery of oil in the United States (and followed closely in other areas around the globe).
There certainly would not be 8+ billion of us, communities would depend upon their local resource base for the most part, and much (all?) of the energy-powered technologies we have would not exist. This is provided Nature was keeping our population growth in check and we hadn’t denuded our environments of its plant and wildlife, as seems to be our way as we continue our seemingly ever-present expansion. We would likely still be in overshoot in such a world, but certainly not to the extent we currently are. Our speed towards a much smaller cliff would be considerably slower. Hydrocarbons have afforded us the ability to speed up the journey tremendously and produce a cliff that is much, much higher than it would be otherwise.
So, it’s beginning to look like Peak Oil might be raising its ugly head again for an increasing number of people–not that it ever disappeared for some small number of us. Even when the shale ‘revolution’ began to pump up the volume about it being vanquished, some adherents drowned out that noise holding on to the geologic inevitability of a decline in production. The more dire consequences of Peak Oil had just been delayed, not avoided. You cannot forever ignore the increasing drawdown of a finite resource that becomes more and more difficult and expensive to retrieve–diminishing returns can be most unforgiving. But I have to say, a lot of people have tried and are still trying to deny biogeophysical reality, mostly by way of magical thinking–and I expect this to get even more prevalent as reality bites us ‘wise’ apes in the ass.
Peak Oil, in fact, arrived quite a number of years ago depending on what type of oil you are discussing; i.e., conventional vs. unconventional. Unconventional extractions (primarily deep sea drilling, bitumen mining, and hydraulic fracturing of shale deposits) have helped to kick-the-can-down-the-road for humanity (along with expansion of the Ponzi scheme that is our credit-/debt-based financial/monetary systems) but the time is quickly approaching (actually, it’s past time) when it’s going to have to face a major reconciliation with hard, physical limits.
Or is it? With the narrative management and distractions our ruling elite will employ, combined with the denial and bargaining that will take place amongst the masses, it may be that the notion gets buried in the stories of pending ‘saviours’ and hidden by the proliferation of distractions to keep the hoi polloi in ignorance and compliant.
‘Renewables’ will save us. Look over there, a war. Nuclear Fusion will save us. Look over there, aliens. A new ‘leader’ will save us. Look over there, another pandemic. Artificial Intelligence will save us. Look over there, enemy drones. ‘Free markets’ will save us. Look over there, Taylor Swift is performing again. Technology will save us. Look over there, it’s the first billion dollar contract for a sports player. Space travel will save us. Look over there, ‘democracy’ is at risk from within. Something will save us…because, heaven forbid, we should be open to and considering that maybe we need to be discussing not ‘saving’ industrial civilisation but preparing for the inevitable return to simpler living.
The implications of this analysis by G&R could be immensely monumental for our complex societies. It is a stark reminder of the finiteness of hydrocarbon resources and the increasing difficulty of facing this reality. It is not the first and probably won’t be the last of such reminders but, like previous ones, will be mostly ignored, denied, or rationalised away by those that don’t wish to face what is quickly approaching (or don’t want the masses to be aware).
The peaking of US shale and gas is particularly problematic given that it has been the marginal producer of oil production increases over the past decade or more. Virtually all demand growth has been met by this extraction.
A decline in the overall production of oil/gas hydrocarbons will derail not only utopian dreams of an energy ‘transition’ (since all material extraction, refinement, and manufacturing processes are reliant on these resources; including all non-renewable, renewable energy-harvesting technologies and electrical-based products–including artificial ‘intelligence’), but also ramp up geopolitical maneuvering (including hot wars) over hydrocarbon resource reserves.
In fact, some of the consequences of this disaster-in-waiting have actually been with us and building for decades. Some Peak Oil analysts have argued that our ruling elite have been quite aware of the coming ‘challenges’ and have ‘planned’ accordingly, acting on their knowledge in a variety of ways.
Much of the geopolitical gamesmanship of the past half a century or more, for example, has likely been focused upon controlling hydrocarbon reserves. And as these finite reserves get dearer (both in quantity and price), the geopolitical maneuvering has been increasing in intensity–particularly around and within those regions where the remaining reserves exist. The coming wars (or should I say expansion of current ones) may also come with increasing ‘othering’ of those who reside close to ‘our’ resources.
A reminder of which nation states hold the most oil/gas reserves and where regime change operations/wars have occurred, are occurring, or will soon occur…and it’s not over some completely bullshit justification like ‘bringing democracy’ or ‘freedom’ to a region; it’s about expanding the racket that is war and about resources, especially hydrocarbon ones–our ‘rulers’ want to take it from their ‘rulers’. Keeping the gravy train rolling for the entitled few and ensuring the hoi polloi receive some of the spoils so as not to rise up against their ‘leaders’ are paramount–regardless of the impacts upon the masses or ecosystems of our planet.
Proven Oil Reserves: Top 15 Nation States
Proven Gas Reserves: Top 11 Nation States
Accompanying this has also been a lot of denial and bargaining in the narratives being disseminated about the globe, such as the notion of finite limits being meaningless in light of human ingenuity and technological prowess–especially as it pertains to an energy ‘transition’. Depending upon who’s telling the story, everything will be electrified and powered by carbon-free ‘renewables’ and/or nuclear fission/fusion; or, if you really want to ‘jump the shark’, we’ll simply mine passing asteroids or migrate to another planet. Do you believe in magic?
The repercussions of Peak Oil/Gas and the loss of net surplus energy can only but alter our world in a myriad of ways–some of which can be imagined (simplification and localisation is approaching like a bat out of hell) but some that will be complete Black Swan Events for most.
The world is not going to be the same for A LOT of people once we are well into the consequences of Peak Oil/Gas. Not. Even. Close.
And the stories that will be told by us story-telling apes will be something to behold as things unfold–especially by those dominant apes that hold sway over the masses due to their positions atop our power and wealth structures. Our ‘elite’ wish to continue in those spots to maintain their privilege and prestige for as long as they possibly can by whatever means they have–and can get away with.
It is quite possible that the facade of ‘representative democracy’ will finally melt away as the elite consolidate their control over the wealth-generating/-extracting systems that provide their revenue streams (and thus positions of power and prestige). I expect to see the trend of increasing inequality continue and accelerate, as well as the expansion of narrative management to help justify/rationalise the above.
“None are more hopelessly enslaved than those who falsely believe they are free.”
― Johann von Goethe, 1809
Narrative control is their preferred method as it is less resource intensive and tends to be more effective, but they will not be afraid to use obvious and intentional violence and oppression (framing it in terms that will be more acceptable to those not targeted–at least, for the moment; ponder how some activists/protesters have been vilified and oppressed in recent years). If you think censorship and narrative management is bad now, just wait.
Societies will crumble. Wars will be waged. Billions may perish. It’s not going to be pretty. Not. At. All.
On the positive side, as some have argued, the decline in hydrocarbon reserves may help to slow–and eventually will halt–some of the detrimental consequences of its use due to our extraction and refinement industries and the industrial production of material goods that leads to significant sink overloading and ecosystem destruction.
A reminder that hydrocarbons–especially oil–is THE master resource that supports the growth and maintenance of our societal complexities through its surplus net energy. The loss of this net energy surplus has huge ramifications for almost all aspects of modern, human existence, let alone the creation, maintenance, and distribution of mostly unnecessaryl consumer goods and services.
The production/procurement and distribution of food, potable water, and regional-shelter material-needs all depend significantly upon hydrocarbons. For so-called ‘advanced’ economies, little of these important needs are produced locally or within the natural environmental carrying capacity of regions. Virtually all the people of these economies are significantly dependent upon hydrocarbons in one way or another, even though most have no idea whatsoever.
“There are these two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says “Morning, boys. How’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes “What the hell is water?”
– David Foster Wallace, 2005
Some questions that persist in my mind’s eye as I contemplate the future:
- What happens when we no longer have the ability to control/contain/manage those dangerous complexities like the hundreds/thousands of nuclear power plants, chemical production and storage facilities, and biolabs?
- What happens when competing polities, who hold thousands of thermonuclear weapons of mass destruction, feel threatened?
- What happens when diesel fuels are unavailable or so exorbitantly priced that food production and distribution systems break down for most?
- What happens in cold climates during winter when heating by hydrocarbons is unavailable?
As individuals, even relatively well-organized collectives, we have little if any agency in affecting what happens in the future with regard to these potential threats. Even the ruling elite have little were they actually to go against their baser instincts of protecting their personal/familial interests. The wheels are in motion and there’s likely no stopping the slow-moving trainwreck that seems to be our trajectory.
So, grab some popcorn and get ready for all sorts of things to go sideways in a variety of ways in the years ahead. Socioculturally. Sociopolitically. Socioeconomically. We are in for some interesting times for sure.
As I stated at the close of my last Contemplation:
“Only time will tell how this all unfolds but there’s nothing wrong with preparing for the worst by ‘collapsing now to avoid the rush’ and pursuing self-sufficiency. By this I mean removing as many dependencies on the Matrix as is possible and making do, locally. And if one can do this without negative impacts upon our fragile ecosystems or do so while creating more resilient ecosystems, all the better.
Building community (maybe even just household) resilience to as high a level as possible seems prudent given the uncertainties of an unpredictable future. There’s no guarantee it will ensure ‘recovery’ after a significant societal stressor/shock but it should increase the probability of it and that, perhaps, is all we can ‘hope’ for from its pursuit.”
NOTE: Peak Oil was the topic that first grabbed me by the short hairs and pulled me into the rabbit’s hole of societal collapse and ecological overshoot almost 15 years ago. I rented the movie Collapse starring the late Michael Ruppert as my personal pick on a Friday afternoon movie hunt for our weekend family movie night (for me to watch, not the family) at our local Blockbuster back in 2010 and I haven’t viewed the world the same since watching it.
Additional Articles of Interest
Drill, Baby, Drill: Can Unconventional Fuels Usher In A New Era Of Energy Abundance?
The American Shale Patch Is All About Depletion Now
US Shale Nears Limits Of Productivity Gains
Summary of German Armed Forces Peak Oil Study
2005-2018 Conventional Crude Production On A Bumpy Plateau With A Little Help From Iraq
Peak Oil is Officially Here! World oil production peaked November of 2018.
A handful of my most recent Contemplations that have touched upon Peak Oil/Energy:
-Today’s Contemplation: Collapse Cometh CLXXV–Energy and Its Interconnections With Our Financialised Economic System. February 7, 2024. Website Medium Substack
-Today’s Contemplation: Collapse Cometh CLVII–Overshoot, Hydrocarbon Energy, and Denial: Avoiding the Pain. October 28, 2023. Website Medium Substack
-Today’s Contemplation: Collapse Cometh CLVI–Peak Oil, Complexity, Psychology, Magical Thinking, and War. October 26, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CLV–Planetary Boundaries, Narrative Management, and Technology. October 23, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CXLIX–Carbon Tunnel Vision And Resource/Energy & Ecological Blindness, Part 1, September 7, 2023. Website Medium Substack; Part 2. September 20, 2023. Website Medium Substack; Part 3. October 6, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CXXXV–Collapse Now To Avoid The Rush: Our Long Emergency. June 6, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CXXV–Hydrocarbons And The Maximum Power Principle: What Could Possibly Go Wrong? April 22, 2023. Website Medium Substack
And a handful that have touched upon the consequences of ‘collapse’:
–Today’s Contemplation: Collapse Cometh CLXXXV-Collapse = Prolonged Period of Diminishing Returns + Significant Stress Surge(s), Part 1. October 7, 2024. Website Medium Substack; Part 2. October 15. Website Medium Substack; Part 3. October 23. Website Medium Substack; Part 4. October 28. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CLXIX–Fiat Currency Devaluation: A Ruling Elite ‘Solution’ to Growth Limits. December 11, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CLXVI-Societal ‘Collapse’: Past is Prologue. November 27, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CXLVIII–What Do Previous Experiments In Societal Complexity Suggest About ‘Managing’ Our Future. September 1, 2023. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CXLIII–Ruling Caste Responses to Societal Breakdown/Decline. August 3. Website Medium Substack
–Today’s Contemplation: Collapse Cometh CXXXI–Sociopolitical Agency, Narrative Control, and Collapse. May 22, 2023. Website Medium Substack
The Depletion Paradox
Excerpt from Third Quarter Natural Resource Market Commentary
Goehring & Rozencwajg: Natural Resource Investors
December 5, 2024
https://blog.gorozen.com/blog/the-depletion-paradox
-US shale oil and gas production appears to have peaked in November 2023
-G&R models suggest that the decline is set to accelerate
-most view this prediction skeptically, believing higher prices and more drilling will counter declines
-G&R assert that “The primary forces behind the current downturn are neither policy-related nor purely economic—they are geological and inexorable. Depletion, not market dynamics or regulatory overreach, is the central culprit.” (p. 7)
-US conventional crude oil production provides a historical example of what is likely to occur
-crude peaked in 1970 and the OPEC crisis occurred in 1973 prompting the US government to expedite permitting and increase drilling
-despite a significant increase in oil prices and drilling, production declined and history seems to be repeating for the US shale patch
King Hubbert–A History
-in 1956, MK Hubbert (Shell geologist) predicated a peak of US conventional oil extraction to take place in 1970; most were skeptical
-assuming hydrocarbon basins were finite in nature, Hubbert argued that extraction flow would follow a set trajectory–a bell-shaped curve
-Hubbert also developed a method (linearisation) of estimating ultimate recoverable reserve amounts that allowed him to predict a production peak (see Figure 2)
-production stopped growing due to production dynamics and basin depletion
Explaining Hubbert–From Macro to Micro
-Hubbert’s logistic curve has been powerfully predictive but criticised since no one understands why
-it appears that the growth curve results from new wells being added during the early phase of basin extraction with each new well adding to total production
-as time passes, however, mature wells begin to decline in productive capacity and overall growth of production only continues if new well production exceeds older well decline
-eventually, new well production cannot offset the decline of mature wells and extraction plateaus then begins to fall and cannot be reversed by investment in more wells
-“It underscores a fundamental truth: growth is bound not just by resources but by the interplay between new additions and inevitable declines. Higher prices and technological advancements may influence the pace, but they can’t alter the underlying dynamics that eventually lead to a plateau in production.” (p. 12)
-even when production appears robust, depletion is inevitable
More Realistic Examples
-extraction is constrained by two decisions: where and how much to drill
-cautious, slow drilling characterises the early drilling phase in a new basin with activity ramping up once potential is realised
-activity slows once the best spots have been drilled, with subsequent wells being less productive
Conventional US Production–A Case Study
-from 1900 to 1945, US drilling was steady as production soared
-during the 1950s, drilling activity grew (+70%) but productivity did not keep pace (+20%) as depletion rates of mature wells increased
-the 1960s witnessed a drilling focus upon the best basins resulting in a doubling of productivity
-this increase rolled over (peaked) in 1970 as the best regions matured and began declining (falling 75% by the mid-1980s) despite a surge in drilling
Turning to Shales
-shale basins require more drilling due to their extensive layout, with productivity varying widely across a basin
-their production profile begins with high extraction rates followed by a steep decline and prolonged low-rate output tail
-this defies Hubbert linearisation but instead shows a logarithmic relation allowing precise extrapolation of production and peak production timing
Enter Neural Networks
-G&R began developing their own AI in 2019 to help model shale production using well design, subsurface geology, and regional trends (and has been revised over the years to include a larger variety of more precise information)
-predictive curves perfectly match actual production and see peak/rollover around when 28% of recoverable reserves have been extracted; current extraction estimates are at or beyond this point
-“Indeed, total shale oil and gas production likely peaked late last year. Both are already down 1%, and our models predict year-over-year production declines will turn sharply negative within six months.” (p. 21)
Depletion Paradox Redux
-the coming decline in production is occurring at a difficult time given that since 2010, global oil demand has been met almost exclusively by shale extraction, helping to suppress US prices by 80% relative to global prices and grow natural gas-fired electricity production and LNG exports
-inferior geology cannot be remediated
-the 1970s saw production plummet despite higher prices and more drilling, and we are likely going to experience the same for shale
-“In the end, the paradox remains—depletion is an unstoppable force, and it is becoming harder and harder to keep up.” (p. 22)
The more detailed summary notes for this article can be found here.
A collection of graphs, charts, and text screenshots of interest. The data shows the significant increase in U.S. shale oil and gas production since the 1990s.
The rollover/peak of this production has huge implications for not just the US but the entire globe as most production increases over the past two decades have come as a result of US shale extraction. The notion that production can continue to meet increasing demand via investment, increased drilling, and/or new technologies is increasingly being questioned–especially by this G&R commentary.
The world is not prepared for a decline/fall in oil and gas production. It has been lulled into complacency, denial, and bargaining via mass marketing of a faulty narrative. The piper has finished playing and must now be paid. Humanity must now sit down at the banquet of consequences that have accumulated over the past two centuries…
Shit is about to get real…
OIL
https://www.eia.gov/tools/faqs/faq.php?id=847&t=6
https://www.dallasfed.org/research/economics/2019/0820
GAS
https://en.wikipedia.org/wiki/Shale_gas_in_the_United_States
Natural gas production in the United States from 1998 to 2023 (in billion cubic meters)
https://www.statista.com/statistics/265331/natural-gas-production-in-the-us/
If you’ve made it to the end of this contemplation and have got something out of my writing, please consider ordering the trilogy of my ‘fictional’ novel series, Olduvai (PDF files; only $9.99 Canadian), via my website or the link below — the ‘profits’ of which help me to keep my internet presence alive and first book available in print (and is available via various online retailers).
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You can also find a variety of resources, particularly my summary notes for a handful of texts, especially Catton’s Overshoot and Tainter’s Collapse: see here.
Released September 30, 2024
It Bears Repeating: Best Of…Volume 2
A compilation of writers focused on the nexus of limits to growth, energy, and ecological overshoot.
With a Foreword by Erik Michaels and Afterword by Dr. Guy McPherson, authors include: Dr. Peter A Victor, George Tsakraklides, Charles Hugh Smith, Dr. Tony Povilitis, Jordan Perry, Matt Orsagh, Justin McAffee, Jack Lowe, The Honest Sorcerer, Fast Eddy, Will Falk, Dr. Ugo Bardi, and Steve Bull.
The document is not a guided narrative towards a singular or overarching message; except, perhaps, that we are in a predicament of our own making with a far more chaotic future ahead of us than most imagine–and most certainly than what mainstream media/politics would have us believe.
Click here to access the document as a PDF file, free to download.
Contemplation title hat-tip to John Mellencamp: