14 ms·
A $900B Oil Treasure Lies Beneath West Texas Desert
- f_allwein 10y agoThe value of 900B is wrong, apparently. Value of oil in the ground != value of oil in a barrel. http://www.forbes.com/sites/timworstall/2016/11/18/the-midland-basin-wolfcamp-shale-is-not-worth-900-billion-thats-not-how-resource-economics-works/#42ec45442197 http://www.forbes.com/sites/timworstall/2016/11/18/the-midla... Plus, we're at a stage where we really need to leave a lot of oil in the ground: https://www.theguardian.com/environment/2015/jan/07/much-worlds-fossil-fuel-reserve-must-stay-buried-prevent-climate-change-study-says https://www.theguardian.com/environment/2015/jan/07/much-wor...
- matt_wulfeck 10y agoAlso it provides security if we burn up everyone else's oil but keep large reserves for ourselves.
- saryant 10y agoThis was official US policy for much of the post-war era and a large part of the reason the US encouraged the development of oil fields in the Gulf. In WWII the Allies deeply learned the benefits of having vast, safe oil resources in lands untouchable by the enemy. US policy after the war called for encouraging foreign development, especially by the US majors, in order to keep our reserves in tact for the next war.
- paulddraper 10y agoCan't speak to the second part, but I came here to post the first part. tl;dr There's nearly a trillion dollars of oil to sell at today's prices, but it's not "worth" anywhere that much in net because drilling it is not nothing.
- ChuckMcM 10y agoThese things always amaze me, $900B which, if they extracted it all at once would deflate the price of oil to less than $10 a barrel and make everyone go broke. For reference the US consumed 7 billion barrels in 2015[1] so this represents basically nearly 3 years of consumption by the US with no imports at all. And world consumption has been nearly flat for a while. [1] https://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6 https://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6
- mzw_mzw 10y agoGood thing it's not gonna get extracted all at once, then.
- imaginenore 10y agoThat statement is false. It entirely depends on how fast you sell it. If you dump it all on the market at once, it can go way way below $10. Or you can take it slow and not affect the price much at all.
- stardek 10y agoAny idea what the expected reaction would be if you sold it slowly but everyone knew that you had a massive reserve sitting in a warehouse somewhere ready for sale?
- ChuckMcM 10y agoTechnically the statement is accurate, but I understood that you disagreed with the hypothetical. That said, there is a lot of evidence and history that supports the notion that OPEC only managed to keep oil prices high by threatening member states with retaliation if they under cut the "standard" price. And at the same time, people who were in a position to undercut that price (Venezuela, Russia, Brazil) did so in order to get more foreign currency faster. It is always a balance of incentives. The market clearly will buy oil at lower prices if given the opportunity. So one could imagine an act of economic warfare where the oil and gas reserves were developed as quickly as possible and shipped to Europe at a steep discount to cut into the revenues Russia makes selling oil and gas. Thus putting a huge crimp in their economy which makes their military spending cut into their social programs more deeply causing internal unrest and dissatisfaction. That certainly would not be in the best interests of the companies pulling the oil out of the ground, but it could be in the best interests of the US policy makers. My original point was that the $900B number was specious, you cannot take the 'estimate of reserves in barrels' x 'the spot price of oil' and call it the 'value'. The quantity is material to the commodity price on the market and so moving it through the market will change the net value.
- diafygi 10y agoRemember all the threads recently about fake news? "The Midland Basin Wolfcamp Shale Is Not Worth $900 Billion - That's Not How Resource Economics Works" http://www.forbes.com/sites/timworstall/2016/11/18/the-midland-basin-wolfcamp-shale-is-not-worth-900-billion-thats-not-how-resource-economics-works/#7dd018a72197 http://www.forbes.com/sites/timworstall/2016/11/18/the-midla...
- matt_wulfeck 10y agoHackerNews needs to take steps to prevent fake news from skewing people's perspectives /s Edit: I really was being sarcastic. This is the current response towards Facebook and I was trying to demonstrate how silly it is.
- draw_down 10y agoI don't think that is quite what is meant by "fake news" but I take the point.
- phonyBologna 10y agoEh, the way I see it, this whole thing with the "fake news" (because propaganda's a dirty word), is more about willful ignorance and the insulation and maintenance of unsophisticated world views.
- draw_down 10y agoBut I wouldn't classify this as any of that, it's just regular old inaccurate.
- phonyBologna 10y agoSo, yeah, "fake news" is more like this other sort of thing: https://www.buzzfeed.com/craigsilverman/partisan-fb-pages-analysis https://www.buzzfeed.com/craigsilverman/partisan-fb-pages-an... https://www.buzzfeed.com/craigsilverman/how-macedonia-became-a-global-hub-for-pro-trump-misinfo https://www.buzzfeed.com/craigsilverman/how-macedonia-became... I feel like there's something more interesting going on here. Like, more to the point that there's this unstoppable reality that people are reading the stories they find attractive. Whether the goal of the stories was to game a compensation system, by forming a click-bait content-farming advertisement ring, and whether it was a plan hatched by two-bit amateurs doesn't matter as much as the premise that many, many people are susceptible to preferring a channel that happily conforms to the ideas that seem to please them, without questioning why it always provides them with everything they've always agreed with. Is the problem that someone out there is creating junk food popcorn stories that people smoke crack and read avidly? Or is the problem that people are smoking crack before they read the news? Seems like it's an easier solution to hunt down those rotten unethical publishers. But after you get rid of the publishers, you still have this sprawling kingdom of crack addicts, so did anything really get fixed? Like, certain people prefer to hear that we have this amazing trillion dollar oil field now, whether it's worth that much or not. So that's what gets published. Meanwhile, the valuation of the huge, bigly oil field is a digression from the more pressing conversation about whether we should ever burn all that oil to begin with. Like, yeah, wow. Lots of oil. Great. But uh, what about all the smog and that business with the greenhouse gases? Weren't we supposed to start using less oil? But never mind all that! What gets clicks is the price tag! Run it!
- sulam 10y agoKeep in mind that this is oil which needs to be horizontally drilled for, meaning fracking. Fracking has destroyed water tables because of the chemicals used and been linked to earthquakes in Canada. Not to mention that it is very intensive in terms of water use. But of course, while the oil is running there are lots of jobs created, at least until OPEC decides they've had enough and drives the price of oil back down. Since this is Texas, I'm pretty sure the local community won't worry about this stuff much (I grew up in Texas and have relatives who live just north of this field's extent). Hopefully the benefits will outweigh the costs for them -- it's not clear that this has been the case for North Dakota.
- SwellJoe 10y agoGiven the water situation in most of Texas, I find it unbelievable that anyone is still pushing oil, especially shale oil, as an energy option anywhere in Texas. And, yet, all those old oil barons are still pushing that agenda, and still controlling the narrative at every level of government. That same desert could house miles of solar panels and miles of wind farms. But, very few people are pushing that solution to the energy problem, even though it is now price-competitive with fossil fuels to do so in places like Texas, where both wind and sun are plentiful almost year round.
- BurningFrog 10y agoUnless I vastly underestimate how much land oil extraction uses, that land could still house miles of solar panels and miles of wind farms.
- SwellJoe 10y agoYou might be vastly underestimating how much land oil extraction uses. It depends on how they'll be extracting this shale oil from this particular shale oil field, which I don't know. In some cases, it is massively land intensive; it is akin to strip mining in that vast tracts of land are dug up. In other cases, it is just massively water intensive, as they pump a water and chemical blend at high temperature underground and then pump it back out to pull the shale slurry out with it. Shale oil is a very different process than traditional oil wells, and much riskier to water reservoir resources in the region.
- andrewvijay 10y agoSo this means middle East will get some relief from wars?
- saryant 10y agoOr their internal divisions spiral out of control as Gulf petrostates receive the double-punch of declining oil revenues and weakening security alliances, causing them lose the ability to buy off their own citizens while at the same time, foreign powers lose their need for the current regimes.
- gooseus 10y agoDoubtful... if this new supply pushes down the price of oil then all regimes dependent on oil exports would lose a lot of revenue. I'd guess that this would lead to instability and possibly war... though it could mean less US involvement in the area, for better or worse.
- foxFive 10y agoI live in this neck of the woods, Midland is 30 minutes away and I often am in town to work or play. On the one hand, I'm kinda glad that the oil is there, those are big numbers especially considering that the price per barrel is half of what is was two years ago. It will definitely boost the local economy. On the other, we are just now starting to see the area begin to settle down from the influx of workers who came to the area for jobs. When oil is booming crime goes up, housing costs go up, and traffic gets dangerous. Not to mention all the water that gets wasted from fracking. Water restrictions were just lifted but the area cannot support more people for long. Groundwater is being contaminated and soon what little above ground water sources we have will run dry if the area continues to see growth, add to this the fact that the shale formations will need to be broken up (by fracking) to access the crude and it looks like even more water will be used, as well as increase the possibilities of sinkholes and seismic activity throughout the entire basin. This is not going to be enjoyable for the locals.
- giardini 10y agoOpen a small business installing water filtration systems on homes. It will be a growth market for the next 50 years in many parts of the USA.
- zabcik 10y agoTexas drilling and fracking regulations are on the chopping block. Soon we'll have little to no leverage to limit drilling or demand environmental studies to be done, so get ready for even more indigenous lands to get violated, even more earthquakes caused from wastewater injection, and even more greenhouse gasses released into our atmosphere exacerbating the already terrifying effects of climate change. No matter how good the profit in the near future might be, we're jeopardizing our ability to live on this planet by allowing this to happen.
- BurningFrog 10y ago> even more indigenous lands to get violated Or some real jobs and money in these dirt poor areas. > even more greenhouse gasses released into our atmosphere Any working solution to that has to be global and reduce demand. Refusing to drill American oil mostly means more oil money to Saudis, Putin, Venezuela and other of the worst butchers and oppressors of the world.
- vkou 10y agoHaving a pipeline built through your lands usually doesn't bring you any jobs, or money. The people building it come from out of town, the people who will be making money from the pipeline are its owners, and the people who will be picking up the bill if things go pear-shaped will be the people who live there. If you have any doubts about that, check out how the Exxon Valdez spill was handled. The oil company makes the profits, and can find all sorts of ways to get out of paying for the damages.
- fanzhang 10y agoIn a theoretical world, finding potential resources is always good. You have the option to extract from it, or ban extraction from it -- which is no worse than not finding it in the first place. Put another way, shouldn't news of any new option be good? It's interesting then that there's such negativity, or at least ambiguity, in this thread. Is it because we've grown more pessimistic at the irresponsibility of society?
- guelo 10y agoThe option to ban extraction is not on the table at all. Wells start pumping immediately after a discovery is made. The election of Trump is a dawning realization to many of us that our civilization is incapable of stopping it's acceleration as we head over the climate change cliff.
- mzw_mzw 10y agoIt's interesting, but it's not surprising. There's a hive-mind on HN when it comes to anything associated with oil. The most ludicrous, unscientific, repeatedly debunked theories about environmental damage from fracking are uncritically believed, conspiracy theories about "oil barons" and Mideast wars are the order of the day, and of course you can't go five minutes without someone happily reminding us all that soon God, er, global warming will punish us sinners.
- mdpopescu 10y ago"The world is ending, give us money." I don't know if Christianity started it, but at least since Malthus others have figured out it's a good scam. I am wondering if anyone will mention "peak oil" here too :)
- guelo 10y agoPeople concerned about climate change are not asking for money.
- reitanqild 10y ago
- kleigenfreude 10y agoFuck this fucking oil shit. Fuck it
- StanislavPetrov 10y agoToo bad we have to burn all that carbon first and we can't just pump it right into the atmosphere. At least we get to inject toxic wastewater into the ground and cause some earthquakes in the process.
- joelthelion 10y agoYou mean a $900 billion CO2 nightmare?
- Gibbon1 10y agoConsider that to get that 900 billion worth of oil we'd probably have spend 400 billion in extraction costs. Over all likely better to spend that on renewables instead.
- yread 10y agoGood for them. Leave it there
- beedogs 10y agoAnd it should remain in the ground. All of it.
- beedogs 10y agoHow does a comment like this get downvoted on HN? Is everyone here an oil industry shill?
- wott 10y agoMost people here are Muricans, they (you?) cannot easily and massively get rid of a more than century old culture based on individualism, short-term thinking, greediness, "bigger is greater" applied to every single aspect of life and society, and oil.
- BurningFrog 10y agoSome people honestly have different opinions and world views than you, without being corrupt, stupid or evil.
- xapata 10y agoYes, but on some issues, otherwise smart people hold amazingly ignorant opinions. I'm sure you can find examples no matter which side of the issue you're on.
- sctb 10y agoWe detached this subthread from https://news.ycombinator.com/item?id=12997799 https://news.ycombinator.com/item?id=12997799 and marked it off-topic.
- PeterStuer 10y ago20 billion barrels of oil sounds a lot until you realize that the world consumes around 35 billion barrels per year. All this fracking comes at a huge environmental cost and all this to keep hanging on to our fossil addiction for a few more quarters.
- zhaphod 10y agowhatever the value, I hope it stays buried.
- sporkenfang 10y agoI know those people would be glad for the money, but damnit it was 80 Fahrenheit on Friday and it's nearly Thanksgiving. Whatever's going on with the weather, humanity doesn't need to be making it any worse.
- deepitee1 10y agoThe effects we're feeling in the South US are mostly from the La Nina[1], but there is actually something interesting happening with the Arctic ice this winter. It's still below zero up there, but we might end up with a northern channel in about 4 years if it stays this warm. It isn't just about the ice that has formed, but the speed that it's forming. It's significantly slower than recent years[2]. This was caused in part from storms[3], so now the rapidly warming temperatures can cascade in the next years with darker water and thinner ice. Also, the methane crater explosions in Sibera can't be helping...[4] [1]http://www.cnn.com/2016/11/10/us/la-nina-arrives/ http://www.cnn.com/2016/11/10/us/la-nina-arrives/ [2]http://nsidc.org/arcticseaicenews/files/2016/11/Figure2a.png http://nsidc.org/arcticseaicenews/files/2016/11/Figure2a.png [3]https://robertscribbler.com/2016/11/18/arctic-storms-sparked-severe-polar-warming-sea-ice-melt-for-november-2016/ https://robertscribbler.com/2016/11/18/arctic-storms-sparked... [4]http://www.businessinsider.com/russian-exploding-permafrost-methane-craters-global-warming-2016-6 http://www.businessinsider.com/russian-exploding-permafrost-...
- giardini 10y agodeepitee1 says: "we might end up with a northern channel in about 4 years if it stays this warm." A "northern channel"? Do you mean a wider "Northwest Passage" from the Atlantic to the Pacific oceans?
- alphydan 10y agoTo put this in perspective, let's assume that there are indeed 75x10^9 barrels of oil. Fracking typically can only extract around 10% of the oil-in-place (the rest is too expensive to recover once the reservoir pressure drops, even at $100/barrel)[1]. The US consumes 19 million barrels a day [2], so (75000 barrels*0.1)/(19bpd)/(365 dpy) = 1 year. All that oil would be burnt in a single year if it was the only source! [1] Consequently, the recovery factors for shale oil are typically lower than they are for shale gas, ranging from 3 percent to 7 percent of the oil in-place with exceptional cases being as high as 10% or as low as 1 percent. http://www.eia.gov/analysis/studies/worldshalegas/pdf/overview.pdf http://www.eia.gov/analysis/studies/worldshalegas/pdf/overvi... [2] https://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6 https://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6
- youdontknowtho 10y agoif they keep it up then it will be beach front property before long...
- themgt 10y agoI like that it's called the "Permian Basin". We're literally digging up the sequestered carbon from hundreds of millions of years ago and putting it back up into the atmosphere to rapidly recreate the climate of that period.
- eru 10y agoYour comment is catchy, but not very accurate. That period lasted millions of years. All the CO2 we are blasting into the atmosphere will be absorbed by the oceans in thousands (or at most ten thousands) of years. (It's taking a while, because the surface layers of the oceans can only absorb so much, and mixing into the deeper layers takes time.)
- xapata 10y agoAs the oceans absorb CO2, the acidity increases. Not so great for our preferred fish species.
- BurningFrog 10y agoProbably true, but the fact that we eat all those fish is a far bigger short term problem. I heard somewhere (rumor alert) that jellyfish and other species we don't like to eat are taking over much of the oceans, since we ate most of the fish.
- deleted 10y ago[deleted]
- giardini 10y agoOpen a small business harvesting jellyfish. It is already a growth market in Asia and will be a growth market for the next 50 years in many parts of the USA: "Southern Fishermen Cash In On Asia's Taste For Jellyfish": http://www.npr.org/sections/thesalt/2014/01/28/267836803/southern-fishermen-cash-in-on-asias-taste-for-jellyfish http://www.npr.org/sections/thesalt/2014/01/28/267836803/sou... "Jelly Balls Harvested by Boone Seafood Darien Georgia": https://www.youtube.com/watch?v=laArO6Yk-W0 https://www.youtube.com/watch?v=laArO6Yk-W0
- woodandsteel 10y agoConsidering long-term energy trends, I think we will have here is a major case of stranded assets.