U.S. Estimates ‘Vastly Overstate’ Future Oil, Gas Output: MIT
The United States Energy Information Administration is misreading the reasons for America’s rising oil and gas production—with the result that it “may vastly overstate oil and gas production in the years to come,” according to researchers at the Massachusetts Institute of Technology (MIT).
The U.S. agency has assumed that “better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future,” Bloomberg writes. But in fact, the MIT investigators determined, most of that increase came from drillers choosing the most promising “sweet spots where oil and gas are easiest to extract,” a strategy naturally limited by geology.
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“Extrapolating from field studies in North Dakota’s Bakken shale deposit, the research suggests that total U.S. oil and natural gas production from new wells could undershoot the EIA estimate by more than 10% in 2020,” the news agency reports. “Things would get progressively worse each year after that, as wells in various sweet spots are exhausted and technology fails to close the gap.”
“This compounds, year after year, like interest,” observed Justin B. Montgomery, one of the study’s authors. “So the further out in the future the wells are drilled, the more they are being overestimated.” He added that “the same forecasting methods are used in other plays in the U.S.,” where “the same dynamic is likely to be present” in estimating future output.
“There certainly could be some validity to getting a rosier forecast because the industry is working sweet spots,” agreed Penn State University hydrogeologist Dave Yoxtheimer. “When that’s all played out, they’re going to have to go to the tier-two acreage, which isn’t going to be as productive.”