One note - the (ominous) natural gas vs wells graphs in Figure 5 ends in 2005 - the US has increased NG production in both 2006 and ytd 2007, though not up to 1973 or 2000 numbers.

One concern I see expressed with regards to oil production over and over is that it's possible to prop up production today at the expense of production tomorrow. It seems to me (please correct me if I'm wrong) that this concern should be even greater when it comes to natural gas. What is there to stop us from using our natural gas at large production rates up until the last bit is used? With oil there is a loss of pressure to mitigate this (as I understand it). And with gas?

The notion of production increase after 2005 is misleading. The issue is really suppressed production in 2005 relative to the other years due to the hurricanes in the Gulf. Dry gas production dropped over 500 Bcf from 2004 to 2005, which is almost exactly the hurricane impact. There was still some modest ongoing loss from hurricanes in 2006. What appears as an increased NG production is simply a recovery from the hurricanes. The numbers from EIA in Bcf:

2003 19099
2004 18591
2005 18074
2006 18531

First 5 months in 2007 so far total: 7756
first 5 of 2004, prior to hurricanes was: 7806

What we really have is a slow drift down in production despite all the increased drilling.

Damage from rapid production in oil wells typically relates to either:

1.) A loss of the gas in solution due to pressure drops (gas solution drive reservoirs) The result is otherwise producible oil with nothing to make it mobile. It just sits there rather than moving toward what should be the lower pressure of the producing well bore. These sorts of depleted reservoirs are often excellent candidates for water flood redevelopment.

2.) Coning of water as the rapidly produced wells draw water from deeper in the produing formation rather than producing water free oil from the top of the formation. (Water drive reservoirs) This has the effect of leaving oil behind and bypassed. In fill drilling can tap into the by passed oil, but drilling new wells is an expensive proposition.

3.) Expanding gas caps as gas comes out of solution in the reservoir. This gas sits on top of the formation where the producing oil wells are now only capable of gas production. Producing that gas causes more problems are pressures drop further (the gas cap stays in place and probably grows with the loss of energy as noted in "1" becoming a real problem. Reduced pressure can also result in finicky pump performance when the pressure drop is very localized restricting or stopping production as a "gas lock" develops in the pump. This is sometimes a big deal with low perm reservoirs. You have to be patient and let the oil come to the well bore.

4.) Overly aggressive attempts at stimulation [ill advised or overly large frac jobs and acid jobs] can lead to "breaking into water as either the well is opened to an adjacent and potentially non oil bearing zone, or a highly permiable but largely vertical streak is opened up [think of a straw going to the bottom of a drink when the good stuff is right on top -- the "Super K" zones that occasionaly are mentioned as one of the issues facing Ghawar are an example of this sort of problem.]

The point is that gas wells typically don't have these issues. Producing a gas well flat out will somtimes leave behind some oil like liquids [and some "gas wells" make quite a lot of these liquids] and overly agrressive stimulation can lead to opening up zones that are not productive just like in an oil well ... but rapid production of a gas well typically doesn't cause the same type or severity of problems as too rapid production does for oil wells.

Hardly a technical explanation, but I hope that helped.

Thanks, RW Reactionary,

Thats a quick, short and sweet summary of overproduction issues.

I think one of the great oil business moneymakers in the next 20 years will be identifing reservoirs that were abandoned early because of overproduction, and going in and reengineering them. There's a ton of Texas and Louisiana salt dome fields and shallow fields in the Ft. Worth basin, Oklahoma and California that need to be reevaluated. I suspect we can get the URR* of these fields up by 10%-20% fairly easily.

Of course, this will only help moderate the peak. Its not the size of the tank, its the size of the tap. Once original pressure has been disipated, its hard to get a huge flow again. And the lifting costs are very high, with a big expense for water treatment and disposal. Land costs are outrageous. I've got several prospects like this that I'm working up.

*URR=Ultimate Recoverable Reserves
Bob Ebersole