Art Berman: Don’t Get Used To Today’s Low Oil Prices
Oil expert and geological consultant Art Berman returns to the podcast this week to address head-on the question: Was the Peak Oil theory wrong? With the world "awash" in sub-$50 per barrel oil, were all the warnings about persistently higher future oil prices just a bunch of alarmist hand-wringing?
In a word: No.
Art explains how the current glut of oil created by the US shale boom — along with high crude output by both OPEC and non-OPEC producers — is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue the trajectory of our demand curve. And at the same time, we're extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch. It's not a matter of if, but when:
I’m not interested in spreading any kind of false ideas that we’re running out of oil. We’re not running out of oil. We’re not running out gas. The problem that we’ve had now for the past twenty years is that we seem to have run out of inexpensive oil and gas — and that’s where the so-called shale plays, the offshore deep water kinds of ventures that have dominated the industry now for much of the last twenty years come in.
So, you can always find more. The question is: At what cost? That’s I think an issue that we don’t really want to talk about very much.
The second piece of that is the idea that somehow technology is always going to save us. I think that theme goes way beyond oil and gas and energy. But, it’s certainly prevalent in my line of work which is oil and gas and so the problem there is that people seem to lose the distinction between technology and energy. Technology does not create energy. Technology is simply a way to convert energy, or to convert resources, into work. So, you can improve the technology and basically it allows you to turn the faucet on harder. It doesn’t create any new energy and it certainly doesn’t help you conserve what you already have. In fact quite the opposite. The better the technology the quicker you run through what you have left.
So, yeah, we can always find more oil and gas. But will be able to afford it? Is our global economy capable of managing that cost? That’s really the issue.
We’ve been looking at diminishing returns as far as the size of what we’ve discovered now for the last 40 or 50 years. This was a trend that was of concern long before shale plays came onto the landscape. It’s an endemic problem and the reason why we went into things like tar sands and ultra-deep water.
We’ve got a hundred and fifty years of history of producing oil and gas wells and oil and gas fields around the world. So far, I have not seen the laws of physics give unconventional/shale plays a pass. There’s just nothing unusual about the fact that you should expect to see things grow, then peak, then decline. That’s just the way that natural systems work. All natural systems. Why should an oil field be different than any other natural system?
So, it all comes down to what we are willing to pay for that additional fix of energy? Unless we somehow figure out how to scale back our use of energy, there’s a day of reckoning which isn’t that many years out. Nobody knows exactly when, but soon we’re just not going to be able to do this anymore — not at $40, $50 or $60 dollars a barrel. The big question is: What are the implications of that?
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Art Berman: Don’t Get Used To Today’s Low Oil Prices
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Chris Martenson: Welcome to this Peak Prosperity podcast. It is May 2 2017 and I am Chris Martenson. I think there’s an oil price shock coming in a few years. Now today we’re going to talk with one of the leading experts on oil and gas production in the US and the person I trust most to analyze and tell the truth about the shale plays in particular. Now, here’s why you should care a lot about this subject. There’s simply no question that economic growth requires energy. Specifically, if you want more economic growth then you are, by definition, going to consume more energy. That’s what decades of data in the energy or economic data series tells us. So, how much we have and whether or not it can support the necessary or even required economic growth to service the massive piles of debt we got today. Not to mention the un- and underfunded and pension and entitlement programs like Social Security and Medicare. We’re way past the time where prudent adults can simply wish or assume that somehow, some way energy will magically show up to save our future hopes and dreams. It’s also past time to begin planning for a very different future of less, and that begins with a grounding in the base data. So, that’s what we’re going to do today and if you choose not to tune in then you will be among those who cannot see what the future holds and will have to content yourself with whatever comes your way.
So, let me introduce today’s guest. Arthur Berman, he has been on the show several times before. He’s a geological consultant with nearly forty years of experience in petroleum exploration and production, with 20 of those at Amoco, now known as BP. He has published more than 100 articles on geology, technology and the petroleum industry during the past five years. He’s got the chops and has published more than 20 articles and reports on the shale gas plays including the Barnett, the Haynesville, Fayetteville, Marcellus, Bakken, Eagle Ford and of course Permian plays. I follow him very closely at his blog at artberman.com. You should too. Welcome, Art, it’s great to have you back on.
Art Berman: Thanks Chris. It’s always good to talk to you.
Chris Martenson: Well let’s start it way on the outside of this story. I feel like the US, Art, and possibly the world has taken its eye off the oil situation except to note that everyone kind of seems to believe that oil well, it’s oversupplied. The costs to extract it are dropping. There’s lots of it. We can just find more as soon as we need to. First, is there any truth to that?
Art Berman: There’s underlying truth to even the silliest things that we believe or they wouldn’t last. So, it’s not a totally crazy idea. There is, I mean if the price gets high enough we will find oil and gas in some very strange and very expensive places. So, and I’m not interested in spreading any kind of false ideas that we’re running out of oil. We’re not running out of oil. We’re not running out gas. The problem that we’ve had now for the past at least twenty years is that we seem to have run out of inexpensive oil and gas and that’s where the so-called shale plays, the offshore deepwater kinds of ventures that have dominated the industry now for much of the last twenty years come in. So, you can always find more. The question is what is the cost? That’s, I think, an issue that we don’t really want to talk about very much.
The second piece of that is the idea that somehow technology is always going to save us. I think that theme goes way beyond oil and gas and energy. But, it’s certainly prevalent in my line of work which is oil and gas and so the problem there is, is that people seem to lose the distinction between technology and energy. Energy is not – technology does not create energy. Technology is simply a way to convert energy, or to convert resources into work. So, you can improve the technology and basically it allows you to turn the faucet on harder. It doesn’t create any new energy and it certainly doesn’t help you conserve what you already have. In fact, quite the opposite. The better the technology the quicker you run through what you have left. So, those are – so the themes that you’re talking about everything has a cost. So, many, many things are possible. Yeah, we can always find more oil and gas. Are we willing to pay for it? Is our global economy capable of managing that cost? That’s really the issue.
Chris Martenson: Well said. Let me just echo something really quick. Thank you for saying that technology does not create energy. I think a lot of people have a mistaken faith in technology, assuming it's technology that allows us to get more energy and maybe there’s some truth to that. If we can get 12 percent out of a tight play instead of ten percent that extra two percent, is kind like extra energy that technology unlocked or are genius processes. But at the end of the day it also allows us to get it out more rapidly. It doesn’t create new energy. Really important point. So, let me echo that. Then there’s a lot to unpack in here.
I started with this idea that I think oil prices are going to have to be a lot higher in the future and here’s why. Let’s go to the cost side of this. I know that new fines in the deep water plays, in some of the more unconventional plays, tar sands, Orinoco, heavy belt, Venezuela, these cost a lot of money to go out and do. So, just again starting at the macro before we get down to the shale, here’s what kind of caught my eye, Art, is that oil discoveries measured in billions of barrels across the globe for 2014, 15 and now 16, when you add those three years together, I don’t have a worse three years for oil discoveries in my data series, which only goes back to the twenties. We have individual years that are as bad as a couple of real dry years in the early fifties, but as a three year set, this is the lowest discovery set we’ve got in many, many decades, by my data. Tell people like, explain that to people. Why is that a concern?
Art Berman: There are really two pieces to this answer, Chris. The first is, is that we’ve been looking at diminishing returns as far as the size of what we’ve discovered now for the last forty or fifty years, really. This was a trend that was of concern long before shale plays certainly came onto the horizon or the landscape. So, it’s kind of an endemic problem and that’s the reason that we went to things like tar sands; we went to things like ultra-deep water. We’ve gone to all sorts of exotic things because we’re just not adding the reserves and oil companies, particularly publicly traded traditional major oil companies – they, a big measure of are they being successful at least according to investors is are they replacing the reserves that they’re producing? For a long time that’s been a real challenge for them. So, in some ways the shale plays have been a little bit of an out that they’ve been able to, at least on paper, say they’re adding reserves again, whereas in the past they weren’t. So, that’s part of the story. But, the short-term story is we’re just not spending the money, okay? We’ve had a collapse in oil prices and you go from several years of hundred dollar oil, let’s just say as a round number. It was actually more than that for a while. Then you go to oil prices that average forty-five or fifty dollars and everybody tightens up. They gotta cut back their spending on everything. Most particularly what happens is that we look for this measure called return on capital. Okay? So, if I got a dollar to spend where can I not only get the biggest bang for my buck, but the quickest return? Because obviously getting your money back sooner than later is an important piece of time value of money and just basic economics. The truth is, is that most of the larger discoveries that have made any time in the last thirty, forty, fifty years have all been in very difficult expensive kinds of terrains that take years, sometimes a decade or more, from discovery to first production all kinds of cost overruns, etc, etc. Bottom line, lousy return on capital investment. Okay?
So, we come along with shale plays and here’s a way that we can spend a limited amount of money, drill a couple of wells onshore, relatively inexpensive compared to offshore platforms and get a return. Get something back pretty quick. So, what’s happened since prices collapsed is that the emphasis has shifted from these big long term kind of projects that have many, many years before they start to even show any monetization much less to paying off your investment to quick pops. Things that we can do without committing a lot of capital to. We can start them we can stop them and we get a fairly quick return. That works great for the companies or works better than anything else, but it’s not really great for long-term supply. So, we’re just not investing the money in the big stuff. That’s the simple answer.
Chris Martenson: Not just the big stuff, but also I think in some of the trickier fields. The in-fill drilling and the other EOR, end of oil recovery, sort of processes, steam injections, whatever. It seems like a lot of investment has just tailed off, and yes the new investment is pouring into the shale because you have these quick returns and all of that. But it was the old conventional fields that we built our entire industrialized economy on. These were the fields where you could stick a straw in the ground and that well might produce for many decades afterwards. So, yes, there’s a long lead time, but it creates a sort of like, I guess, if the analogy here would be the old conventional fields are sort of the baseload generators in the electrical grid and the shale comes on as kind of your gas-fired power plant. So, it’s like, it gives you quick spurts and all of that. But, is that fair characterization for me to think that there’s been an underwhelming or even an under amount of investment in what we would call the base load oil generation?
Art Berman: Well, that’s exactly right, but here’s the reason. It’s not because we’re ignoring it and it’s not because we’re stupid. It’s because we found all that. We found all the good stuff, all the easy stuff. That was found decades ago. That’s going back to the first point I made when you asked the question about why are we having such lousy years for discovery. It’s not a new problem. Okay? So we just don’t know where there are more Saudi Arabia size, Prudhoe Bay North Alaska size, Cantarell Mexico size fields. If they’re out there we don’t know where they are and our technology doesn’t allow us to seem them. So, in a way it’s like your base load is dwindling. You got to replace it other stuff or you’re not going to have any power at all.
Chris Martenson: Well indeed. So, just to put it in context let’s round up. There’s ninety plus million barrels a day of liquid fuels on the market right now, let’s round up to a hundred. If we say that, again to round just to make this all easy, that there’s five percent decline rates in the existing fields. That means you have to replace about five million barrels per day per year. To put this in context, how much shale oil are we getting out of the US? Which has really been I think overbilled as this swing producer capable of ramping up in a moment’s notice and could really hit the short falls. If we were having to replace five million barrels a day per year out of existing baseload, put shale in the US in context if you can, around that number.
Art Berman: Sure. So, to use round numbers; the tidal oil if you will, the shale in the US produces about four, four and a half million barrels a day. Okay? So, but that’s a number that has to be, you got to keep drilling and drilling and drilling to even keep that number flat much less growing. So, you’re talking about needing to add that amount every year. That possibility, trying to be realistic as opposed to pessimistic. It’s just, I don’t see how you can do that. I don’t think that the size of the resource is big enough, at least in the United States, to do that. So, it’s great, you found four or five million barrels a day that you didn’t think you had, but can you do that every year? Absolutely not. We’ve kind of done it once. The additions that we’re making, although they’re praised in the press, we’re not in the most optimistic scenario. Maybe we’re going to add a million barrels a day for a couple of years before all that goes away. So no, the world is in very bad shape when it comes to where might we find, forget about what we are finding. Where might we find that four or five million barrels a day every year that we need? Shale is a piece of it, but it’s not the answer.
Chris Martenson: Well said. So, that’s really where I was getting to with this idea that I think there are higher oil prices in the future and not least of which is that we know there’s more offshore. We know there’s more in the ultra-deep water, we know how much cost and we have some idea that there is more there. So obviously, we’ll go for more if we need to. But the prices will have to at least come up to well I would call it the marginal cost of production. But I mean the prices have to come up higher than they are for a company to even say, yeah that’s worth it, let’s go do that. So, that’s kind of my view is that we’re going to need more oil in the future and it’s going to have to come up to not the marginal cost of production of shale, but the marginal cost of production of those other marginal barrels out there. Whatever else is in the world? I mean, is that a fair way to think about it or is oil like, just such a different commodity we can’t think about it that way.
Art Berman: No. it’s a commodity like all other commodities and you’re thinking about it exactly correctly. That’s the way you have to think about it. So, what is that price? I mean, of course nobody really knows the answer to that. But, just to kind of clear the garbage from the daily headlines, the idea, I saw something this morning where in the offshore technology conferences in Houston where I live today, that’s all the big deep water guys. Somebody at BP said well even though our break even cost in deep water is forty dollars a barrel, if prices go below fifty we’re not going to drill. Okay. Well, let’s deconstruct that comment. When he says the break-even price is forty dollars a barrel, what he means is that the production costs are forty dollars a barrel.
Chris Martenson: Right.
Art Berman: Forget about all the exploration. Forget about all the cost of building platforms and pipelines. When all of that cost is already spent then the physical cost of just lifting and producing and paying taxes on the produced oil is forty dollars a barrel. That’s a real different number than the marginal barrel that you’re talking about, Chris. I mean the real number for the deep water is probably at least seventy dollars in a very optimistic scenario. So, when he says they’re not going to do any drilling in deepwater, BP is a global leader on everything but in deep water and the price of oil today is not fifty dollars – it’s kind of hard to be optimistic about that, isn’t it?
Chris Martenson: Well, it is and so this gets to a really important point and you said clear the garbage from the headlines. I feel like that’s what we’re doing here in the opening parts of this podcast. In the United States I have to deconstruct things that people have been reading which I consider to be a little bit on the spin side, a little bit PR, sometimes overt propaganda and sometimes just flat-out lies. So, to help sort of bring some clarity to this, this idea of a break-even cost. You just mentioned a very important concept here that when somebody says here’s the break-even cost of getting this barrel out of the ground. That might be what’s included if all you’re looking at is the well has already been drilled and you’re just trying to get oil out of the ground. That’s one way to look at it, the simplest. But, we have to go wider than that and what we really care about is investors in this space would be the all-in cost. Which I believe people at these oil companies like to be paid salaries. I believe they have taxes that are due, severance taxes income taxes. I believe that they’ve got royalties. They’ve got all kinds of things that are actually part of their operating structure. So, when you mentioned in things that we’ve read that some of these shale plays are able to break even at twenty a barrel or thirty, somewhere in that zone. Is that a break-even number or is that an all-in number?
Art Berman: No. that’s a break-even number, if you eliminate what you call sump costs. Okay? Everything you had to pay to get to that. It’s a point-forward number, Chris. That’s really what we’re talking about. While it does include some of those costs that you mentioned, it never included fundamental costs of doing business like paying salaries and keeping the lights on and running your corporate jets and things like that. It also never includes your interest expense and all these companies, even the biggest, are in major debt and interest expense is a big part of what they have to do to stay alive. So, at the very least it excludes those two huge components of just doing business. So, it’s not a real number.
Chris Martenson: Well, let’s talk about that interest expense real quick. Let’s see if I’m thinking about this the wrong way or the right way. Last I heard there was about three hundred fifty billion in debt on the shale companies. To put that in context, I know oil is trading in the high forties today. But, again I love round number. So, let’s imagine at the wellhead there getting thirty-five dollars a barrel, right? This is just so I can do the math in my head. If I divide thirty five into three hundred and fifty I get a number like ten. That means that they would have to extract ten billion barrels just to pay the debt back without interest costs on top of that, without any shareholder return. I mean is that, is there another way to think about this business? I mean to me that’s classic business 101. If they have three hundred fifty billion in debt and they’re selling stuff for thirty-five dollars a unit they need ten billion units just to clear out the debt before they begin to add to things like, I don’t know, shareholder equity or interest payments or any of the rest of that. Is that fair?
Art Berman: That’s fair and as you know it’s back of the envelope and it’s a little bit more complex than that. But if you’re just trying to get a quick read on how we doing here, that’s a great way to do it. If that doesn’t look good then you need to dig deeper and find out what’s really going in the complexity of it all. That’s the reason I spend a lot of time looking at these annual reports that the Securities and Exchange Commission requires of publicly traded companies, even ones that aren’t based in the US, because they’re required to provide something called the standardized measure. Which is, okay, given oil prices or gas prices, which ever you're dealing with today, what do you project to be your future cash flows just to produce those reserves that you’ve already proven. What I’m seeing is, is that the cash flows that they’re projecting and the reserves that correlate with them are about a third of what they were in 2014. Okay? So we can talk all about break even cost being, getting lower all the time but we’re doing that by writing down huge reserves and projecting a whole lot less profit, if you will, for the companies and their shareholders. There’s just no way to spin that into a good thing that I know enough; and fair enough. It’s because prices are terrible but that’s the way it is. That’s the way business works. I mean, you have to live with what you have.
Chris Martenson: All right. So, that’s turn on that for a minute. Because now we’re down in it. You wrote an article recently that the headline of which is, low break-even prices are not just for shale players they’re for everyone. Tell us about that and why that’s important?
Art Berman: Well, the mythology. The headlines are that somehow these shale companies have shown us the end of history, if you will. Now that we’re doing shale everything that you used to think was true about oil and gas, it’s no longer true. Where we used to think we were running out of affordable oil and gas resources as recently as ten years ago or so, forget about that. Now, we got a cornucopia that never stops giving and all those dinosaur companies like Exxonmobil and BP and whatever, they’re just not nimble enough. They’re not hip to all the nuances and technology and so you really don’t want to look at them anymore. You want to look at these very agile companies that are using all the new technology. Well, so I just went and looked at this data that I described, that the SCC requires of all these companies and yeah it’s true. The shale companies are breaking even at forty dollars a barrel and guess what? So are all the big companies, all right? Why is that? Well first of all, none of these big companies are dumb. I mean they’re not just sitting on the sidelines waiting to become extinct while the supposedly nimbler smaller companies are kicking them in the butt. I mean, they’re changing too.
But, the real answer is they’re all writing down a massive amounts of reserves and whole bunch of costs that come along with those like equipment and depreciation. So, when they get to the bottom of all that crap and they dust it off they say hey we’re breaking even at forty dollars a barrel. Well yeah, everybody is. It’s nothing special. It’s called hard times. The most important piece of this is what’s happened to the cost of doing business? I’m talking about the oil field service companies, the companies that provide the drilling rigs that provide the frack crews and that provide the drilling muds, they have had to discount their cost of services so severely that that’s the major component that’s driving this so-called lower break-even price. That you go out and you can download a producer price index for the cost of drilling oil and gas wells from the Federal Reserve of Saint Louis and the cost of doing that has gone down like, forty percent in the last two years. No thanks to technology, that’s just the discount that these companies have to provide to get some cash flow. So, the headline tells us it’s all technology. I’m not saying there’s no technology but in my post that you’re talking about I’m saying it’s ten percent technology and ninety percent cost reduction from the service providers. No maybe, and that’s a round number too. I’m not going dispute is it fifteen/eight five I don’t know what it is, but the huge component of this cost reduction is that the oil field service companies are going out of business. They can’t continue to do business at these prices.
Chris Martenson: When the inevitable turn comes then, the flip side of this story would be that the break-even cost will then shoot back up again because the cost to drill and service will also be going back up. Is that right?
Art Berman: Absolutely. If you go out to the Saint Louis fed and download that oil and gas well drilling producer price index you’ll see that there’s been a big jump in the last two months. Why? Because activity has gone up a lot. Because prices went up and everybody is hopeful that the OPEC cuts are going to bring happy days again. So, yeah, the two always work in tandem and as the service companies need to charge more and can charge more to stay alive then the cost of a barrel of oil is going to go up. There’s no way around it.
Chris Martenson: All right. So the shale story really, the headlines are just screaming constantly technology, technology, technology. It is a component. Some I’ve noticed is process. Not to get too wonkish but somebody sent me this thing and said wow look at the flow rates on this well. When I looked at it was like instead of a six thousand foot lateral, which is the horizontal part of the well way down below, it was close to eleven thousand or twelve thousand feet. Instead of a twenty-stage frack it was a hundred-stage frack and there was fifty million pounds of sand put down that hole. So, my first thought was yeah, you basically drilled two wells, or something like that. That feels like a process improvement which is, I’m sure there’s amazing technology. I don’t want to diminish the skill involved but I do want to say that this, it sounds like we’re supersizing a process and that to me feels like just a way of, I’m not sure that that’s helping us get more out of ground on a better price. I’m not clear on that. What are your thoughts there?
Art Berman: The question to ask always is gee guys that’s great. What does it cost? So, we have an important razor I guess you’d call it. Are you actually producing new reserves or is this the case of rate acceleration? That you’re just accelerating what you would produce anyway without spending all that money and not drilling that eleven or twelve thousand feet horizontal and not pumping all that sand in and all that kind of stuff. I did a study which I published on my website not long ago on the Bakken play in North Dakota which is one of the three big components of Tidal oil or shale oil in the United States, pretty nearly a million barrels a day. What I discovered, to my surprise, really to my surprise because I like that play as much as I like any of these plays, is that that is, we’re starting to see signs of depletion. That, it looks to me like, we’ve overshot the limits of efficiency as far as infilling locations go. Does that mean that the Bakken is done? Well no. I mean it’s going to continue to produce for a long, long time. But the likelihood of it increasing production very much except by rate acceleration is low. All right well now that’s a big wake-up call. Because we’ve been led to believe that this tide oil resource is the gift that keeps on giving and here’s one of the three major legs to the stool in the United States and ten years in it’s starting to show signs of losing its momentum. Now why should that surprise anybody?
I mean these may be unconventional reservoirs but the laws of earth physics don’t change for them. There’s hardly a field anywhere in the world or a play anywhere in the world that doesn’t reach a peak and start to decline and ten years for a round number is a pretty darn good number from when you’ve maxed out on growth and supply. So, this came as a big surprise and needless to say I got a lot of criticism, not the least of which was from the officials in North Dakota who couldn’t imagine who this person was who dared to question all of their good work. But, the data is pretty clear and really and truly nobody has come to me and said well all right, here’s what you did wrong. So, what’s that say? Well that says that we’re going to start seeing the same thing in these other plays. So, and the thing that really worries me the most is water production. We never hear about water production. But water is not a useful component of gasoline or jet fuel or anything else and yet it comes with the territory. You’re going to produce a certain amount of water. You got to pay a lot of money to get rid of it. What I saw in the Bakken is that water production was increasing in a big way. We’re not talking about little bit of water, we’re talking about billions of barrels of water along with billions of barrels of oil. I go out and look at the Permian Basin which is a much younger play and the water cuts, the percentage of water as the percentage of the total oil plus water produced is already eighty, eighty-five percent.
Chris Martenson: What? Really?
Art Berman: Really.
Chris Martenson: Wow.
Art Berman: Wow is right. Okay. So this is the dark side. So, there are really two dark sides to the shale plays. The first we talked about is that because of all the great technology you’re going to run through it faster than if you didn’t have the great technology. The second is, is that because it’s an unconventional accumulation, okay? It doesn’t have a trap. It doesn’t have a way to get above the water or to produce it more slowly so you don’t pull the water in. It just, it comes with territory. There comes a point where you’re just going to produce more water than you can pay for your operations. I’m not trying to be doomster here. This is my profession and when I see eighty percent water cut early on in the life of a field or a play I’m starting to say, wow that’s not a good thing.
Chris Martenson: Now just help people understand this. The Bakken rounding, the plays down around ten thousand feet. So as water starts to intrude and you’re lifting one barrel of water for every barrel of oil, you still have to lift that barrel of water ten thousand feet, right? It’s got to come up a couple of miles, is that? I mean I assume there’s an energy cost associated with lifting water because when I carry pails of water upstairs I get winded. So, I’m assuming it doesn’t come out of the ground for free, right? You got to lift it.
Art Berman: Well that’s a good point and so at the risk of getting deeper into the proverbial weeds here, with a shale reservoir because it has no natural permeability you don’t just put it on a pump like we do a conventional reservoir. We don’t, you fracture it artificially. Presumably if you put it on a pump all you’d do would be to pull from the fractures that you’ve created. So, you wouldn’t actually be pumping from the storage. So, we rely on the gas that’s dissolved in the oil to provide that heavy lifting that you’re talking about when you carry water. Okay? What I saw in the Bakken is that the percentage of gas produced is declining. That means that the energy in the reservoir that’s bringing the oil to the surface is going away. So you got, you’re decreasing the gas which is a bad thing because that says that your energy is going down and you’re increasing the water. Which
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