U.S. oil industry 2020 and beyond

[BillKidd + 139]

Ok, ye smart guys. The oil biz in the USA is now mostly shale oil/gas. Vertical drilling by independents (or anyone) seems to have disappeared. Probably down 90%+ anyway. So, if shale is it, hmmm. The SEC financial reports show that these companies were not making money; we all know it was due to OPM, Wall Street, mostly. So, if they couldn't make money before, how the heck are you going to make money at $20? Even $40? There's debate about what the number is. $60? $70?

COULD the USA give the finger to Saudi Arabia? How could that shake down? Don't we need heavier crude to blend with our light crude? Could we get it from Mexico and Canada? Why NOT tell the Saudis goodbye? What the heck is there to like about them?

Trying to envision how the U.S. oilbiz could make it out of this. I've read some say the majors will come in and swoop up the shale rock when there is blood in the street, and, supposedly, they can make money at a much lower crude price. Or... could the shale industry survive but with just far fewer players? And the price is going to need to be $50, $60, $70?

Sure hope for responses as to how to realistically see a future for the business. Especially now with the possibility of a depression staring us in the face.

[Gerry Maddoux + 3,627]

I wouldn't count myself as one of the "smart guys," but you raise a lot of very interesting questions that are hard for a guy like me to ignore.

1) Yes, the oil biz in the USA is mostly shale, as is the NG. And you're right about vertical drilling though if I were a young man I'd drill into the marl between the Austin Chalk and the Buda Shale and try to do it for <$500,000 a well. I'll bet that would make some money. Going deeper into the Red River formation in the Williston Basin would yield more oil but cost more to drill. 

2) The break-even cost for drilling and completing shale wells depends entirely on the spacing and the completion techniques--not so much the thickness of the shale. And if you spread out, drill about six wells on a 1280-acre spacing, generate your own electricity from well gas, pipe in and pipe out, that cost is about $40/barrel, providing you are strong enough to reserve space in a pipeline to offload your NG. 

3) The USA could and should give the finger to Saudi Arabia. That would be applauded everywhere but in the Chevron, Oxy, Exxon boardrooms. 

4) Yes, we do need heavy crude to mix with the LTO, but we could get that from Canada (Western Canadian Blend) or Mexico (Maya). It would even be in our favor to help the Canadians and Mexicans understand our needs more precisely, and help them with their production until we have a mutually beneficial flow. Then we could tell the Saudis goodbye, wish them well, and tell them to take cover, haha, might be some incoming. There is absolutely nothing to like about them, unless your name is James Regan (whom I've come to like, oddly).

5) There are 6,000 shale producers. About 4,000 of them are doomed. That still leaves a lot of smart, small producers and they're the ones with the most loyal workers. We should support them with everything at our disposal because they are the backbone of America.

6) It has been my lifelong experience that oil and gas companies hire can-do people with a good attitude. I've seen them stop and help change a tire, or carry part of a casket housing someone from whom they've leased property, or help out with a contribution toward a hospital wing. All America has to do is help the oil business survive and the workers in the oilfield will help America survive. When I was a 16-year-old shavetail kid who looked gay in the fifties, the workers on a rig watched how hard I worked and then threw in behind me. They protected me. They worried when my dog got sick. Then my mother. The bias that oil and gas in America is evil is far off-kilter. Shale was a weird way of getting oil out of the ground but it staved off the predatory instincts of the Saudis. So yes, we should shoot them both middle fingers, slap a big tariff on Saudi oil, support the people who have always supported America, and rebuild this thing. This may be more rah-rah than you wanted and less specific but it's my belief from the heart. 

[ceo_energemsier + 1,818]

3 hours ago, BillKidd said:

Ok, ye smart guys. The oil biz in the USA is now mostly shale oil/gas. Vertical drilling by independents (or anyone) seems to have disappeared. Probably down 90%+ anyway. So, if shale is it, hmmm. The SEC financial reports show that these companies were not making money; we all know it was due to OPM, Wall Street, mostly. So, if they couldn't make money before, how the heck are you going to make money at $20? Even $40? There's debate about what the number is. $60? $70?

COULD the USA give the finger to Saudi Arabia? How could that shake down? Don't we need heavier crude to blend with our light crude? Could we get it from Mexico and Canada? Why NOT tell the Saudis goodbye? What the heck is there to like about them?

Trying to envision how the U.S. oilbiz could make it out of this. I've read some say the majors will come in and swoop up the shale rock when there is blood in the street, and, supposedly, they can make money at a much lower crude price. Or... could the shale industry survive but with just far fewer players? And the price is going to need to be $50, $60, $70?

Sure hope for responses as to how to realistically see a future for the business. Especially now with the possibility of a depression staring us in the face.

 

There is a lot of non shale US production -- Gulf of Mexico, shallow, deep and ultra deep water and more production will be coming online. The non US shale onshore production is over 10%. There are also hundreds if not thousands of conventional oil and gas fields (oil reservoirs) in the US that are overlooked and bypassed and can be acquired and developed at lower costs and applying new techs to these conventional fields will add a lot of recoverable reserves to the US oil industry. 

Vertical drilling hasnt disappeared , now horizontal drilling is added to vertical drilling for shale and also non shale.

The US can give the finger to KSA and we can go along without their oil and we dont have to import heavy crude (by heavy I am referring to light sour crude ranging from 25-34 API and sulphur from 1.2%-3%) into the US for blending .

What a lot of people dont know is that the US still has a lot of sour light ot sour medium or heavy crude being produced onshore and offshore.

Majors can come in and pick up the skeletons of indie shale players and can make profit on that and also private equity is taking a back seat to jump in when there is a lot of blood in the water and that will lead to a feeding frenzy.

Vertical conventional oil production in the US has a huge potential and can be another game changer and add a massive amount to the US daily production when the market conditions are right and the companies that go into these conventional fields start using better and newer techs to find the oil and gas and use a wide range of tech from drilling to completions and lift systems.

You have states like IL, NM, CO, TX, LA, WV, PA that has massive conventional reserves that cna be developed at lower costs but we dont need companies or rather people walking around with a water stick to find oil or use a rooster or their dog to sniff out oil. LOL

 

 

[ceo_energemsier + 1,818]

2 hours ago, Gerry Maddoux said:

I wouldn't count myself as one of the "smart guys," but you raise a lot of very interesting questions that are hard for a guy like me to ignore.

1) Yes, the oil biz in the USA is mostly shale, as is the NG. And you're right about vertical drilling though if I were a young man I'd drill into the marl between the Austin Chalk and the Buda Shale and try to do it for <$500,000 a well. I'll bet that would make some money. Going deeper into the Red River formation in the Williston Basin would yield more oil but cost more to drill. 

2) The break-even cost for drilling and completing shale wells depends entirely on the spacing and the completion techniques--not so much the thickness of the shale. And if you spread out, drill about six wells on a 1280-acre spacing, generate your own electricity from well gas, pipe in and pipe out, that cost is about $40/barrel, providing you are strong enough to reserve space in a pipeline to offload your NG. 

3) The USA could and should give the finger to Saudi Arabia. That would be applauded everywhere but in the Chevron, Oxy, Exxon boardrooms. 

4) Yes, we do need heavy crude to mix with the LTO, but we could get that from Canada (Western Canadian Blend) or Mexico (Maya). It would even be in our favor to help the Canadians and Mexicans understand our needs more precisely, and help them with their production until we have a mutually beneficial flow. Then we could tell the Saudis goodbye, wish them well, and tell them to take cover, haha, might be some incoming. There is absolutely nothing to like about them, unless your name is James Regan (whom I've come to like, oddly).

5) There are 6,000 shale producers. About 4,000 of them are doomed. That still leaves a lot of smart, small producers and they're the ones with the most loyal workers. We should support them with everything at our disposal because they are the backbone of America.

6) It has been my lifelong experience that oil and gas companies hire can-do people with a good attitude. I've seen them stop and help change a tire, or carry part of a casket housing someone from whom they've leased property, or help out with a contribution toward a hospital wing. All America has to do is help the oil business survive and the workers in the oilfield will help America survive. When I was a 16-year-old shavetail kid who looked gay in the fifties, the workers on a rig watched how hard I worked and then threw in behind me. They protected me. They worried when my dog got sick. Then my mother. The bias that oil and gas in America is evil is far off-kilter. Shale was a weird way of getting oil out of the ground but it staved off the predatory instincts of the Saudis. So yes, we should shoot them both middle fingers, slap a big tariff on Saudi oil, support the people who have always supported America, and rebuild this thing. This may be more rah-rah than you wanted and less specific but it's my belief from the heart. 

 

Mexico's oil industry is in systemic rot and with corruption nothing is going to improve for a long long time , if ever. Just like how Venezuela's oil industry is dead , Mexico us headed that way fast. Their crude production decline is massive and they cant seem to stem it and I doubt they will anytime soon that will be meaningful to the US.

 

The US companies should look into developing US sour crude production so we dont have to use it for blending with shale crude.

Another thing is US refiners like XOM and others have upgraded and expanded many refineries to run on shale crude, in addition to the slew of petchem plants and new ones that will come online are using shale feedstocks.

As with this pandemic, all the medical equipment , supplies PPE are made from petchem which use crude and natgas and condensate and NGLs as feedstock.

[James Regan + 1,776]

How would Israel play into this big finger to KSA, the Kingdom would be at the mercy of the Evil Empire across the straights and their proxies  and this would also leave the Jewish people high and dry considering the following which is only a portion of why the USS Golan Heights is still anchored and ready for action.

With the Christian Right, with tens of millions of followers and a major base of support for the Republican Party, has thrown its immense media and political clout in support for the Jewish State and its right wing base (Ironic). Based in part on a messianic theology that sees the ingathering of Jews to the Holy Land as a precursor for the second coming of Christ, the battle between Israelis and Palestinians is, in their eyes, simply a continuation of the battle between the Israelites and the Philistines, with "God in the role of a cosmic real estate agent" who has deemed that the land belongs to Israel alone–secular notions regarding international law and the right of self-determination notwithstanding.

The arms industry, which contributes five times more money to congressional campaigns and lobbying efforts than AIPAC and other pro-Israel groups, has considerable stake in supporting massive arms shipments to Israel and other Middle Eastern allies of the United States. It is far easier, for example, for a member of Congress to challenge a $60 million arms deal to Indonesia, for example, than the more than $2 billion of arms to Israel, particularly when so many congressional districts include factories that produce such military hardware.

The widespread racism toward Arabs and Muslims so prevalent in American society, often perpetuated in the media. This is compounded by the identification many Americans have with Zionism in the Middle East as a reflection of its own historic experience as pioneers in North America, building a nation based upon noble, idealistic values while simultaneously suppressing and expelling the indigenous population.

How would this fit into the republican agenda in this year of election, bit more to this than just telling the the camel jockeys to GFTs....

Edited April 14, 2020 by James Regan

[Gregory Purcell + 94]

8 minutes ago, James Regan said:

How would Israel play into this big finger to KSA

Ultimately all those Israelis would need to flee to Europe and New York City.    Israel needs the Shia and Sunni Muslims at each others throats.  Saudi Arabia spends many many billions promoting terrorist ideology which says Shia are subhuman heretics.  It is really the age old divide and conquer strategy of Empire. 

We most likely  will not give the middle finger to KSA (although they might collapses anyway)  because we fear a united Iran, Iraq, Syria, Jordan and Lebanon.   If KSA goes into anarchy, the 30% of the population who are Shia  live over the oil patch, those guys are use to living without air conditioning, in horrible poverty and doing work,   and the other Gulf Kingdoms go up in flames as well,  then we have no military base in the Middle East. 

   

[ronwagn + 6,290]

8 hours ago, BillKidd said:

Ok, ye smart guys. The oil biz in the USA is now mostly shale oil/gas. Vertical drilling by independents (or anyone) seems to have disappeared. Probably down 90%+ anyway. So, if shale is it, hmmm. The SEC financial reports show that these companies were not making money; we all know it was due to OPM, Wall Street, mostly. So, if they couldn't make money before, how the heck are you going to make money at $20? Even $40? There's debate about what the number is. $60? $70?

COULD the USA give the finger to Saudi Arabia? How could that shake down? Don't we need heavier crude to blend with our light crude? Could we get it from Mexico and Canada? Why NOT tell the Saudis goodbye? What the heck is there to like about them?

Trying to envision how the U.S. oilbiz could make it out of this. I've read some say the majors will come in and swoop up the shale rock when there is blood in the street, and, supposedly, they can make money at a much lower crude price. Or... could the shale industry survive but with just far fewer players? And the price is going to need to be $50, $60, $70?

Sure hope for responses as to how to realistically see a future for the business. Especially now with the possibility of a depression staring us in the face.

It seems very crass and unfeeling but our refineries will get all the crude oil they want one way or another. What profit needs to be made will be made along the way to the gas pumps. Governments will get the majority of the money listed on the pump. That is the future I see for gasoline and diesel. It is about the same way the natural gas business has been running for years. If you think I am wrong, please tell me how and when. Will we let our emergency supplies dwindle to nothing? I don't think so. 

[Douglas Buckland + 6,308]

Perhaps I am reading the early posts wrong, but I keep seeing ‘vertical drilling’ being associated with conventional oil, and ‘horizontal drilling’ being associated with shale oil.

I can guarantee you that conventional operators were drilling horizontal wells long before the first shale oil well was spudded.

[ronwagn + 6,290]

3 hours ago, James Regan said:

How would Israel play into this big finger to KSA, the Kingdom would be at the mercy of the Evil Empire across the straights and their proxies  and this would also leave the Jewish people high and dry considering the following which is only a portion of why the USS Golan Heights is still anchored and ready for action.

With the Christian Right, with tens of millions of followers and a major base of support for the Republican Party, has thrown its immense media and political clout in support for the Jewish State and its right wing base (Ironic). Based in part on a messianic theology that sees the ingathering of Jews to the Holy Land as a precursor for the second coming of Christ, the battle between Israelis and Palestinians is, in their eyes, simply a continuation of the battle between the Israelites and the Philistines, with "God in the role of a cosmic real estate agent" who has deemed that the land belongs to Israel alone–secular notions regarding international law and the right of self-determination notwithstanding.

The arms industry, which contributes five times more money to congressional campaigns and lobbying efforts than AIPAC and other pro-Israel groups, has considerable stake in supporting massive arms shipments to Israel and other Middle Eastern allies of the United States. It is far easier, for example, for a member of Congress to challenge a $60 million arms deal to Indonesia, for example, than the more than $2 billion of arms to Israel, particularly when so many congressional districts include factories that produce such military hardware.

The widespread racism toward Arabs and Muslims so prevalent in American society, often perpetuated in the media. This is compounded by the identification many Americans have with Zionism in the Middle East as a reflection of its own historic experience as pioneers in North America, building a nation based upon noble, idealistic values while simultaneously suppressing and expelling the indigenous population.

How would this fit into the republican agenda in this year of election, bit more to this than just telling the the camel jockeys to GFTs....

https://www.arabnews.com/node/1108121/saudi-arabia Poll of feelings regarding Trump in Saudi Arabia and Saudis by Americans. 

https://www.vox.com/2020/1/6/21050019/saudi-arabia-poll-unpopular