USGS Announces Largest Continuous Oil Assessment in Texas and New Mexico

[ceo_energemsier + 1,818]

On 12/10/2018 at 11:50 AM, Bhimsen Pachawry said:

 

 

 

 

You all are missing a big point here- Petroleum has no price. It is a natural resource and can't be assigned a price. It is critical to function industrial economy. USA consumed 20.7MBPD oil and it has no choice but to get it somewhere. Whatever loss the shale oil companies undergo is much less than the loss to the economy if the oil is not produced. Hence, govt is willing to subsidise the shale production to ensure that shale oil production is kept going.

About why USA is producing that heavily relies on the political reason behind it. USA used to import oil from Arab countries who sided with USA in 1970s and agreed for petrodollar arrangement, thus making USA world power and allowing USA to buy oil by simply printing dollars. In return, USA agreed to protect Arab countries, sell weapons and "spread Islam" while ensuring that Arab countries are made defacto leaders of Islam. The USSR which was atheist had deislamised lot of regions like Tajikistan, Kazakhstan, Turkmenistan etc and were expanding. This alarmed the Arabs and the alliance with USA was forged. USSR was taken down by Arabs pumping oil in record volume since 1985, thus bringing down USSR economy and simultaneously waging wars on multiple fronts.

But recently, the Arabs realised that USA was taking advantage of its dollars and misusing its powers to steal Arab oil. The movements like Arab Spring sponsored by USA enraged Arabs. Iraq invasion was also despised as an attempt to steal Arab oil. The high current account deficit of USA and arbitrary printing of dollars made the value of dollar diminish. So, they threatened USA that they will withdraw from petrodollars if USA buys oil using the dollar it prints. So, USA is forced to be independent in oil needs and is not able to import it except from countries which are politically close to USA like Canada which is considered as countries under USA sphere of influence.

The USA oil production is a measure of desperation rather than based on so called "free market"

"Stealing Arab Oil"

Well I guess we should look @ every swimming pool in the US to find all the "Arab Oil" that the Americans stole. And where are all those other billions of barrels of "Arab Oil" stolen by the US? where are those storage tanks?

There is a political aspect of wold oil trade and energy politics but the US shale revolution has lot more to do with engineering, technology and the American Dream to be doing something better for one's own gains and for others benefits as well.

If striving to be better in using resources and being better in achieving an over all  better lifestyle and a high quality and high standard of life is being "desperate" then humans have been desperate for eons. Having better medical care, better education, better health and life expectancy and the hi-tech life that just about everyone wants is desperate?

[Dan Warnick + 6,100]

Wall street thinks/thought they could get into the oil business by loaning the big bucks, and even the small bucks through smaller regional banks, and then manipulate the price of oil ever higher through their media arms and their various domestic and international bought and paid for "client base".  They are now into the shale operations for 10's (100's??) of Billions of $$ and failure is not an option; they have to keep going as long as they can until they either make profits from high prices or until they lose it all.  Foolish long term thinking by Wall Street, as usual, since they seem to only be capable of going after short to medium term bucks on their best days.

[ceo_energemsier + 1,818]

5 minutes ago, Dan Warnick said:

Wall street thinks/thought they could get into the oil business by loaning the big bucks, and even the small bucks through smaller regional banks, and then manipulate the price of oil ever higher through their media arms and their various domestic and international bought and paid for "client base".  They are now into the shale operations for 10's (100's??) of Billions of $$ and failure is not an option; they have to keep going as long as they can until they either make profits from high prices or until they lose it all.  Foolish long term thinking by Wall Street, as usual, since they seem to only be capable of going after short to medium term bucks on their best days.

Wall Street will go into any "legal" business they think they can make $$$. They fund shale operators/producers and then protect their own skin by hedges, puts and collars and other "financial schemes" . They will go long or short on the futures while they fund ground operations for shale companies, covering their risks from just about every angle. The bigger player and investors in the shale industry have been major foreign NOC's and OC's and private equity investors, some of those have lost a lot of money signing up JV equity deals in the 1st shale boom phase with companies like Chesapeake. They were paying extremely outrageous prices for unproved lands.

[ceo_energemsier + 1,818]

On 12/11/2018 at 1:59 PM, ceo_energemsier said:

https://www.bloombergquint.com/business/conoco-sees-u-s-shale-growth-at-25-in-2019-even-as-oil-slides

 

 

I see a lot of people putting down shale and the value of shale resources, yet the production keeps on going up month to month year over year. Yes there are debt issues, decline issues, pricing issues. I also take exception to statements made by CEO's and execs of shale companies such as " our breakeven is 2$/bbl". I think it was Pioneer exec who made that statement. I could be wrong but that was a couple of years ago. That was an "ENRON-esque" statement made by using "ENRON-esque" accounting playbook.

The fundamentals to a successful shale company operation lie in the facts that, using the best geotechnical suite of technologies to find the highest quality rocks, not paying "high prices" per acre (10,000$-100,000$/ acres) and not leasing land that doesnt provide high quality rocks under the surface, the key word is leasing STRATEGICALLY , keep costs down using every bit of technology and business procedure, management, operations controls; having a funding source and base that keeps debt down while having the freedom to operate and produce a sustainable long term production profile, keeping up with production declines (one of the best way to do is drill and complete in spots that have the highest and best accumulations of hydrocarbons and those spots keep "sourcing" "replacing" produced hydrocarbons, basically in excellent, best, better, good drainage spots). We will have boom and bust cycles , only the fittest survive.

We have seen hundreds of companies formed during the boom cycle of shale and hundreds go bust because they had the wrong business model and outlook and they thought they would hit a gusher or two and that will be their golden moment. I have heard a lot of people over the years and still keep on hearing from people, "oh my lease or my minerals" are x miles from  X company's well that came in @ 3000bpd .

Lot of things change under the surface in X miles in any direction. You can hit a gusher that is sustainable and produces 3,000bpd over a long time frame with low decline rates, you can hit a gusher that can have an IP of 8,000bpd for 120 days and declines after that down to 500bpd and keeps declining. You can hit a dry well. All these can be within 100ft of each other.

The technology to unlock the secrets of the quality of the rocks is key, right GEOLOGY and the right suite of technologies to where to drill and how to drill and complete!

 

 

Correction it wasnt the CEO of Pioneer , it was the CEO of APACHE making statements re. their Permian laterals costs

[NWMan + 89]

Obviously no one supported Saddams invasion of Kuwait.  The comment referred to Saddam being removed which happen after the UN oil for food programme  The Euro was a currency and Saddam was selling oil in Euros when the subject or regime change was developed.  The invasion of Iraq was based on its immanent treat to the UK and the world with weapons of mass destruction and this invasion did not have UN approval.

Any way that's a different subject - it still remains that when you are producing oil you are supposed to be in a spot, sweet enough to at least break even.  There a lots of location in the world were you can find and produce oil at a loss.  It is only American oil shale that does this and Bhinsen is the only person to come up with a viable explanation.

[John Foote + 1,135]

3 hours ago, NWMan said:

The invasion of Iraq was based on its immanent threat to the UK and the world with weapons of mass destruction

Any way that's a different subject - it still remains that when you are producing oil you are supposed to be in a spot, sweet enough to at least break even. 

The invasion was sold to the public one way, but that was a lie, has been proven to be lie, and clearly the entire thing has worked out poorly. Saddam couldn't have fought his way out of a wet paper bag. Kills his civilians, yeah, not take on a force of any significance. Unfortunately one of the few remaining believers in the invation, Bolton, is again in a position of influence.

As for making money when you produce oil, you need to shed a western business thought process when thinking what KSA, Iraq, Kuwait, etc., do. From a CAPEX/lift cost perspective, the region is wildly profitable, and $25 a barrel isn't an issue. It droves me nuts in the region, seeing billions wasted, but much of it was practically intentionally wasted, part of the wealth redistribution process which preserves alliances, and make no bones about it, you have to have wealth redistribution in an extraction economy. Just having people work productively won't do the job, because the nature of oil and gas is only going to employ a few. It becomes obvious two thirds of the work force is social ballast. It's a reason for the mega project fetish, create work. The profits generated by selling oil (and gas) is what funds the country. So over time as the largess, expectations, and population expands, the amount required from a barrel of oil increases. And pretty soon, yup, they need $85 a barrel. But not for production costs reasons. 

[ceo_energemsier + 1,818]

6 minutes ago, John Foote said:

The invasion was sold to the public one way, but that was a lie, has been proven to be lie, and clearly the entire thing has worked out poorly. Saddam couldn't have fought his way out of a wet paper bag. Kills his civilians, yeah, not take on a force of any significance. Unfortunately one of the few remaining believers in the invation, Bolton, is again in a position of influence.

As for making money when you produce oil, you need to shed a western business thought process when thinking what KSA, Iraq, Kuwait, etc., do. From a CAPEX/lift cost perspective, the region is wildly profitable, and $25 a barrel isn't an issue. It droves me nuts in the region, seeing billions wasted, but much of it was practically intentionally wasted, part of the wealth redistribution process which preserves alliances, and make no bones about it, you have to have wealth redistribution in an extraction economy. Just having people work productively won't do the job, because the nature of oil and gas is only going to employ a few. It becomes obvious two thirds of the work force is social ballast. It's a reason for the mega project fetish, create work. The profits generated by selling oil (and gas) is what funds the country. So over time as the largess, expectations, and population expands, the amount required from a barrel of oil increases. And pretty soon, yup, they need $85 a barrel. But not for production costs reasons. 

Breakeven prices and costs of production in the Gulf region is lot lower comparatively to other areas because of geology and the contiguous nature of that sub surface rock geology. Yes to these GOVS., the key is to keep their Govs running and in the "Palace" and their 'subjects' happy/subjugated through the huge number of industry jobs, socially directed petro$ funded programs , low cost energy and fuels, lots of food and shiny objects. And in a way, it does preserve a form of stability otherwise the chaos......mayhem, bloodshed and what not as we have seen in places

[rblinkenhoger 0]

The Cimarex Vagrant 38 A 3H Wolfcamp well has done over 860,000 barrels of oil and over 6,000,000 mcf in little over a year and a half. I think that the report is real and profitable at the same time!

[ceo_energemsier + 1,818]

Exxon Becomes Top Permian Driller to Combat Falling Oil Output

• Kevin Crowley

December 17 2018, 2:17 PMDecember 18 2018, 9:38 AM

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(Bloomberg) -- Exxon Mobil Corp. has overtaken rivals to become the most active driller in the Permian Basin, showing the urgency with which the world’s biggest oil company by market value is pursuing U.S. shale.

After a slow start in the West Texas and New Mexico basin, Exxon is now operating more drilling rigs than Concho Resources Inc., which merged with RSP Permian Inc. earlier this year to create one of the biggest Permian-focused explorers, according to statistics from RigData Inc. supplied to Bloomberg Intelligence.

It’s not hard to see why the Permian has become so important to Exxon. A series of strategic mistakes sent the oil giant’s overall production careening to a 10-year low by the middle of this year. Drilling wells in the the Permian, the world’s premier shale field, yields low-cost oil in months rather than the years required for megaprojects to begin producing crude.

“They need to get the production and returns back up, and the Permian is where you can ramp up the fastest,” said Fernando Valle, a New York-based analyst at Bloomberg Intelligence.

Exxon isn’t alone in tapping U.S. shale after years of pursuing overseas resources. Chevron Corp. will spend the highest portion of its capital budget at home in at least a decade. The Permian now accounts for about 10 percent of Chevron’s overall production.

BP Plc this year agreed to spend $10.5 billion on BHP Billiton Ltd.’s shale assets to gain access to the Permian while Royal Dutch Shell Plc is mulling a bid for one of the basin’s largest private companies, people familiar with the matter said Monday.

Growth Engine

For Exxon, the Permian is still small when placed in the context of its global reach. In the third quarter of this year it produced just a fraction of the oil titan’s total production. But CEO Darren Woods expects strong growth each year through 2025. By then, he’s targeting as much as 800,000 barrels a day from the Permian and the Bakken in North Dakota, which would be about 20 percent of today’s overall production.

Exxon’s escalation in the Permian is essentially a bet that Exxon can drill wells so cheaply that they’ll be profitable despite crude’s 37 percent decline since early October. The company says its shale wells can make double-digit returns with oil at just $35 a barrel. West Texas Intermediate traded at $48.55 a barrel at 9:54 a.m. Tuesday.

“The business we build in the Permian, we’re building for the long term,” Woods said in a Bloomberg TV interview last month. “It needs to be efficient, low cost and effective.”

©2018 Bloomberg L.P.

[ceo_energemsier + 1,818]

Dec 17 (Reuters) - Oil production from seven major U.S. shale basins is expected to surpass 8 million barrels per day (bpd) by the end of the year, the U.S. Energy Information Administration said in a monthly report on Monday.

The United States has surpassed Russia and Saudi Arabia as the world’s biggest oil producer, with overall crude production climbing to a weekly record of 11.7 million bpd.

When December ends, shale production is expected to climb to 8.03 million bpd for the first time on record and forecast to rise by about 134,000 barrels per day (bpd) in January to 8.17 million bpd.

 

The largest change for January is in the Permian Basin of Texas and New Mexico, where output is expected to climb by 73,000 bpd to a record of about 3.8 million bpd in January.

In North Dakota’s Bakken region, shale production is estimated to rise by 18,000 bpd to a record 1.46 million barrels per day.

U.S. natural gas production, meanwhile, was projected to increase to a record 76.9 billion cubic feet per day (bcfd) in January. That would be up more than 1.1 bcfd over the December forecast and would be the 12th monthly increase in a row.

A year ago in January output was 62.8 bcfd.

 

The EIA forecast gas output would increase in all the big shale basins in January.

Output in the Appalachia region, the biggest shale gas play, was set to rise 0.4 bcfd to a record 31.5 bcfd in January. Production in Appalachia was 26.4 bcfd in the same month a year ago. (Reporting by Devika Krishna Kumar and David Gaffen in New York; editing by Jeffrey Benkoe and Grant McCool)

[ceo_energemsier + 1,818]

https://finance.yahoo.com/news/exxon-becomes-top-permian-driller-211710483.html

[ceo_energemsier + 1,818]

UT: Technically recoverable natural gas from future US shale wells on rise

HOUSTON, Dec. 17

A new analysis of the nation’s major shale gas plays shows 20% more natural gas can be technically recovered from future wells compared with an estimate made 5 years ago. Researchers primarily attributed the increase to new drilling practices.

The analysis by the University of Texas at Austin’s Bureau of Economic Geology examined production capabilities and estimated total gas in the Barnett, Fayetteville, Haynesville, and Marcellus plays. The study updated 2011-13 findings.

Svetlana Ikonnikova, the principal investigator of the study and a research scientist at the bureau, said that developments in drilling technologies, market conditions, cost structures. and improvement in geological characterization prompted the updated assessment.

“Five years ago, we hardly thought of multilayer or stacked well drilling, or of quadrupling lateral well length,” she said. The team used 3D modeling and advanced data analytics to enhance the understanding of:

• Geologic reservoir characterization.
• Individual well decline and recovery analysis.
• Individual well geology and engineering improvements that increase productivity.
• Economically recoverable resource assessment.

Researchers found future wells in the four shale gas plays can technically recover about 780 tcf of gas in addition to 110 tcf already recovered by wells drilled by Dec. 31, 2017. The previous study found 650 tcf of technically recoverable gas.

Based on US gas consumption of 27 tcf in 2017, the new estimate suggests the addition of about 5 years of domestic consumption.

The projected increase comes largely from new drilling practices that increase recovery, reduce per-unit cost, and allow companies to continue drilling even during periods of low oil or natural gas prices.

New methods include stacked drilling, drilling wells closer together, and horizontal wells that can run for about 2 miles.

http://www.beg.utexas.edu/research/programs/shale

[Dan Warnick + 6,100]

Thanks for that information barrage, @ceo_energemsier.  A number of moves by the big boys that I expected and a few that I didn't; which is usually the case.  What is the main impact, if there is one, to the total or overall message of the articles you shared?

[ceo_energemsier + 1,818]

6 minutes ago, Dan Warnick said:

Thanks for that information barrage, @ceo_energemsier.  A number of moves by the big boys that I expected and a few that I didn't; which is usually the case.  What is the main impact, if there is one, to the total or overall message of the articles you shared?

Bottom line is the yield from wells.... keep improving with new developments and technologies. The skepticism of some about shale and how it cannot be sustainable... to be sustainable every shale prospect has to be put through an extreme vetting process, not the wholesale buying up of acreage paying top $$$ and then applying existing and new and emerging/evolving technologies to tier map (sweetest, sweeter, sweet) spots of hydrocarbons and using and applying all available and up coming breakthrough techs to drill , complete and produce, getting the maximum results possible while lowering the costs at every stage. The Big Oil coming into the Permian shows that they are willing to take the risks and seek the rewards.

[Dan Warnick + 6,100]

31 minutes ago, ceo_energemsier said:

Bottom line is the yield from wells.... keep improving with new developments and technologies. The skepticism of some about shale and how it cannot be sustainable... to be sustainable every shale prospect has to be put through an extreme vetting process, not the wholesale buying up of acreage paying top $$$ and then applying existing and new and emerging/evolving technologies to tier map (sweetest, sweeter, sweet) spots of hydrocarbons and using and applying all available and up coming breakthrough techs to drill , complete and produce, getting the maximum results possible while lowering the costs at every stage. The Big Oil coming into the Permian shows that they are willing to take the risks and seek the rewards.

Excellent!

[Mike Shellman + 548]

Productivity is clearly declining, not improving, in all three of America's shale oil basins. A host of realized production data sources proves this, none better than shaleprofile.com. The 'we can always rely on better technology stuff' as to  shale oil is getting old and worn out. Service providers in all basins are losing their shirts; how much longer they can, or are willing to keep costs down is questionable. At the moment the Permian is netting less than $40 per BO and the Bakken less than $30. Take home pay per BO after ALL costs are deducted does NOT support even 700K BO EUR's and very, very few shale oil wells in America will ever produce that. Debt maturities are looming and interest rates are going up, not down. Very few pure shale players generated FCF 3Q18 when WTI Cushing was $70. Exxon and Chevron are digging in out in W. Texas because they can't find anything anywhere else (Guyana the exception). Why will those big companies have better economic results than independents? They won't. Give that a year and lets look at 2019K's.

The reserve growth over profit business model the shale oil industry embraces has failed, miserably. As the industry oversupplies the world oil market, prices go down. Assets that could be recovered at $75 oil will soon require impairment because of a 40% decline in product prices and a lot of that "growth" will be wiped off the books. Or should be wiped out under SEC rules and ethical standards.

Economics and the current financial state of US shale oil producers warrants skepticism. Unless, of course, one thinks shale oil grows on trees and the money it requires to extract the stuff does as well.

 

 

 

 

 

Edited December 19, 2018 by Mike Shellman

[Dan Warnick + 6,100]

22 minutes ago, Mike Shellman said:

Productivity is clearly declining, not improving, in all three of America's shale oil basins. A host or realized production data sources proves this, none better than shaleprofile.com. The 'we can always rely on better technology stuff' as to how it applies to shale oil is getting old and worn out. Service providers in all basins are losing their shirts; how much longer they can, or are willing to keep costs down is questionable. At the moment the Permian is netting less than $40 per BO and the Bakken less than $30. Take home pay per BO after ALL costs are deducted does NOT support even 700K BO EUR's. Debt maturities are looming and interest rates are going up, not down. Very few pure shale players generated FCF 3Q18 when WTI Cushing was $70. Exxon and Chevron are digging in out in W. Texas because they can't find anything anywhere else (Guyana the exception). Why will those big companies have better economic results than independents? They won't. Give that a year and lets look at 2019K's.

Economics and the current financial state of US shale oil producers warrants skepticism. Unless, of course, one thinks shale oil grows on trees and the money it requires to extract the stuff does as well.

 

I agree with what you say about debt maturities looming and interest rates going up.  These MUST be serious impediments to the future of shale production.  Next year may well be the crusher for Exxon and Chevron, especially Chevron I think because of the two I believe Chevron's debt is much higher and requires high priced oil to sustain their payments (more so with higher interest rates), let alone go poking around in the shale or anywhere else for that matter.  But my view is just from looking at their books; you guys are on the ground and have long term experience in these matters.  Keep talking, please.  We need the reality.