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Edited by JJCar
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Think of the scenario like this:  Hydraulic fracturing started to become more mainstream about 1993. Hydraulic fracturing is a secondary recovery method. We've been fracking as a regular part of the drilling program since 2009. That's 10 years we've been using secondary recovery methods.

All this time OPEC and Saudi Arabia have been pumping oil the standard first tier way, they are just now thinking about pairing directional drilling and hydraulic fracturing.

Now, as you have stated in numerous posts, the majors are taking over the Permian, mainly because they were smart and let the independents get the majority of the kinks out of directional and hydraulic fracturing. Unlike independents, the majors operate worldwide and have the cash built up to ride the ups and downs. Now they plan on swooping into the Permian, where they've owned, not leased, millions of acres and plan to take over. All good and fine.That may put us in the driver's seat for 7-10 years.

All this time technology will be getting cheaper and easier to acquire, just like the majors did with the technology from the Indies.

All this time we're plugging away, developing technology, making tech more accessible and cheaper and the Saudi's are still plugging away doing their own thing.

By the time they actually have to rely on newer technology, it will be dirt cheap and easily accessible. The three largest service companies in the world have been in Saudi Arabia for almost 2 decades and are itching to ply their cutting edge fracturing tech in Saudi Arabia.

The largest service company in the world and the leader in technology , Schlumberger,isn't even a US owned company.

You believe they won't go where the work is once the Red Queen runs her course here? Ha!

Like I said there will be a time when we may run the yard for a short period of time, but the Saudi's can wait and diversify. Just like the majors did.

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(edited)

I agree the Saud's and other Mideast OPEC Countries don't need to frac  now.  They can pump the very low cost conventional oil for years to come. It is believed Libya has more tight oil reserves than conventional. They have trouble keeping conventional field open.  Hopefully they can ramp up a couple more million barrels with BP's recent commitment. 

There is one exception. Poor little Bahrain. It has no conventional oil or gas and has had to depend on hand outs from Saudi Arabia to get by. . . . .  UNTIL RECENTLY !  One of the US service companies did some test drilling and found an estimated 80 Billion bbls of tight oil .  That's a lotta oil. They plan to start major production. 

BUT YOU MISS MY POINT.  

Demand will drop. When ? There are many different estimates.  Morgan Stanely said China oil demand will peak 2025.  Others say Electric Vehicle purchase inflection point is 2023 to 2024 ( gasoline vehicles are est 1/3 of oil 100 million bbls/day production . Even if EV's reduce oil consumption by 10% that is 3.3 million barrels a day decrease in demand.  

When now just 1 million bls/day over supply puts the market in a tizzy. Recent OPEC cut of 1.2 million bls ran prices up 30%.

Could Saudi's ramp up production and out produce US and others.  Sure.  Go ahead.  They did that in 2015, drove price down to $26 bbl and lost half their cash reserves ($450 Billion loss)

MY POINT I'M TRYING TO MAKE IS  The Saudi's ability to control the supply side of the equation is coming to an end

.  The King has no clothes

. The US export machine is coming. 

The SAUDI's CAN'T KEEP CUTTING PRODUCTION FOREVER.  

US and other new production will quickly fill any SAUDI's cuts in the very near future.  This is not a one dimensional market anymore.

IT ALL STARTS when the three pipelines come online. EPIC PIPELINE. end of this year and GREY OAKS and CACTUS II the first half of 2020.

 

Edited by JJCar
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