Will Uncle Sam Step Up and Cut Production

[J.mo + 165]

9 minutes ago, James Regan said:

The forecasts and the actuals are showing a plateau, will the plateau drop off?

The shale growth story has been a very seductive dialogue the past 15 or so years. Who can argue with a chart like this?

You really can’t. The proof is in the pudding as shale goes, and shale heretics have been made to sit in the corner with a pointy cap on their heads.

 

 

This year, for a variety of reasons, domestic production and shale growth in particular have hit a wall. The latest report from EIA shows a decline that breaks the upward trend line.

Interesting, what has happened for this bullish trend to be reversed?

Takeaway capacity MBS.

[James Regan + 1,776]

1 hour ago, BenFranklin'sSpectacles said:

I have a better idea: Uncle Sam can cut someone else's production.  Preferably someone who's oil passes through the Strait of Hormuz.  

SOH If cut both ways it’s not going to help Uncle Sam or the UK who have just capitulated and released the Grace 1 under a new flag and changed the name, today I’m embarrassed to be from the UK.

Surrender or capitulation are not even English words we stole them from the French after 1066 but apparently now we’re having to use these words.....😤

Edited August 18, 2019 by James Regan

[ronwagn + 6,290]

On 8/15/2019 at 6:56 AM, SKEP said:

Jamie

Read it again. ARAMCO IS TELLING THE TRUTH.  NO LIE.

The Saudis lie. OPEC lies, Oil Ministers lie. 

Answer me this .  Is MBS lying when he says he did not know about  the plan to cut Khashoggi into piece with a bone saw.  Is he living when he says he didn't approve the murder.

Can't wait to hear your answer.

Please tell.

Answer me this. We're Saudis lying when they said they said no Saudis financed 911 ?

Answer me this. We're Saudis lying when they say they did not flood market with oil to crush US production in '74, '84-'85, '98 -99, 2014-2015 ?

Remember as Senator Graham said, "Saudi Arabia wouldn't last 2 weeks without our (U.S.) support."

You say Saudi is U.S. friend.  No they are opportunist. 

 

They have always been for Saudi Arabia mainly the Royals themselves. Their future looks very bleak to me however. Oil prices will remain low. for quite awhile. The entire Middle East will be weakened even more than it is already. Russia is in the same position. 

[James Regan + 1,776]

20 minutes ago, ronwagn said:

They have always been for Saudi Arabia mainly the Royals themselves. Their future looks very bleak to me however. Oil prices will remain low. for quite awhile. The entire Middle East will be weakened even more than it is already. Russia is in the same position. 

KSA have heavily reduced exports to the USA and will be propping up China as their main supply chain in an attempt to completely derail Iran. They are in a bind and will do as required, as I’m told so much on this forum that I need to get on board with free trade. So it looks like KSA is doing exactly that I imagine to the disgust of Mr Trump.

But Trump can’t have it other ways, and it looks like his plan to strangle China on crude imports has backfired, MBS is just a little bit more cunning than Trump and being from a trible culture isn’t at all affected by  megalomaniacal threats.

KSA will do what they always do and will succeed to control the oil price regardless as to suit their  needs, yes they are ruthless but one thing is different from the Arabs they don’t normally make idle threats they act.

Lets ser what this week brings.

Respectfully

qad yakun klun min jamalik 'abtal

 

[ronwagn + 6,290]

1 minute ago, James Regan said:

KSA have heavily reduced exports to the USA and will be propping up China as their main supply chain in an attempt to completely derail Iran. They are in a bind and will do as required, as I’m told so much on this forum that I need to get on board with free trade. So it looks like KSA is doing exactly that I imagine to the disgust of Mr Trump.

But Trump can’t have it other ways, and it looks like his plan to strangle China on crude imports has backfired, MBS is just a little bit more cunning than Trump and being from a trible culture isn’t at all affected by  megalomaniacal threats.

KSA will do what they always do and will succeed to control the oil price regardless as to suit their  needs, yes they are ruthless but one thing is different from the Arabs they don’t normally make idle threats they act.

Lets ser what this week brings.

Respectfully

qad yakun klun min jamalik 'abtal

 

So, how does this help the price at which they sell their oil? 

I would rather see Saudi Arabia sell their oil than Iran. I am perfectly happy with America using its own oil and not exporting any. I would rather see us using our natural gas though, and exporting some. 

[Boat + 1,315]

The Permian in particular has stole market share from many in the Middle East. Remember the continued OPEC cuts? The sanctions against Iran and Venz can only be successful if there is oil to replace it.

All the banter about LTO seems kinda skewed as the miracle of increased production is alive and well. There were skeptics 5 years ago and skeptics now but completion crews jumped over 20 just last month. Expect production to keep jumping. Most folks don’t seem to track completions which seems like a better metric than say rig count. 

[Douglas Buckland + 6,308]

19 hours ago, DocManfred said:

Interesting chart, but I belive US shale won´t stop. Numeros mom and pop companies will declare chapter 11 in the coming months with lower O&G prices due to continuous overproduction in US.

Ownership will mostly change to IOCs. They have deeper pockets, stable balance sheets and can better steer the business through tough times in volatile markets by exploiting synergies. And they are used to deliver adequate returns to their shareholders. 

Hopefully the outcome will be a better adaption of US shale production to demand and allow for adequate prices which can pay-off investments for sustainable future O&G production.

How does the ownership passing from 'mom & pop' shops to IOC's really change the declining production scenario in the shale oil arena?

Yes, they have deeper pockets, but that does not mean they enjoy throwing good money after bad. Exploiting synergies...how so?

The problem with the shale oil game is the rock itself and the pressure regimes present in the rock. Regardless of your deep pockets or stable balance sheets, you are not going to change this!

The 'mom and pop' shops have already tried everything available technology-wise to try and turn a profit, to no avail. Keep in mind that they had access to borrowed money to afford the latest technology from the service companies - where these technologies are developed and fielded.

Perhaps the IOC's could drill even longer, incredibly expensive laterals, but this simply ramps up the initial production before the dismal decline curve hits...due to the lithology and pressure present.

[James Regan + 1,776]

9 hours ago, ronwagn said:

So, how does this help the price at which they sell their oil? 

I would rather see Saudi Arabia sell their oil than Iran. I am perfectly happy with America using its own oil and not exporting any. I would rather see us using our natural gas though, and exporting some. 

“With the export volume and destination reshuffle, the Saudis look to kill two birds with one stone. One goal is to reduce oil exports to the most transparently reported market, the U.S., for the shorter-term target to have global inventories drop to adequate average levels, rebalance the market, and consequently—hopefully for the Saudis—prop up oil prices.”

[ceo_energemsier + 1,818]

Texas well completions drop 12% through July

 

https://www.reuters.com/article/us-usa-oil-drilling/texas-well-completions-drop-12-through-july-idUSKCN1V61RO

[John Foote + 1,135]

18 hours ago, ronwagn said:

I would rather see Saudi Arabia sell their oil than Iran. 

A very common sentiment, but based on what? Who has done more to radicalize Islam and anti-west terrorism? 

I am quite against both the styles of governments both countries use. 

[ronwagn + 6,290]

9 hours ago, John Foote said:

A very common sentiment, but based on what? Who has done more to radicalize Islam and anti-west terrorism? 

I am quite against both the styles of governments both countries use. 

Saudi Arabia is not intent on destroying Israel and does not consider us an enemy, just a business competitor and military ally of sorts. 

I love the Iranian people, but their Mullahs are evil IMHO. The Saudi leaders are not beholden to them to my knowledge.

[Boat + 1,315]

20 hours ago, Douglas Buckland said:

How does the ownership passing from 'mom & pop' shops to IOC's really change the declining production scenario in the shale oil arena?

Yes, they have deeper pockets, but that does not mean they enjoy throwing good money after bad. Exploiting synergies...how so?

The problem with the shale oil game is the rock itself and the pressure regimes present in the rock. Regardless of your deep pockets or stable balance sheets, you are not going to change this!

The 'mom and pop' shops have already tried everything available technology-wise to try and turn a profit, to no avail. Keep in mind that they had access to borrowed money to afford the latest technology from the service companies - where these technologies are developed and fielded.

Perhaps the IOC's could drill even longer, incredibly expensive laterals, but this simply ramps up the initial production before the dismal decline curve hits...due to the lithology and pressure present.

Did you know in 2013 Permian wells averaged less than 100 barrels per day? Today that average is around 775. There are charts showing how every year the average is growing. Then the decline curve disinformation campaign. Lol Ultimate production blows away older wells. Don’t let those percentage clowns fool you. A lot more oil is produced initially and way more over the life of a well. I recommend the Drilling productivity report put out by the EIA. They show historical up to current data as a total and by play in cute little charts.

[Boat + 1,315]

11 hours ago, ceo_energemsier said:

Texas well completions drop 12% through July

 

https://www.reuters.com/article/us-usa-oil-drilling/texas-well-completions-drop-12-through-july-idUSKCN1V61RO

Interesting that the data differs in the EIA Drilling Productivity Report. The Permian shows completions with a 22 crew gain.

Edited August 20, 2019 by Boat

[Douglas Buckland + 6,308]

4 hours ago, Boat said:

Did you know in 2013 Permian wells averaged less than 100 barrels per day? Today that average is around 775. There are charts showing how every year the average is growing. Then the decline curve disinformation campaign. Lol Ultimate production blows away older wells. Don’t let those percentage clowns fool you. A lot more oil is produced initially and way more over the life of a well. I recommend the Drilling productivity report put out by the EIA. They show historical up to current data as a total and by play in cute little charts.

A). What 'decline curve disinformation campaign'? Either these wells suffer significant production declines after a couple of years or they don't. Are you saying that they do not?

B). Is the ultimate recovery based on the initial production or is it based taking into account the rapid production decline - if in fact this is a real phenomena?

[ceo_energemsier + 1,818]

https://www.reuters.com/article/us-usa-oil-drilling/texas-well-completions-drop-12-through-july-idUSKCN1V61RO

 

 

https://finance.yahoo.com/news/shale-bond-buyers-picky-more-175234083.html

 

https://www.abqjournal.com/1354833/nm-coffers-flush-with-cash-from-oil-boom.html

 

https://www.fool.com/investing/2019/08/17/us-rig-count-falling-oil-production-keeps-rising.aspx

 

[ceo_energemsier + 1,818]

https://finance.yahoo.com/news/freightwaves-oil-report-narrowing-brent-144709600.html

[John Foote + 1,135]

14 hours ago, ronwagn said:

I love the Iranian people, but their Mullahs are evil IMHO. The Saudi leaders are not beholden to them to my knowledge.

Saudi leaders are most definitely not beholden to any Iranian mullah. However the radicalized Islam that wants to end the west is not Shia, it's Sunni. Both want to claim leadership of Islam. You can go to church in Iran, you can't do that in KSA. The original oil embargo was KSA, Iran bailed us out, then Iran, KSA bailed us out, and now who cares, we got shale. Not quite so simple, but you get the picture. Neither are allies, but one has always had the political sense/cents to keep folks in the USA making money off them. But they are also far more indirectly responsible for dead Americans and our soldiers over there. We protect them from themselves.

[ronwagn + 6,290]

3 hours ago, John Foote said:

Saudi leaders are most definitely not beholden to any Iranian mullah. However the radicalized Islam that wants to end the west is not Shia, it's Sunni. Both want to claim leadership of Islam. You can go to church in Iran, you can't do that in KSA. The original oil embargo was KSA, Iran bailed us out, then Iran, KSA bailed us out, and now who cares, we got shale. Not quite so simple, but you get the picture. Neither are allies, but one has always had the political sense/cents to keep folks in the USA making money off them. But they are also far more indirectly responsible for dead Americans and our soldiers over there. We protect them from themselves.

I was referring to the Saudi equivalent of a mullah. 

[Tomasz + 1,608]

I will gladly read this forum in about 5 years when small reserves of shale oil with constantly growing production will eventually prove insufficient. I would like to point out to some fanatics of shale oil that its resources are much smaller than in the Middle East countries and OPEC must simply wait out the shale madness which will end or at least stop growing in a maximum of 5 years and then reach an increasing market share at satisfactory prices.

In the US there was a time of gold rush, currently there is a shale oil rush and in a few years time there will be a sober discussion why the last oil reserves were exported below real production costs only in order to become even more dependent on foreign oil imports in the future.

[Gerry Maddoux + 3,627]

Lots of good observations above. The central themes seem to be, let free markets determine the price of oil; tight oil is not a sustainable commodity; the Saudis haven't really cut production; conventional drilling and production is up. 

The one key element that seems to be missing from an adroit conversation is that oil has been for decades the Achilles Heel of the United States. We won the second war partially because we had oil and Germany didn't. For a long time, we had to mollycoddle Saudi Arabia so they'd keep us well supplied. If at any time they'd simply turned off the spigot, we've have been forced to commandeer enough to run our military in the event of concomitant war with a major power. During that vulnerable time, we kept the Strait of Hormuz open by virtue of our military might, pure and simple. Saudi Arabia didn't turn off the spigot because we protected them from catastrophic air strikes to their oil fields and egress passageways to world markets. It was a poor marriage, but like a lot of them it worked. 

And then McClendon, Ward, Hamm and others discovered how to get oil out of saturated tombstone rock. That was a very big deal because for the first time ever it weaned us off the Saudi Arabia teat. This occurred, let me remind us all, when production in the Gulf of Mexico was flagging very badly, and most conventional onshore fields were spent to the point of being brine pits. Tight oil gave the United States the badge of energy-independence for the first time since 1950.

And yes, offshore drilling and production is once again booming, and that's a good thing. And you're right, it may put shale out of business. But for right now, shale oil is still the gizmo that's keeping the United States energy-independent. At a time when an uneducated, hapless, ragtag Houthi can remotely fly a drone made in Iran over the Saudi collecting stations, and ultimately possibly even plug up the choke point at Bab el-Mandeb (bordering Yemen) or a well-trained Hezbollah militant is capable of shutting down the Strait of Hormuz (bordering Iran), if the tanker flow of oil couldn't be restored quickly we'd be in panic mode--our reserves aren't that great, the strategic reserve is a joke, and there are precious few places that could even begin to plug that deficit. The much ballyhooed Saudi pipeline can only handle about 20% of daily shipping, and then, when it's loaded onto a tanker, it would be vulnerable too. 

Want to see a major upheaval in the world? Try on that scenario: block those two outbound shipping lanes, each just two miles wide. See just how much spare capacity there is in this old world. I am a free-market advocate for most things; however, war has taught us that oil is much too important to merely let it be held captive to the ebb and flow of free markets. Blow all of our over-leveraged shale oil companies out of the market and we're once again held hostage to Saudi Arabia, and as the gentleman pointed out above, they hit us hard on 9/11. Not exactly the type of bedfellows I want to climb (back) in with. So while I don't have many answers, I feel strongly that Tom Kirkman is just about spot on in his Goldilocks price of $70 for a barrel of crude. Everyone lives. Even if the Iranian proxy forces manage to close off those two shipping lanes at one time. I'm going to get hit by a lot of darts, but if it takes a little governmental finagling to ensure our newfound independence, well, it's no better or worse than a tax cut for corporations, or a tariff on China, or talking up a tariff on German cars. Bring it on!

[James Regan + 1,776]

1 hour ago, Gerry Maddoux said:

Lots of good observations above. The central themes seem to be, let free markets determine the price of oil; tight oil is not a sustainable commodity; the Saudis haven't really cut production; conventional drilling and production is up. 

The one key element that seems to be missing from an adroit conversation is that oil has been for decades the Achilles Heel of the United States. We won the second war partially because we had oil and Germany didn't. For a long time, we had to mollycoddle Saudi Arabia so they'd keep us well supplied. If at any time they'd simply turned off the spigot, we've have been forced to commandeer enough to run our military in the event of concomitant war with a major power. During that vulnerable time, we kept the Strait of Hormuz open by virtue of our military might, pure and simple. Saudi Arabia didn't turn off the spigot because we protected them from catastrophic air strikes to their oil fields and egress passageways to world markets. It was a poor marriage, but like a lot of them it worked. 

And then McClendon, Ward, Hamm and others discovered how to get oil out of saturated tombstone rock. That was a very big deal because for the first time ever it weaned us off the Saudi Arabia teat. This occurred, let me remind us all, when production in the Gulf of Mexico was flagging very badly, and most conventional onshore fields were spent to the point of being brine pits. Tight oil gave the United States the badge of energy-independence for the first time since 1950.

And yes, offshore drilling and production is once again booming, and that's a good thing. And you're right, it may put shale out of business. But for right now, shale oil is still the gizmo that's keeping the United States energy-independent. At a time when an uneducated, hapless, ragtag Houthi can remotely fly a drone made in Iran over the Saudi collecting stations, and ultimately possibly even plug up the choke point at Bab el-Mandeb (bordering Yemen) or a well-trained Hezbollah militant is capable of shutting down the Strait of Hormuz (bordering Iran), if the tanker flow of oil couldn't be restored quickly we'd be in panic mode--our reserves aren't that great, the strategic reserve is a joke, and there are precious few places that could even begin to plug that deficit. The much ballyhooed Saudi pipeline can only handle about 20% of daily shipping, and then, when it's loaded onto a tanker, it would be vulnerable too. 

Want to see a major upheaval in the world? Try on that scenario: block those two outbound shipping lanes, each just two miles wide. See just how much spare capacity there is in this old world. I am a free-market advocate for most things; however, war has taught us that oil is much too important to merely let it be held captive to the ebb and flow of free markets. Blow all of our over-leveraged shale oil companies out of the market and we're once again held hostage to Saudi Arabia, and as the gentleman pointed out above, they hit us hard on 9/11. Not exactly the type of bedfellows I want to climb (back) in with. So while I don't have many answers, I feel strongly that Tom Kirkman is just about spot on in his Goldilocks price of $70 for a barrel of crude. Everyone lives. Even if the Iranian proxy forces manage to close off those two shipping lanes at one time. I'm going to get hit by a lot of darts, but if it takes a little governmental finagling to ensure our newfound independence, well, it's no better or worse than a tax cut for corporations, or a tariff on China, or talking up a tariff on German cars. Bring it on!

 “I am a free-market advocate for most things; however, war has taught us that oil is much too important to merely let it be held captive to the ebb and flow of free markets.”

The USA and the rest of the world have made fortunes and sustained the planet with Petroleum for decades ran by cartels, the biggest cartel were what the Italians called the seven sisters a transnational of American and European Consortium for Iran  which dominated the global petroleum industry from the mid-1940s to the mid-1970s.

After we release the control of oil into the free market let’s also dump the Gold Standard as we do t need the banks regulated we will just print money, hey Maduros doing it as we speak (26 Tonnes flown in private jets to Dubai), healthy fiscal policy.

Edited August 21, 2019 by James Regan

[SKEP + 229]

On 8/16/2019 at 6:11 PM, James Regan said:

Oil is a loose term when talking about the US as a net importer its a a broad term that includes crude oil and refined products such as gasoline, diesel and jet fuels, and other products; “petroleum” and “oil” are easily confused.

No agenda here other than the fact that the US is flooding the market with LTO and would like the rest of the world to step up and cut production, the problem is the US tight oil industry has no valve installed it will pump until its dead. The fall off from shale play is prolific and unsustainable and in general an unhealthy business model.

Drill baby Drill

Oil industry is dying. It's a slow death but it's dying.

The abusive  OPEC cartel is dying.  On its last breath.

Sell your oil while you can. 

Most of the OPEC members depend on oil for economic development. 

Don't want to be them. 

The US oil companies that will be taking over the shale production will pump and export as fast as they can.

Sorry Saudi Arabia.

 

[SKEP + 229]

On 8/18/2019 at 8:45 PM, James Regan said:

KSA have heavily reduced exports to the USA and will be propping up China as their main supply chain in an attempt to completely derail Iran. They are in a bind and will do as required, as I’m told so much on this forum that I need to get on board with free trade. So it looks like KSA is doing exactly that I imagine to the disgust of Mr Trump.

But Trump can’t have it other ways, and it looks like his plan to strangle China on crude imports has backfired, MBS is just a little bit more cunning than Trump and being from a trible culture isn’t at all affected by  megalomaniacal threats.

KSA will do what they always do and will succeed to control the oil price regardless as to suit their  needs, yes they are ruthless but one thing is different from the Arabs they don’t normally make idle threats they act.

Lets ser what this week brings.

Respectfully

qad yakun klun min jamalik 'abtal

 

Trump wanted to strangle China on oil ? What are you talking about ? 

Go for a ride on your Ducati . . . the fresh air will clear your head. 

Jamie do you think your House of Saud survives when oil under $50 ?

Edited August 21, 2019 by SKEP

[Tom Kirkman + 8,860]

6 hours ago, Tomasz said:

In the US there was a time of gold rush, currently there is a shale oil rush and in a few years time there will be a sober discussion why the last oil reserves were exported below real production costs only in order to become even more dependent on foreign oil imports in the future.

^ this

[James Regan + 1,776]

2 hours ago, SKEP said:

Trump wanted to strangle China on oil ? What are you talking about ? 

Go for a ride on your Ducati . . . the fresh air will clear your head. 

Jamie do you think your House of Saud survives when oil under $50 ?

Trump wanted to strangle China on oil ? What are you talking about ?  I guess your right it’s a bit ambiguous I was referring to sanctions against Chinese companies being sanctioned for buying Iranian crude.

A Ducati never, only Honda buddy can’t beat a Jap Pocket Rocket.

Not my House but KSA will survive, time will show us.

Do you really think we only have 8-10 years left? Honestly I just don’t see it ( Shale Patch- No Doubts- Deepwater coming back with vengeance, currently signing rigs for 5 years contracts in Brasil)!

Edited August 21, 2019 by James Regan