Shale Oil Fiasco

[James Gautreau + 86]

Here is a good take.

https://www.youtube.com/watch?v=FRYyXpOoN_Q

 

[Mike Shellman + 548]

deleted

Edited January 1, 2020 by Mike Shellman

[ceo_energemsier + 1,818]

Permian AI To Unlock Additional Resources In Already Prolific Basin

Texas-based E&P, Riverford Exploration, has been using AI in the Permian Basin to extract more than just oil and gas from its assets, CEO says.

 

 

 

he Permian Basin has long been a bountiful playground for operators including Riverford Exploration LLC. The Texas-based E&P has seen success using 3-D geocellular and reservoir characterization artificial intelligence (AI) to assess the basin.

The data Riverford has extracted from applying AI to its assets in the Midland and Delaware basins has allowed the company to predict future drilling paths of operators and resource potential, said Riverford’s president and CEO, Bill Fairhurst, at the Machine Learning & AI For Upstream Onshore Oil & Gas 2019 conference on Aug. 29.

Most importantly, Fairhurst said the company has been able to assess productivity. In conjunction with the Bureau of Economic Geology and Tight Oil Resource Assessment (TORA), he estimates that there are still roughly 100,000 more wells that can be drilled in the Permian.

Supporting Fairhurt’s outlook of continued productivity, in April the Permian Basin surpassed Saudi Arabia’s Ghawar Field to become the largest producing oil field in the world. Permian oil production is currently over 4.4 million barrels per day of oil, he said.

“Every 15 years there’s a major technological breakthrough that changes the oil and gas industry and right now that’s machine learning,” he said.

Additionally, the consortium’s research predicts that the technically recoverable resources at Wolfcamp A and Wolfcamp B are in a range of 35 to 52 billion barrels. “That is less than 7% of total recovery of the amount of oil that is in place,” he noted.

“What is important when we look at the statistics is what factors are going to influence productivity,” he said.

Riverford’s 3-D geo-modeling, created by TORA, has provided incremental data to back his outlook of the basin. According to Fairhurst, the company has geo-modeled the entire Midland Basin to have 1.3 billion cells and the “much larger and thicker” Delaware Basin to have 1.75 billion cells.

“For every variable, we have that many individual inputs. So, if we look at 20 to 30 geologic reservoir parameters, we’re looking at models that have 30 to 50 billion individual data points in them,” he said. “The whole idea is that we’re building statistics on these frameworks that we’re doing in these models.

“We’re going into much greater detail than any public information.”

Riverford has been successful in predicting drilling through AI. Utilizing trends across the basin and expected prices and costs, Fairhurst said the company is able to derive a drilling portfolio of projections. Riverford’s profitability maps and well inventory maps reveal likely locations of future wells and availability.

“There are a lot of capital efficient areas,” he said.

Fairhurst believes Riverford’s success is because the company starts from the bottom with examining rocks.

“It’s all about the rocks,” he said. “By doing geo-cellular models, adding a dynamic reservoir model and looking at what type of completions needs to be done, we [are able to] understand the variables that affect productivity.”

Outside of the Permian, Riverford holds producing assets in the Bakken’s Elm Coulee oil field and Oklahoma’s Scoop, Stack and Merge. Fairhurst said he is currently applying AI to its Bakken assets to unveil even more gas potential in the basin.

The company has also leveraged AI in its stratigraphic framework petrophysics, statistical modeling and history matching applications.

[Coffeeguyzz + 454]

This has been an exceptionally informative series of postings.

My thanks to you all for your contributions. 

 

One semi-aside in this issue of Permian natgas production ... the 2 unheralded LNG export terminals on the Mexican west coast - Costa Azul and Puerto Libertad - are now on track for what seems like certain operation within a 3 to 5 year time frame.

Projected capacity of ~26 million tonnes per year (mtpa) puts them right at the total output  level of the 3 massive Curtis Island operations combined. However, the capital cost using off-the-shelf blueprints and modular construction (to say nothing of the ultra cheap supply source) gives these Mexican  operations significant economic advantage. (Each mtpa equates to about 130 million cubic feet per day production).

 

Unleashing the long neglected Piceance is another probable consequence.

 

Down the road, the current Manzanillo import terminal is apt to flip to  being an exporter.

Edited December 26, 2019 by Coffeeguyzz

[ceo_energemsier + 1,818]

1 minute ago, Coffeeguyzz said:

This has been en exceptionally informative series of postings.

My thanks to you all for your contributions. 

 

One semi-aside in this issue of Permian natgas production ... the 2 unheralded LNG export terminals on the Mexican west coast - Costa Azul and Puerto Libertad - are now on track for what seems like certain operation within a 3 to 5 year time frame.

Projected capacity of ~26 million tonnes per year (mtpa) puts them right at the total output  level of the 3 massive Curtis Island operations combined. However, the capital cost using off-the-shelf blueprints and modular construction (to say nothing of the ultra cheap supply source) gives these Mexican  operations significant economic advantage. (Each mtpa equates to about 130 million cubic feet per day production).

 

Unleashing the long neglected Piceance is another probable consequence.

 

Down the road, the current Manzanillo import terminal is apt to flip to  being an exporter.

There are already negotiations between US company(ies) and JVs to build (a) pipeline(s) for crude oil out of the Permian to the West Coast of Mexico for export along with an export oriented refinery. The pipeline(s) throughput capacity could range between 750,000bpd-1,000,000bpd. These maybe placed by utilizing and expanding the existing ROWs for the gas lines.

 

[Gerry Maddoux + 3,627]

13 minutes ago, Coffeeguyzz said:

Unleashing the long neglected Piceance is another probable consequence.

Wow, what about the Paradox Basin? Any hope there? It's full of oil but also salt. 

[ceo_energemsier + 1,818]

Is the US Shale Boom Really About to End?

 

 

If current crude flow data forms the basis of industry opinion, US shale oil production has shifted the tectonic plates of the market. Thanks largely to a massive output uptick in shale plays like the Bakken, Permian and Eagle Ford, the country has more than doubled headline crude production over the past decade.

At around 12.5 million barrels per day (bpd), the US is already the largest producer in the world and some forecasters are predicting a rise to 13.1 million bpd by 2020. Rising volumes have also given shale players the title of being buffer producers, largely insulating the market from price spikes caused by outages elsewhere.

For some, a continuation of the boom is not in doubt. According to the US Energy Information Administration (EIA), production from seven major American shale plays is forecast to climb by 49,000 bpd in December to 9.133 million bpd.

At its heart is the Permian Basin, in West Texas and Southeast New Mexico, where the EIA expects the biggest month-over-month increase of up to 57,000 bpd. Looking at the long-term, an unlikely source appears to have given US shale its backing – none other than rival producers’ group OPEC, which expects a flood of shale barrels and less of a call on its members’ crude.

"The main driver of medium-term non-OPEC supply growth remains overwhelmingly US tight [shale] oil," OPEC recently noted in its markets outlook. By 2025, OPEC expects US oil production, courtesy shale, to have risen by over 40% from its current level to 17 million bpd; an upward revision of 3.1 million bpd over the group’s forecast last year.

While some are optimistic, others are only too keen to puncture the enthusiasm. The latter club surprisingly includes shale pioneers themselves and not just market forecasters. In a recent analysts’ call, Pioneer Natural Resources Chief Executive Officer Scott Sheffield said shale output growth will slow next year thereby creating a price supportive environment.

He added that Pioneer was definitely becoming “more optimistic” the market is “probably at the bottom end of the cycle regarding oil prices” as a result.

Industry pioneer Mark Papa, Chief Executive Officer of Centennial Resource Development and former Chairman of EOG Resources, is another doubter. At Centennial’s third-quarter results in November, Papa downgraded his 2020 shale growth forecast to 400,000 bpd from the 700,000 bpd he predicted as recently as September.

“This is likely not just a 2020 event. I believe US shale production on a year-over-year growth basis will be considerably less powerful in 2021 and later years than most people currently expect,” he added.

Many have also accused the EIA of being too optimistic and focussed on the upside in challenging conditions. Oregon, US-based think-tank Post Carbon Institute recently noted the much talked about shale “sweet spots” will “inevitably become saturated with wells, and activity outside of sweet spots will require higher rates of drilling and capital investment to maintain production, along with higher commodity prices to justify them.”

Worse still, according to some, these sweet spots are what the shale industry narrowed down on after the oil price slump of 2015, thereby choosing to focus on the most profitable wells first, and scaling up production at such sites which have been maxed out.

US shale players’ future was a hot topic at the recently concluded Abu Dhabi International Petroleum Exhibition and Conference 2019 (ADIPEC), a signature industry event held this November in the United Arab Emirates.

Under the microscope was the unmistakable tightening of shale purse strings – Apache Corp, Cimarex Energy, Occidental Petroleum and Pioneer have all signalled plans to cut spending. Regina Mayor, Global Sector Head, Energy and Natural Resources at KPMG, told Rigzone shale’s long-term potential needs to be parked for now because distress in the industry cannot be ignored. 

“We see a significant tailing off in shale production curves, drop in rig counts and a very visible drying up of access to capital for the smaller players. Process optimisation and US ingenuity are factors in the rise of shale but there are diminishing returns on the ability of American players to capture as much value as they did in the past.”

Mayor did not dispute US output uptick potential in barrel terms but “seriously doubts” the market will see a continuation of the tremendous exponential growth in shale barrels it has gotten accustomed to. Many others at ADIPEC were short-term bearish on shale oil as well, expressing serious concerns over production shocks as early as 2022-23.

But while there is distress for some, there are opportunities for others. Oil majors appear to be investing heavily in US shale and scaling up operations. Cue BP’s $10.5 billion acquisition of BHP’s shale assets in 2018, and ExxonMobil and Chevron’s upping of Permian production.

Vociferous debates over the impending death or otherwise of US shale has been caused by a fuzzy conflation of projections made for different time-frames and economic realities, according to Dr. Carole Nakhle, Chief Executive Officer of Crystol Energy.

“Some are short-term projections, others long-term, and what we hear is a convenient hotchpotch of the two based on people’s biases. Is the US shale party over? For some smaller players with poor gearing, lack of access to credit and mediocre acreage it almost certainly is.

“But over the medium- to long-term, the structure of the industry is changing in such a way that the smaller players who have been there for a while are the ones who are struggling. But that doesn’t mean the party is over for the shale industry as scaling and strategic investment by oil majors suggests Big Oil is stepping into the breach armed with efficiencies of scale.”

And let’s not forget, there have been past attempts by forecasters of all persuasions to underestimate US shale. These subsequently turned out to be wildly inaccurate and conventional wisdom suggests that might be the case this time around too. Perhaps the party isn’t over; just the music has stopped for smaller players as bigger ones bang their drums.

Gaurav Sharma is an independent oil and gas analyst with over 15 years experience. He provides regular market commentary for events, publishers and broadcasters. Follow him on Twitter @The_Oilholic or email at gaurav.sharma@oilholicssynonymous.com

[James Gautreau + 86]

Does not bode well for El Hefe.

[James Gautreau + 86]

1 hour ago, ceo_energemsier said:

Permian AI To Unlock Additional Resources In Already Prolific Basin

Texas-based E&P, Riverford Exploration, has been using AI in the Permian Basin to extract more than just oil and gas from its assets, CEO says.

 

 

 

he Permian Basin has long been a bountiful playground for operators including Riverford Exploration LLC. The Texas-based E&P has seen success using 3-D geocellular and reservoir characterization artificial intelligence (AI) to assess the basin.

The data Riverford has extracted from applying AI to its assets in the Midland and Delaware basins has allowed the company to predict future drilling paths of operators and resource potential, said Riverford’s president and CEO, Bill Fairhurst, at the Machine Learning & AI For Upstream Onshore Oil & Gas 2019 conference on Aug. 29.

Most importantly, Fairhurst said the company has been able to assess productivity. In conjunction with the Bureau of Economic Geology and Tight Oil Resource Assessment (TORA), he estimates that there are still roughly 100,000 more wells that can be drilled in the Permian.

Supporting Fairhurt’s outlook of continued productivity, in April the Permian Basin surpassed Saudi Arabia’s Ghawar Field to become the largest producing oil field in the world. Permian oil production is currently over 4.4 million barrels per day of oil, he said.

“Every 15 years there’s a major technological breakthrough that changes the oil and gas industry and right now that’s machine learning,” he said.

Additionally, the consortium’s research predicts that the technically recoverable resources at Wolfcamp A and Wolfcamp B are in a range of 35 to 52 billion barrels. “That is less than 7% of total recovery of the amount of oil that is in place,” he noted.

“What is important when we look at the statistics is what factors are going to influence productivity,” he said.

Riverford’s 3-D geo-modeling, created by TORA, has provided incremental data to back his outlook of the basin. According to Fairhurst, the company has geo-modeled the entire Midland Basin to have 1.3 billion cells and the “much larger and thicker” Delaware Basin to have 1.75 billion cells.

“For every variable, we have that many individual inputs. So, if we look at 20 to 30 geologic reservoir parameters, we’re looking at models that have 30 to 50 billion individual data points in them,” he said. “The whole idea is that we’re building statistics on these frameworks that we’re doing in these models.

“We’re going into much greater detail than any public information.”

Riverford has been successful in predicting drilling through AI. Utilizing trends across the basin and expected prices and costs, Fairhurst said the company is able to derive a drilling portfolio of projections. Riverford’s profitability maps and well inventory maps reveal likely locations of future wells and availability.

“There are a lot of capital efficient areas,” he said.

Fairhurst believes Riverford’s success is because the company starts from the bottom with examining rocks.

“It’s all about the rocks,” he said. “By doing geo-cellular models, adding a dynamic reservoir model and looking at what type of completions needs to be done, we [are able to] understand the variables that affect productivity.”

Outside of the Permian, Riverford holds producing assets in the Bakken’s Elm Coulee oil field and Oklahoma’s Scoop, Stack and Merge. Fairhurst said he is currently applying AI to its Bakken assets to unveil even more gas potential in the basin.

The company has also leveraged AI in its stratigraphic framework petrophysics, statistical modeling and history matching applications.

When I first started at GE Aircraft Engines I was told they had a trap they set for ever over eager engineer chomping at the bit to improve things. They told him to model a compressor blade using finite element analysis and to reduce dovetail stress. He'd go off and at the next staff he would report he could reduce stress "By at least 20%, at least." The section chief would nod knowingly. Every single staff after that first one saw a decline until it reached 0. He could not improve it at all. Then he was told that dozens of engineers had worked that exact problem and it was as optimized as it gets. That's how I see fracking. Yes Geophysics has reduced the # of dry holes, but it hasn't eliminated them. Bottom line is that if it worked so great why is production declining? Eventually that decline curve out runs the new production, and that's what is happening now. 

[Coffeeguyzz + 454]

Mr. Maddoux

Don't know about the Paradox, but the Unita is poised to triple production a few years out (to ~250/300k bpd) as the new 90 mile train tracks are built for takeaway of their high quality, high paraffin product. Should lower the cost for shipped in proppant, also.

Kinda interesting to observe how little attention is placed upon the various other potential resource plays as the current, dominant regions garner all the attention.

Ohio oil production jumped from ~50k bpd to ~80k bpd this past quarter (3 Qtr 2019).

Pennsylvania is now producing ~150,000 bpd condensate along with almost 19 billion cubic feet per day natty.

 

Wanna hear of something that may absolutely rock this already tumultuous energy world?

Harkening back to your earlier comment regarding natgas-fueled vehicles ...

A handful of fuzzy heads out of Texas A&M and the Korean Advanced Institute of Science and Technology claim to have developed an adsorptive (with a 'd', not 'b') material that has achieved the 'Holy Grail' threshold of practical 20/25 Gallon of Gas Equivalent storage at under 500 psi.

Furthermore, this polymer can be produced at exceptionally cheap cost.

To transition from activated carbon for CNG to this new material (or some other, competing substance) would enable the ~50 million US households to fill up their CNG vehicles right in their driveways with residential supplied natgas and small compressors.

In addition, most every existing gasoline/petrol vehicle now on the road could be converted to CNG use with readily available hardware ... only the tanks/storage would need replacement/addition.

With anywhere from 15 to 25 million natgas vehicles worldwide currently running (Italy alone has over a million), with the rapid spread of natgas to poorer countries around the world (FSRUs playing a significant role), with the large  spread of the oil/gas pricing looking to hold for years, the transformation into the Age of Gas may be a LOT closer, a LOT more disruptive than presently appears to be the case.

 

 

 

Edited December 27, 2019 by Coffeeguyzz

[Gerry Maddoux + 3,627]

9 minutes ago, Coffeeguyzz said:

With anywhere from 15 to 25 million natgas vehicles worldwide currently running (Italy alone has over a million), with the rapid spread of natgas to poorer countries around the world (FSRUs playing a significant role), with the large  spread of the oil/gas pricing looking to hold for years, the transformation into the Age of Gas may be a LOT closer, a LOT more disruptive than presently appears to be the case.

I think so. Converting all the eighteen wheelers to NG was T. Boone Pickens' pipe-dream. Boone was talking his book, per usual, but it was a fabulous idea that, had it taken root, would have nipped all this green EV nonsense in the bud, especially electric trucks. Well, here's to you, Boone, better late than never. 

I think natural gas is the thing, and I have for years. Of course, I never imagined it to be this abundant or cheap. But that's part of the allure, too, especially in the LNG world--with all the acid oxides (particularly sulfur oxide) removed by the liquifaction process. I maintain adamantly that NG will drive LTO production as much as anything.

13 minutes ago, Coffeeguyzz said:

Kinda interesting to observe how little attention is placed upon the various other potential resource plays as the current, dominant regions garner all the attention.

True again. The Permian has just sucked all the oxygen out of the room, with regards to other areas. I'm a bit peeved that the fact that NG up in the Bakken is 10% ethane has largely escaped national attention, for example. And that the research up there using NG back down the hole hasn't gotten more attention--it essentially rebuilds the pressure integrity of the reservoir rock.  

[James Gautreau + 86]

14 minutes ago, Gerry Maddoux said:

I think so. Converting all the eighteen wheelers to NG was T. Boone Pickens' pipe-dream. Boone was talking his book, per usual, but it was a fabulous idea that, had it taken root, would have nipped all this green EV nonsense in the bud, especially electric trucks. Well, here's to you, Boone, better late than never. 

I think natural gas is the thing, and I have for years. Of course, I never imagined it to be this abundant or cheap. But that's part of the allure, too, especially in the LNG world--with all the acid oxides (particularly sulfur oxide) removed by the liquifaction process. I maintain adamantly that NG will drive LTO production as much as anything.

True again. The Permian has just sucked all the oxygen out of the room, with regards to other areas. I'm a bit peeved that the fact that NG up in the Bakken is 10% ethane has largely escaped national attention, for example. And that the research up there using NG back down the hole hasn't gotten more attention--it essentially rebuilds the pressure integrity of the reservoir rock.  

Does the nat gas fired engine have the torque of a diesel?

[Gerry Maddoux + 3,627]

2 hours ago, Mike Shellman said:

If Permian associated gas  can compete in the LNG market against the likes of Qatar, Russia, West Australia and East Africa, even APP Basin gas from the US,  it will because it's being sold at a financial loss, similar to how American shale oil is being exported at a financial loss. 

Why would Cheniere be selling "at a financial loss?" Maybe I misinterpreted what you are saying, maybe overall it's a financial loss, but not for the owner of the liquifaction plant and the export tankers. 

[Gerry Maddoux + 3,627]

3 minutes ago, James Gautreau said:

Does the nat gas fired engine have the torque of a diesel?

No, and never will, unless turbocharged. 

And that's the reason the concept never took hold. The best facility was the Cummins Westport, and they tried hard to make this go. 

Actually, the low-sulfur diesel makes this less important than in the past, especially in comparison to the IMO2020 MARPOL mandate, which I think will be earth-changing, literally and figuratively. 

[ceo_energemsier + 1,818]

13 minutes ago, Gerry Maddoux said:

Why would Cheniere be selling "at a financial loss?" Maybe I misinterpreted what you are saying, maybe overall it's a financial loss, but not for the owner of the liquifaction plant and the export tankers. 

I dont know any crude oil exporter who is exporting crude @ a financial loss, some lease operators and producers maybe yes, but not exporters.

[wrs + 893]

6 hours ago, Gerry Maddoux said:

That wasn't the whole story. Reagan removed price controls for oil and it worked. He decided to do the same thing for natural gas. It didn't work. 

With the country horribly starved for natural gas, and with deep drilling about the only thing that produced large quantities of natural gas, he had originally put a floor under "deep gas." Deep was defined as anything deeper than 10,000 feet. Elk City quickly proclaimed itself as the Deep Gas Capital of the World. A well that we had interest in was 29,600 feet deep. It made the WSJ by producing 75 mcf/d, but lasted only three months. That well sold NG for about $10/tcf, which amounted to about $750,000/day. Needless to say, that well drew a lot of interest. Before long, every company was drilling for deep natural gas. The cost was about $10M per well.

Reagan's about-face was in 1986 or '87. I don't know whether it was part of the Tax Reform Act of 1986 or not, but he suddenly removed the floor under deep gas. It quickly returned to earth. 

Anyway, the repercussions of all that really resounded in the oil field. The deep gas operators went broke. Parker Brothers had built a rig capable of going to 50,000 feet. Big Bertha lies today in the Elk City Oil and Gas Museum, having never been put to work. It is merely an oddity of the times. 

Penn Square made a lot of deep gas loans that proved to be for dry holes.  The dollar amount of loans they made and sold upstream to Seattle First National, Continental Illinois and several other big commercial banks exceeded $1B and nearly destroyed the banking system because the loans were not collateralized and many were "character loans" made to frat brothers and the like.  I didn't think deep gas was ever really a viable source for NG.  You are the first person I have ever heard mention it since back in the 80s when it was infamous.  

[Mike Shellman + 548]

1 hour ago, Gerry Maddoux said:

Why would Cheniere be selling "at a financial loss?" Maybe I misinterpreted what you are saying, maybe overall it's a financial loss, but not for the owner of the liquifaction plant and the export tankers. 

I have no doubt that Cheniere can make money from liquifying natural gas and transporting it... providing it can compete with the rest of the world already well rooted in LNG processing and market share, Mr. Maddoux. Same with 3rd party ship owners who can sell Pioneer's LTO to South Korea, or whomever; that was not my point. Upstream, coming out of the ground, shale oil and shale gas is woefully unprofitable to extract, racked with debt and still totally dependent on outside capital for sustainability.

Unconventional shale  represents America's last remaining hydrocarbon resources and it is being exported to foreign countries throughout the world at a financial loss. Once those hydrocarbons become scarce in our country, and they already are, and even more expensive to extract (than they are now), it will become more apparent to Americans what a horrific financial loss exports actually are.  Whatever it is we are pissing off up a flare stack, or sending to China to stimulate their economy, on US credit, we will want back someday and have to pay for it dearly. Those that are able to monetize the shale phenomena now, with no money vested, nothing at risk, do not want Americans to think about tomorrow, they are only interested in today. They need the bucks, or the votes, or both; for the most part they, Republican, Democrat, green or oily black, can't think past next week. 

https://www.oilystuffblog.com/single-post/2019/10/11/Cartoon-Of-the-Year

[James Gautreau + 86]

Well now that's the rub. If indeed shale is peaking and will soon enter terminal and irreversible decline, then as Matt Simmons said all those years ago, peak oil and not climate change will be front and center for the election. Oil still runs the world, oil still runs our military, oil is still by far the most important commodity. What will politicians do? Trump will want to open everywhere up for drilling. Dems... who knows what they will suggest. We cannot make the devices like solar panels and wind mills without oil and energy. They tried it in the USSR. Oil peaked in the 1980's at 11 mbpd and by the time the Soviet Union collapsed in 1991 had dropped to 7 mbpd. Peak oil collapsed the Soviet Union. People in all those countries wanted the oil under their feet and were willing to fight for it. After Putin rose to power Russia has miraculously gotten production back to 11 mbpd, the only country to ever come back from peak oil. We don't count since our return to 1970 production levels was done unconventionally. It really will be terrible once shale oil is in clear decline and there is no Plan B. I would not be surprised to see this break up America. If you were Texas, wouldn't you want to keep your oil and gas to your state? Sell it to New Englanders for nearly 8 times what you get for it now. I am quite sure these thoughts passed through LBJ's mind when he took out JFK. Texas, this colossus of natural resources and tiny, little, Massachusetts... pleaseeeeeeeee. And he's president!

[wrs + 893]

6 hours ago, James Gautreau said:

The same thing happened in 2008. The dollar collapsed when oil starting moving upward. You could plot the dollar index and crude oil price and you'd have an X. 

https://www.cnbc.com/2019/11/01/us-dollar-could-weaken-to-85-on-the-dollar-index-citi.html

I think it's the other way around (JMO), the dollar devalued and oil went up because the US was a huge oil importer.  There are many components to dollar strength, right now the US is paying positive interest rates while much of the rest of the world is mired in negative or near zero rates.  In addition the US is no longer a net oil importer which supports the dollar.  I would be interested to hear what you believe might collapse the dollar in the current financial environment.  

What the US has is the cheapest energy in the world thanks to shale and negative WTI - Brent differential.  That is a massive economic advantage whose effects are rather obvious from the great economy that we have been experiencing coincident with the last election.  Trump claims this economy as his but it's really the result of cheap oil that benefits the US more than the rest of the world.

[Gerry Maddoux + 3,627]

42 minutes ago, wrs said:

I didn't think deep gas was ever really a viable source for NG.  You are the first person I have ever heard mention it since back in the 80s when it was infamous.  

It was pretty much like the Permian is today: if you happen to own minerals in an area and they drilled a good deep gas well on your minerals, it was a bonus day. The Crook well, for example, was huge--like fracked shale wells, it just didn't last long. And much like the "infamous" part of the Permian, that area was proselytized by some unscrupulous characters who--you're totally correct--brought down Penn Square Bank, almost brought down Sea First and Continental Illinois. On a worldwide basis, I'm not an expert on whether it was a "viable source" for NG or not. For my family it was a seminal event, I'd say. As with many things, we didn't make it infamous; the bankers did. 

[James Gautreau + 86]

No question cheap oil helps us and is the primary reason our economy is booming. Notice how Trump tweets whenever oil starts rising but has been eerily silent during this rally. The number most important to his reelection is the price of WTI. OK so what happens? Monthly production figures start declining. Every single week is a huge draw to oil stocks. You'll have your first one tomorrow. It'll be obvious by next summer. I see prices at $100 a barrel by the end of summer and 200,000 barrel decline in monthly production #'s every single month. Any geopolitical event such as another attack in Saudi Arabia, there's no telling how high they might go. Going into the election, Trump will propose turning coal into gasoline as his major policy, as well as opening up areas to drilling. The Dems will say go all green immediately probably. Iran sanctions will be lifted. The dollar will continue to fall, when Saudi Arabia announces it will accept yuan in payment for oil. At that point the ratio between the yuan and the dollar will fall to 3 or 4 to 1 in a matter of months. It will be similar to what happened to the dollar and the pound when America supplanted Britain's currency. Over the next 20 or so years, the yuan and dollar get closer and closer to parity. The election is a coin toss. People may rally to Trump's side with the devaluation of the dollar. They may prefer Trump's "leadership" in a crisis. They may not want green. But that's what I see coming. 

[Gerry Maddoux + 3,627]

46 minutes ago, Mike Shellman said:

Once those hydrocarbons become scarce in our country, and they already are, and even more expensive to extract (than they are now), it will become more apparent to Americans what a horrific financial loss exports actually are.

I could not agree with you more. Unfortunately, we have these refineries that run on a certain ratio of LTO to heavy sour oil. There are two new LTO refineries being built in America. But for right now, the plethora of old refineries still feedstock in a certain mix and quality. Exporting this last hurrah has been an unmitigated disaster that didn't have to happen. Well, if this is all going south as rapidly as you guys all seem to think, it won't take people like Elizabeth Warren to enjoy their ban fracking proclamation. In that case, she should hope for the continued viability of the Utica and Marcellus, because without them it's going to get damn cold along the eastern seaboard. And the guys who operate the refineries and refuse to upgrade, well, it sounds like they know what they're doing too. Just wait for a few years and we'll be back to the seventies.  

[James Gautreau + 86]

Shut down expected by July 12: Philadelphia Energy Solutions will close its doors permanently, officials announced Wednesday. The refinery is expected to close by July 12, according to Councilman Kenyatta Johnson, who represents the district where it sits. The 335,000-barrel-per-day refinery, the largest on the East Coast, employs more than a thousand people directly, including nearly 700 hourly union workers, and thousands of contractors. Just a year after emerging from bankruptcy, the cash-strapped oil refinery was already facing financial woes before Friday’s three-alarm fire swept through the facility. The Inquirer previously reported that the cost of repairing damages from the inferno could push owners to the financial brink. In a statement Wednesday, PES said the company “will position the refinery complex for a sale and restart.”

[Old-Ruffneck + 1,246]

7 hours ago, Gerry Maddoux said:

Reagan's about-face was in 1986 or '87. I don't know whether it was part of the Tax Reform Act of 1986 or not, but he suddenly removed the floor under deep gas. It quickly returned to earth. 

Anyway, the repercussions of all that really resounded in the oil field. The deep gas operators went broke. Parker Brothers had built a rig capable of going to 50,000 feet. Big Bertha lies today in the Elk City Oil and Gas Museum, having never been put to work. It is merely an oddity of the times.

My memory isn't what it used to be, but around 83 84 went from contract drilling to by the foot. That was start of the downfall of all the operators that couldn't afford by the foot new mentality. Was a ploy to drive costs down, and it worked. I did work on several Parker Bros rigs, Tom Brown rigs, mainly Jal over to Andrews, back down to Ft. Stockton.  A Penrod rig set the record deepest hole 35 miles s.e. Sanderson Hwy outta Ft. Stockton. 2.5 years that rig sat there. At 27k ya might get one connection on yer tower. Was owning the title for about 6 months and the OK well beat it. 

Todays well drilling is nothing like my years on the floor and derrick. They can drill holes for less money than in 1984 gas well near Orla/1984 about 3.5mil to todays close proximity 5mil. And way less dry holes, these freaks with computer operated equipment  are making money. I see some still folding but a lot a banding together. We now exporting 4mb daily reflects a lot of holes and more DUCs getting completed. I am hopeful new  tech will come into play and get more. West Tex and SE New Mex have a lot to give. I will be there in couple weeks. Will get better judgement call then. 

[wrs + 893]

25 minutes ago, James Gautreau said:

No question cheap oil helps us and is the primary reason our economy is booming. Notice how Trump tweets whenever oil starts rising but has been eerily silent during this rally. The number most important to his reelection is the price of WTI. OK so what happens? Monthly production figures start declining. Every single week is a huge draw to oil stocks. You'll have your first one tomorrow. It'll be obvious by next summer. I see prices at $100 a barrel by the end of summer and 200,000 barrel decline in monthly production #'s every single month. Any geopolitical event such as another attack in Saudi Arabia, there's no telling how high they might go. Going into the election, Trump will propose turning coal into gasoline as his major policy, as well as opening up areas to drilling. The Dems will say go all green immediately probably. Iran sanctions will be lifted. The dollar will continue to fall, when Saudi Arabia announces it will accept yuan in payment for oil. At that point the ratio between the yuan and the dollar will fall to 3 or 4 to 1 in a matter of months. It will be similar to what happened to the dollar and the pound when America supplanted Britain's currency. Over the next 20 or so years, the yuan and dollar get closer and closer to parity. The election is a coin toss. People may rally to Trump's side with the devaluation of the dollar. They may prefer Trump's "leadership" in a crisis. They may not want green. But that's what I see coming. 

I think this might be the apocalyptic scenario but I do think that there won't be much if any growth in shale production out of the Permian next year unless oil prices get over $70.  I am not confident we will see $100 but personally it would be good for me.  I have a lot of new production that recently came on line so selling into a rising price is a good thing for me and the operators.

I think that expensive oil won't hurt the US as much as Europe and China but it will help the mideast and Russia which isn't something Trump wants but he has to weigh that against the benefit to China of cheap oil.  It's a complicated set of options to choose from.  I think up until this year Trump was cheering cheap oil but as you say, he has been eerily silent lately on oil which I hope continues.

BTW, thanks for the youtube link, that's a good presentation.