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Guest Post: Will Saudi Arabia Allow The U.S. Oil Boom?
Submitted by Jim Stafford of OilPrice.com
Will Saudi Arabia Allow the U.S. Oil Boom? Interview with Chris Faulkner
Technology, technology, and more technology—this is what has driven the American oil and gas boom starting in the Bakken and now being played out in the Gulf of Mexico revival, and new advances are coming online constantly. It’s enough to rival the Saudis, if the Kingdom allows it to happen. Along with this boom come both promise and fear and a fast-paced regulatory environment that still needs to find the proper balance.
In an exclusive interview with Oilprice.com, Chris Faulkner, CEO of Breitling Energy Companies - a key player in Bakken with a penchant for leading the new technology charge—discusses:
• How Bakken has turned the US into an economic powerhouse
• What the next milestone is for Three Forks
• What Wall Street thinks of the key Bakken companies
• Where the next Bakken could be
• What to expect from the next Gulf of Mexico lease auction
• What the intriguing new 4D seismic possibilities will unleash
• What the linchpin new technology is for explorers
• How the US can compete with Saudi Arabia
• Why fossil fuel subsidies aren’t subsidies
• How natural gas is the bridge to US energy independence
• Why fossil fuels shouldn’t foot the bill for renewable energy
• Why Keystone XL is important
• Why the US WILL become a net natural gas exporter
Oilprice.com: How important are Bakken and Three Forks to US energy in the big picture?
Chris Faulkner: The Bakken Shale has been the biggest driver in America’s reversal of decades of decline in oil production. It has transformed North Dakota into an economic powerhouse with the nation’s lowest unemployment rate and fastest-growing GDP—and an oil production level surpassing that of some OPEC nations. An added increment of almost 800,000 barrels per day of oil output, built in less than a decade, has helped the US reduce its dependency on oil imports from often hostile countries by 22% since peaking in the mid-2000s.
US oil production is at its highest level since 1992, and in another 5 years, it is projected to reach its highest level since 1972. More importantly, the US oil production surge will help tamp down the possibility of chronically recurring oil supply shortages and help keep a lid on oil price spikes for the foreseeable future. Additionally, the Bakken surge is helping to narrow the spread between WTI and Brent, providing even more economic incentive to develop the costly unconventional resource plays.
Oilprice.com: The US government recently more than doubled its estimates for Bakken and Three Forks to 7.4 billion barrels of undiscovered and technically recoverable oil and 6.7 trillion cubic feet of natural gas. How is the industry responding to this? How are investors responding?
Chris Faulkner: Some operators had already been developing the Three Forks formation ahead of the USGS revised estimate for the Greater Bakken play. That drilling in fact provided much of the knowledge about the Three Forks that led to the USGS upgrade. We’re already seeing stepped-up drilling in the Three Forks, and some of that will entail dual horizontal laterals, a real milestone that could yield spectacular IP rates. Accordingly, Wall Street analysts are upgrading their guidance on companies such as Continental Resources that are leading the Bakken charge.
Oilprice.com: What’s the next Bakken?
Chris Faulkner: That’s a tough one. In a sense, we’ve already seen it with the Three Forks reappraisal. But it would be exceedingly difficult to replicate the Bakken, with its vast areal extent and thick pays. Progress is being made with a modest level of drilling in the Tuscaloosa Marine Shale of southern Louisiana and Smackover Brown Dense Shale in southern Arkansas/northern Louisiana, but results have been somewhat spotty to date. Perhaps the best prospective candidate is the Cline Shale in the Texas Permian Basin. This shale covers a vast area, has very thick pay zones, and there is established infrastructure. Some estimates have put its technically recoverable resources at 30 billion barrels of oil. But it’s very early days in that play. Devon Energy is moving aggressively there, and we should get some hints of its true potential before too long.
Oilprice.com: How excited should investors be about the Monterrey Shale?
Chris Faulkner: Some restraint is in order. While preliminary estimates put potential Monterey Shale technically recoverable resources at more than 15 billion barrels, it’s hardly a slam dunk. There has been a flurry of leasing and some drilling to date, but as of yet no operator has “cracked the code” for the Monterey. Even apart from the substantial technical challenges and complicated geology and petrophysics, a bigger hurdle would be the widespread and entrenched anti-oil development attitudes industry faces in California, which already has the most stringent regulatory regime in the nation. Furthermore, that anti-oil stance will just gain momentum with the anti-frac campaign that the environmental pressure groups are pushing now.
Oilprice.com: The US government’s next auction of Gulf of Mexico acreage is expecting a bigger turnout than previous auctions. How is the bidding environment shaping up ahead of this sale?
Chris Faulkner: Excellent. Even with the near tripling of minimum bid requirements in deepwater areas, I expect brisk bidding. Operators are fine-tuning their exploration strategies in the deepwater areas, and some recent significant discoveries, such as ConocoPhillips’s huge Shenandoah find, will only stoke that enthusiasm. I think we’re also seeing the beginnings of a revival in shallow Gulf waters, judging from the high number of bids there in the last sale. Expectations of a gas price rebound were underpinned by the latest approval of another LNG export terminal—both positive for shallow-water drilling.
Oilprice.com: How important are Brazil’s pre-salt finds to a revival in the US Gulf of Mexico?
Chris Faulkner: The Gulf revival is proceeding quite nicely as it is with the string of big discoveries in the Inbound Lower Tertiary. However, the knowledge and best practices being accumulated in the pre-salt play off Brazil probably benefits the pre-salt plays emerging off West Africa more so than in the US Gulf, where success has been concentrated more in the subsalt. In fact, the advances gained in probing the Gulf subsalt—particular in seismic technology—laid much of the groundwork for decoding Brazil’s pre-salt. I think you’ll see the Gulf operators focus more on the Lower Tertiary as the flavor of the day.
Oilprice.com: How are drilling advancements contributing to a re-evaluation of old data and the collection of new data?
Chris Faulkner: There’s no doubt that MWD and LWD [Measurements-while-Drilling/Logging-while-Drilling] have helped operators gain a better perspective on old well logs. As accumulation of drilling data in real time makes even more technical advances, progress will continue. This may be the biggest contributing factor for the dramatic reductions in spud-to-release times that we’ve seen in the major unconventional plays.
Oilprice.com: What are the most recent major advancements in seismic imaging and data processing that are changing the way companies decide where to explore and where to drill next?
Chris Faulkner: 3D seismic is firmly established as a valuable exploration tool, especially for delineating reservoirs that have already been identified, and there are intriguing new possibilities for 4D seismic (essentially 3D seismic phases over time), especially for enhanced oil recovery and carbon sequestration applications. But in terms of pure exploration, the linchpin technology has been reverse time migration, which really got the ball rolling for subsalt and pre-salt plays in the Gulf and off Brazil and West Africa. Then explorers started using pre-stack depth migration to ultimately arrive at a fully defined 3D salt geometry, which has fueled much of the success in the Gulf.
Oilprice.com: What can we expect both from drilling technology and supercomputer data collection and processing over the next 5-10 years?
Chris Faulkner: We’ll probably see a growing convergence of microseismic data gathering and processing in real time and real-time drilling data gathering to enhance mapping of natural fractures in tight reservoirs that may help drillers better steer the well so as to optimize subsequent placement of frac stages.
Oilprice.com: Can the US really compete with Saudi Arabia in terms of production?
Chris Faulkner: Sure, just as long as the Saudis will allow it. Don’t forget the Kingdom is still the world’s swing supplier, a role it’s held since the late 1970s. It’s important to remember that the Saudis not only have the largest proved reserves of oil, it’s also the largest repository—by far—of low-cost oil reserves. Much of Canada’s oil sands and US tight oil requires $75 per barrel or more to be economically viable. Saudi Arabia also needs $75 per barrel, but that’s to support its current domestic budget. The Kingdom’s lifting costs are somewhere around $5 at last report. So Saudi Arabia could easily flood the market, as it did in the early ‘80s, if it lost too much market share, dropping oil prices to $50 or less, and US drilling and production would collapse. Ideally, growing demand from China and other Asian markets will help sustain Saudi production levels and oil prices even as the Americas become self-sufficient in oil.
Oilprice.com: Can we expect to see a gradual end to fossil fuel subsidies in the near or medium-term?
Chris Faulkner: Depends on what you mean by subsidy. Anti-oil factions erroneously claim that the standard tax incentives that the US oil and gas industry shares with most other American businesses are subsidies. But while these incentives are the target of some heated rhetoric, there are enough red-state Democrats in Congress to prevent them from being stripped away, especially for the independent oil companies that rely most heavily on them. A more likely development in the US would be incremental attempts to impose a “back door” carbon tax by proxy–essentially the Obama administration resorting to regulatory overreach to add to the costs of fossil fuel development, production, and consumption. This kind of disincentive essentially creates a subsidy-in-reverse.
Oilprice.com: Who benefits most from these subsidies and how?
Chris Faulkner: Again, if you mean standard industry tax breaks such as expensing of intangible drilling costs, expanded amortization for G&G costs, repealing the percentage depletion allowance benefit, pure-play E&P independents rely on them more heavily than integrated firms such as the majors or hybrid midstream/upstream firms. I’ve seen estimates that eliminating these incentives could slash as much as 15–20% of US drilling. But if you mean true subsidies such as those in Iran or Venezuela aimed at keeping gasoline and other fuel costs to consumers below their real costs, then the primary beneficiaries are the autocrats and dictators who might get ousted without them.
Oilprice.com: Is natural gas a feasible bridge to the US’ renewable energy future, and will the Obama administration’s plan to fund clean energy projects with oil and gas revenues work?
Chris Faulkner: Absolutely yes and absolutely no, respectively. The fact that US greenhouse emissions have fallen in recent years owing mainly to power plants switching from coal to low-cost natural gas illustrates the first point quite clearly. The fact that US LNG export projects are moving ahead underscores the point that there are abundant gas resources to support that bridge.
As to the second point, one word: Solyndra. How do you think Americans will react to their energy bills spiking so that more of their tax dollars can be flung down that rat hole? How reticent do you think the Republicans will be about pointing that out?
Oilprice.com: How important is Keystone XL to the US’ energy future?
Chris Faulkner: Keystone XL is important for several reasons. First, blocking the project will alienate our most important energy trading partner, Canada. Some folks talk about US energy self-sufficiency, but for oil that is a much taller hurdle; however, North American oil self-sufficiency could be achieved in less than a decade. Who knows how Canada will react to such a snub and an apparent violation of NAFTA? Retaliatory measures in energy trade are not out of the realm of possibility. The irony is that Canadian oil sands syncrude, bitumen, and heavy oil will continue to move south irrespective of Keystone XL’s fate, so any purported environmental benefits from stopping the project are a wash. And Gulf Coast refiners are eager to replace declining supplies of heavy crude from Mexico and Venezuela (not to mention the reliability of the latter’s supplies) with low-gravity feedstock from a friendly North American supplier whose supply will only increase.
Perhaps the most important impact of blocking Keystone XL is symbolic. If the administration caves to the environmental pressure lobby, it sends an unmistakable message to both sides; the result will be a perception of significantly heightened investment risk in the US oil sector and an emboldened opposition that will use the momentum of this “victory” (certainly a pyrrhic one for America) to step up opposition to oil and gas development everywhere in North America. Don’t forget: A hostile administration beset by a sluggish economy imposed the windfall profits tax that resulted in the migration of hundreds of billions of dollars of US oil and gas company E&P capex overseas; this was the single biggest factor in the US oil production decline of the past several decades. A regulatory stranglehold can have the same effect.
Oilprice.com: What can we expect in the next 1-2 years in terms of advanced fracking technology that could help remove some of the opposition to the process?
Chris Faulkner: The use of benign frac fluid constituents taken from food sources is certainly a significant advance and at least shows industry is trying to address the public’s concerns. Breitling Oil and Gas’ EnviroFrac™ program was founded in February 2010 to evaluate the types of additives typically used in the process of hydraulic fracturing to determine their environmental friendliness. After evaluations are completed, EnviroFrac™ calls for the elimination of any additive not critical to the successful completion of the well and determines if greener alternatives are available for all essential additives. EnviroFrac™ is a decisive move toward an even greener fluid system. By reviewing all of the ingredients used in each frac, the program identifies chemicals that can be removed and tests alternatives for remaining additives. To date, the company has eliminated 25% of the additives used in frac fluids in most of its shale plays.
But the truth of the matter is that the science and data have always been on industry’s side in this debate. So technology is less of a consideration in removing opposition than are efforts to educate the public about the science and data.
Oilprice.com: How important is technology versus acreage to a company’s success? How does this balance work out for Breitling?
Chris Faulkner: Given our size, Breitling’s focus on technology actually provides leverage for our investors against the huge scale of effort and capex that larger companies employ in amassing vast leaseholds in today’s resource plays. We rely on advanced exploration technology to help us find prospects others might have overlooked and help us be more selective in high-grading the best opportunities. For example, 3D seismic surveys—and earlier 3D surveys in particular—often contain information that is beyond visual resolution and thus escapes the interpreter. Signal processing on the workstation using what might be termed “geologically based seismic deconvolution” has the potential to enhance the resolution to the point that this hidden information can be made visible and incorporated into the interpretation. Breitling’s patent-pending Geo3D Seismic Filtering technology takes existing 3D seismic data and enhances it so that it is noise-free with a broad enough “zero phase” spectrum to represent fractional match points that could lead to oil and gas discovery. Within the limitations of the seismic data we can use this synthetic data to optimize our 3D data set and locate oil and gas reservoirs that were missing in previous low resolution interpretation.
Oilprice.com: There have been a number of hints by the Obama administration that the US could become a net gas exporter, with potential exporters eyeing lucrative Asian markets. What will this mean for gas prices at home? What will it mean for the US economy?
Chris Faulkner: I think this has gone beyond the “hints” stage with the administration recently approving a second LNG export terminal, although I expect more of that LNG will go to Europe than to Asian markets. The US would experience a net economic benefit occurring with unrestrained exports. Certainly US gas prices would increase but not nearly as much as EIA’s earlier study concluded, because global competition among established LNG suppliers would put a cap on US LNG exports at a certain price point. The US trade balance will improve. All energy-intensive industries combined would see a loss of jobs or output no greater than 1% in any year. If anything, putting a cap on LNG export volumes would probably push gas prices higher because it lessens that competition emerging in an increasingly global LNG trade.
Oilprice.com: Chris, thanks for taking the time to speak with us – hopefully we will get a chance to speak later in the year. For those of you looking to find out more about Chris and Breitlings operations please visit: http://www.breitlingenergy.com
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You got a bank account with a billion dollars , wtf does it matter when your daily withdrawl lilmit is a few hundrend bucks?
Not true. All the oil producers have a break even price level for oil. This is the price oil has to stay above to pay all their govt expenditures. I think the Saudis number is around $90 a barrel.
I think he means flow rates versus total reserves.
Faulkner: check out www.theoildrum.com
Saudi oil reserve numbers are a fraud.
.
He knows about theoildrum.com. He has no use for the site because the material there debunks his "work". He's the CEO of advertised-energy-company.com, so his job is ham-handed delivery of propaganda.
What is surprising to me is the remarkably low quality of the propaganda being delivered. He employs just about every stereotype used to explain away the energy problems faced by the US over the last 40 years, including this moldy oldie:
Seriously, you have to go all the way back to the days before the mood ring, pet rock, and CB radio crazes, back to the Watergate era for that one.
Even a well written Onion-style parody of an interview with an energy CEO wouldn't use as many old bromides as this guy did.
It almost looks like he's just trying to pump the stock of his company before he bails.
Yes, and he doesn't care.
+1
oil lubricates the earth from the shock of internal and external forces. we remove it at our own peril
it's true, krugman
"I think the Saudis number is around $90 a barrel."
from article:
"Saudi Arabia also needs $75 per barrel, but that’s to support its current domestic budget. The Kingdom’s lifting costs are somewhere around $5 at last report."
If you read the article, it says $75.
When I worked for ARAMCO - in 1980 - the cost of the oil was 65 US Cents/barrel. Of course, it is much more expensive now - say $30/barrel. The figure of $90 might be what the government expects so as to pay for all the subsidies and weaponry - nothing to do with the cost of producing the stuff.
Because you have to constantly put money into maintaing and updating the ATM machine, also known as a well, indefinitley. And the less money/oil that there is left, the more it takes to get out.
Do they still accept our paper promises in exchange for their oil? Yes, methinks.
They do that because they are in control. Not because they have a gun to their head. /sarc
No actually, they never have.
http://fofoa.blogspot.ca/2009/07/gold-oil-and-money-in-free-market.html
Saudi Arabia has at least 5000 tons of gold.
Did you mean 5000 pounds?
Between the Saudi royal family and the government itself, 5,000 tons might not be unreasonable. SA has been collecting gold for decades, very quietly and below the official radar.
No. Tons.
Its the bullion banks job to funnel gold to SA through hedges with the gold miners.
Why do you think Brian Mulroney was on the board of Barrick gold while he was prime minister of Canada at the same time ?
How will the Saudi's defend their gold if push comes to shove? Is this under the assumption that the one occupying their country is ultimately the owner of their oil and gold.
If the Saudis are trying to store quantities of OIL outside of their own country (by JVing w/ the Chinese to build SPRs in China) what makes you think all their gold is in Saudi Arabia?
There was a rational reason many nations moved their gold to NY following WW2, even though the gold trade was centered in London, just as there is a rational reason why the Saudi elite park such large amounts of their portable wealth in 3rd countries...
I guess that would be consistent if the Saudis were so stupid as to trust the US then why not also be so stupid as to trust the Chinese. No matter what, they are plum fucked.
But, but, but everyone knows that the safest places in the world to store your gold are New York City and the City of London.
No doubt that's where most of Saudi Arabia's gold reserves are securely held.
BM was a total douche, whose 'Progressive Conservative' party was sent to the Arctic Wilderness for many years by the voters. Mulroney would get a woody just to hob-nob with his colonial masters (Reagan, Thatcher). Just another political ho'. History will not judge him kindly. Don't ask me what I really think.
Natgas vehicles, especially trucks, would be a tremendous winner; why haven't they been put into production?
Because a barrel of natural gas at standard temperature and pressure contains 1/1000th the energy as a barrel of crude.
Physics decides these things, not economics.
Actually that's the economics of physics.
Nice, but gas at STP conditions is not a useful comparison. Try:
http://en.wikipedia.org/wiki/Energy_density
As you can see from the table, with enough Cow Dung (Bull Shit) that's found everywhere and even here, one can harness energy to do (useful?) work. ;-)
It is happening. Westport makes engines for nat gas trucks, cars and even locomotives. I think this also includes retrofit kits for cars.
http://www.westport.com/
What is weird is gas prices have been frozen for almost a month. I wonder if O is worried about impeachment and the worried the sheep are getting angry. I have never seen gas prices almost fixed at one price for so long. Weird.
I know....it feels like the entire 90s and 2000s before 2008 when gas was the same freaking price and everyone had money. A whole month! A MONTH. Happy times are here again.
you think? fucking Duh. shit, that's nothing, want to see real manipulation, look at PM prices. 7+ billion people are still competing for a better quality of life, plenty of fucking demand for the world's most fungible/transportable energy and commodity chemical source-OIL. In fact, the population is growing, hence demand is growing...
It is happenning... but very, very slowly. IMO, it is an indicator of just how sick our economy is, that it is taking so long for the transportation industry to take advantage of these low NG prices.
Read the Hirsch report....
As for NG, you do realize that the US is still a net importer, do you?
not for long.
Had beer and corndogs last night.
I got some natural gas my own damn self.
Natgas trucks are coming on line. Right now the chokepoint is infrastructure. Union 76 is installing compressed natural gas (CNG) fueling points at many of its stations, and Maine is encouraging the establishment of CNG fueling stations along I-95. Honda has a CNG-fueled car that may be introduced to the U.S. within the next couple of years. CNG buses are already in use in New York and elsewhere, includinga couple of school districts and the Portland city bus system here in Maine.
Sad thing is, all of the government induced build-out will be "financed" by yet more wasteful fedgov grants.
In other words, meet your next "shovel-ready jobs plan."
Now, who is our nat-gas engine producer that will become the next Solyndra?
As always, if there were truly value to be delivered, private enterprise would've filled in the void by now.
The Saudis/Muslim Brotherhood/CAIR own Wash DC, a lot of Boston, have investments in all the US TV networks espcially Fox News. They own Congress and the White Hut.
LOL! Plenty of Saudi lackeys on ZH and tards who watch Operation Mockingbird TV.
They're just concerned that since dickHolder at the DOJ has stated that anti-muslim talk is a hate crime, you might get a visit from ObungaHole and some of his Libyian Jihadest buddies.
The White Hut - ROFL that was good. The first and only up arrow you'll get from me ... well, unless .... never mind it will be the last.
i'm confused. i thought the joos owned DC.
just wait till China discovers vast shale oil/gas reserve in some corner of their land/sea ... you will be seeing gold plated Aston-Martins on ebay.
saudis have plenty of oil for the 1.4 billion people in china. i dont think they are too concerned about the sham....er..i mean...shale.. gas story in the u.s........................
But Kito! We will be the oil producer of the world! It will only come at the cost of having humongous coke/dung piles all over the place. We can then sell those piles of coke/dung to some deserving third would nation! WIN WIN! Haiti could use some coke/dung. it's great for the air and super unclean.
Saudi Reserve estimates are bullshit IMO, but either way your point is well made. China as reported here Iw ould guess is the big winner in Iraq, and they are building the world's largest refinery to process saudi crude.
To the point of the article, look back at where the Us imports most of it's crude from and then ask yourself how much leverage the Saudis ultimately have. That chart puts in perspective what a sham the interventionalist military adventurism exploits have been. One one hand one can say they were about keeping oil from the other guy more than a strategic imminent need, and they even failed at that.
Saudi Arabia hs never allowed independent confirmation of its oil reserves, nor has it changed its reserve estimates substantively since the late 1980s, despite all the pumping since then. So absolutely right -- Saudi reserve estimates are total bullshit.
Right now Canada is far and away the number one source of imported oil, followed by SA, Venz, Mexico and Iraq.
http://www.eia.gov/dnav/pet/pet_move_wimpc_s1_w.htm
Before the company I am VP for ( pipeline construction ) started anew and went private we were part of a massive global company. In the halls of Calgary and Houston I often heard jokes in this regard, and stories of the Saudis pumping as much water in one hole to get oil out of another. They can't run dry soon enough for the sake of world peace and US military spending prudence.
I'd like to think that the collapse of the House of Saud would result in a more peaceful world, but I sure wouldn't bet on it, as power never gives up without a fight (if for no other reason than to provide a diversion for their escape).
I'll take the chance. As their reserves dwindle they are less important, firstly. Secondly, they are themselves a foreign family installed there by the west - who have operated a brutal dictatorship which makes former libya, look like the switzerland of africa, which is exactly what it was. Thirdly, as the literal home base of wahabbism, which underpins the ideology of what we call radical islam and use as an excuse to get molested at airports, as well as use to fight irregular wars against in places like afghanistan and iraq as well as arm to fight irregular wars FOR us as in libya and syria - I don't know we could go much lower.
The big old Saudi supergiant fields like Ghawar all use water injection, and outflow is ~98% saltwater and 2% oil cut. It's nearly over for the KSA.
Nyet, Ghawar water cut is about 35%.....
Flak, I love your work here but when did you last work for Saudi Aramco? "Official" water cut at Ghawar hasn't been 35% in over a decade (http://www.aapg.org/explorer/2011/06jun/ghawar0611.cfm), and had reached a 46% water cut back in 1979! (Read Matt Simmon's "Twilight In The Desert"). http://www.theoildrum.com/node/9263
Kingtut specifically mentions 55%+ on most of the supergiants, and annual decline rates of 8% are published even by the Saudi's themselves.
"Accepted" (for public consumtion) KSA supergiant water cuts are in the same realm as KSA "Reserves", i.e. marked to fantasy. I have it on good authority from current petrogeologists that Ghawar is down to delivering oil flavored water.
http://www.oilslick.com/Commentary/?id=1742&type=1
They've only kept production up with more recent projects (e.g. Manifa, etc.), but have been unable to increase total liquids production.
Agree. The Saudis started with about 160 Billion barrels, and have pumped around 120 of that. Still a lot of oil left, but they have to pump sea water into their wells to get the oil out. Imagine 100s of 8 foot pipes at pressure going into the ground. What somes out of the wells is already as much as 55% water.
Shale gas and oil works well for companies that do their geology right. But it will never come close to the heyday of Saudi oil production. The world is going to be paying a lot more for oil in the next few years. On the other hand, gas in Istanbul is $12/gallon and they some of the worst traffic jams I've ever seen. Conclusion: We will drive and we will pay whatever it costs.
These "oily" characters that are coming out to hype this kerogen bullshit, give one the impression that there will be a lot more dump than pump in the near future.
First of all you should be going to The Oil Drum and not Oil Price. The Oil Drum’s staff bios make Zero Hedge look like the Romper Room.
Do you get your financial advice from Fred Mishkin, Alan Blinder, and Blythe Masters?
Doesn't everyone?
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013...
Why that man wrote one of my worthless Econ textbooks.
Awesome answer Kito. That is why I don’t waste my time on Oil Price.com. The Oil Drum.com is the place to go.
But...but....Peak oil! Where are the nuts?
the "nuts" are hiding in a cave with OwlGoricle building an ark awaiting the flood from melting glaciers and pole ice.....
Naw, the whackjobs are buying into the hype over fracking with the sociopaths among them trying to fleece little old ladies out of their life savings....
It's fun to watch, anyway. These guys are gonna evaporate when the music stops. Gone without a peep.
Sitting here, reading this, laughing wryly at the stupidity of humanity.
"Technology, technology, and more technology—this is what has driven the American oil and gas boom starting in the Bakken and now being played out in the Gulf of Mexico revival, and new advances are coming online constantly."
Wrong, wrong and more wrong -- fracking and horizontal drilling have been around 20+ years.
What made this happen is price. The technology could not be used profitably until the price got to $100. The hard to reach stuff costs more to extract. Get the price up and you can extract it.
And it's a diminishing return reality. The hard to extract stuff also runs low and you have to go for harder and harder and harder to extract stuff, requiring more and more and more price.
This is the horrible reality of oil scarcity. You will not like what a world of $30/barrel oil looks like because there will be damn little of it flowing at that price.
That's right.
Good oil companies can borrow money for free. So they sink it into these no margin projects.
Given that money is free, why can't they increase world crude oil production? That is the tell to anyone who claims to have an understanding of basic economics....
Fracking has been around more than 100 years. They used to 'drop' little bottles of nitroglycerine down the hole.
A thought occured to me reading the headline.
Just how much influence is Saudi having upon the stalled Keystone pipeline ?
They have immense leverage which they will not relinquish easily.
A threat to drop the petro dollar and dump their UST's.Plus...
There appears to have been a major geopolitical shift in power over the
last ten days with Russia retaking pole position.
Long iodine tabs, and lead plate.
Probably about as much influence as uncle Warren and his extremely profitable railroads.
I love the term "low-gravity feedstock" ... meaning that if they simply pitch and turn the pipeline correctly through the altitude decline from ND to the Gulf, the oil flows by nature of gravity and the altitude assist. That's low cost, low complexity, and I imagine that even a 15mph (think Loire River current) constant flow would mean it really won't take VERY long to get the average crude molecule from A to B.
+1 for the Buffet callout. Who wants a rail monopoly when the crude gently flows to the Coast like rain in a gutter. Load onto tankers and ship into water ports. Fuck you Buffet.
Absolutely to Doc's point below. Also "capital, capital, capital" determines price not "Saudi Arabia." once global capital determines you're better off being a desert...you're better off being a desert." sure...imports can surge into the USA...but demand can fall off too. A huge housing bubble will finance people...towards cars that use batteries...towards Solar Tech. Why? "because these are trillion dollar capital flows" not what some clown named Breitling is talking about. (I tried to say this on SA btw but they no longer post anything I write. Do appreciate the TD's still keeping up the fight for free speech. I really believe this this is the most valuable media property there is in the world today actually. PERIOD.)
The Saudis can just as easily sell to China and India. With 7 billion people in the world there will be no problem soaking up supply.
US oil companies like Valero will be selling to China and India right beside the Saudis.
Not one drop of oil from US resources belongs to the US. And the Keystone XL pipeline if built will take Canadian crude to US refineries and from there to China and India, and if the US wants even one drop we'll have to buy it on the open market.
Anyone thinks anything less hasn't been paying attention.
Finally someone is making sense – how refreshing for a change.
"Will Saudi Arabia Allow The U.S. Oil Boom?" - that's is only half the question the other ..
part of question is ", will the FED Allow The U.S. Oil Boom?" and why ?
Because the petro-dollar needs demand, if the US became too independent(possibly even self sufficient) it would kill the demand for petro-dollars thus suffocating the money printing on which the whole US economy is now based.
You have it ass backwards....
The Saudis are being paid for the most part in gold.
Wow!...so this is the Key to our economic recovery!!! All is well in USA we now have our own oil so we can bring our troops home..stop our expansionism and interventionism! Prosperity for all once again!!! Hooray!
Free Koolaid for everyone!!
Matt Damons crappy anti fracking movie was paid for by the UAE.
Which has recently completed the first 25% of construction on its first nuclear power plant.
Yes, but where do they get their fuelstock uranium from? Iran?
http://www.enec.gov.ae/media-centre/news/content/emirates-nuclear-energy...
The enriched uranium will be supplied to KEPCO Nuclear Fuels (KNF), which will manufacture the fuel assemblies for use in the four planned UAE units. KNF is a member of ENEC’s Prime Contract consortium, led by Korea Electric Power Corporation (KEPCO).
Starting in 2014 - 2015, a total of six leading companies in the nuclear fuel supply industry will participate in the ENEC fuel supply program. ConverDyn (U.S.) will provide conversion services; Uranium One, Inc. (Canada) will provide natural uranium, URENCO (headquartered in the U.K) will provide enrichment services; and Rio Tinto (headquartered in the U.K) will provide natural uranium. TENEX (Russia) will supply uranium concentrates, conversion services and enrichment services. AREVA (France) will provide uranium concentrates, conversion services and enrichment services.
All politics aside, you enjoy shitting where you eat?
I think he enjoys eating shit so the question is moot....
The Daily Mail had Matt at a gym in Cambrige England with g*y George Clooney. These two are always together and Matt's wife looks like a beard.
BTW - his fracking movie died at the box office.
George's girlfriend, on the other hand... [wolf whistle]
If Matt weren't an actor, he'd be a teacher. Like his mom. I guess the pay's better in acting.
canada and mexico provide the majority of U S oil
And that's why during the 2012 Election, the Other Guy -- what was his name, Mitt something? -- kept referring to "North American energy independence". Nobody but nobody called him on it. Twits!
The Bakken oil field is like an old hash pipe to a pot head.... Scraping it out will get you buzzed but each time you scrape you get less....
Sounds like you know a bit too much about hash pipes and not too much about energy.
Are you *trying* to bait me?
Run along, but first you may want to loosen the chin straps on the metal collander you are wearing, I think it is cutting off the blood circulation to your brain....
What brain?
Let's see your 'Stats' on Bakken freddie.
Flack, do with him as you will.....
Bakken is for suckers:
http://www.theoildrum.com/node/9748
I've stopped reading my Porter Stansberry subscriptions after his Bakken bukkake ("We'll have all the energy we'll need for many, many years and gas prices will fall, bla, bla, bla...") Is he still hot to trot over Bakken, or has he found new stock to promote?
If the Bakken is so fucking wonderful, why did Oneok cancel a proposed pipeline because producers would not commit to a 10 year contract?
http://www.bloomberg.com/news/2012-11-28/oneok-shares-fall-after-bakken-pipeline-canceled.html
http://trib.com/business/energy/oneok-cancels-wyoming-pipeline-for-bakken-oil/article_cbdd15d9-25d1-5fd1-8e91-5606435e2aa7.html
This is all you need to know about the long term prospects for the Bakken....
Passing on a puny 10 year contract means the majors think these guys have 5 years to live.
This shit isn't even a mystery. All the clues are right there in the daily newspaper.
Total horseshit. This guy WORKS for the oil/nat. gas industry, so he has a vested interest in seeing capital flow into this project. Also, why the fuck would the Saudis worry about Bakken unless their fields were already in decline? Right now, all we are doing is running as fast as we can to stay in the same place.
OMFG.
Bakken? REALLY ? 20 years of production and it's up in the 100,000 of barrels a day and will NEVER hit multimillion per day.
DROP IT. Burning in the high teens MILLIONS of barrels a day, a field that will never do more that a few hundred THOUSANDS of barrels a day shouldn't even be discussed with a straight face.
SA must be shaking in their sandals. "Omar, they might really develop Bakken, I feel threatened"
Seriously people.
Well stated and reasoned....
I don't always agree with you, but I think that some people just junk you for the sake of junking you.
No shit.... ;-)
Tells you a lot about the state of critical thinking in America.
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Which one is it? I think we can rule out Florida right off the bat.
Also, is it an entire state? I thought that, at best, it might be a county or two.
The drill rig count in the Bakken dropped more than 15 percent last year, and production began declining as well after peaking at ~700,000 bpd. Tight oil fields live and die by the drill rig count because the wells produce about 40 percent of the available oil in the first year and then tail off. (Same with tight natgas wells.) Unless they get more rigs into play, Bakken is already past its prime.
In two years we'll be talking about Bakken in the past tense.
And at that time there will be this legion of jilted brides to Bakken claiming that it was a Left-wing Al Gore conspiracy to break the US economy that required Bakken to be shut down at gun point, there being about 50 bazillion barrels of oil still in the ground there.
Haterz gotta hate, it seems.
James Kunstler has been making the point that a lot of this strident denial regarding the fate of shale and fracking is due to American's being dependent on cheap oil just to survive, and the thought of it ever going way is driving us all bat-shit crazy with grief. I have to agree, the denial is way beyond creepy. It's as if as a nation we've become suicidal over the issue.
.
..and then it will be the Ay-rabs, and then it will be the Chinese, and then it will be the UN, and then it will be the Soviets (yes, the Soviets, not the Russians), and then it will be George Soros & His Bilderburger Band ...
Not necessarily in that order, of course.
If you believe in planned conspiracies outlined many years ago. The entire Middle East situation is part of the set-up. Both Israel and the oil producing Arab states will be betrayed by the powers and the middle eastern leaders who have conspired with the powers.
Pike's third war to bring in the global communist luciferian government.
Or, the fact that the US is becoming independent of middle east oil may be "just a coincidence"... if you prefer to believe that.
http://www.youtube.com/watch?v=1e3m_T-NMOs
...or the US
is not a fact but merely the current narrative.
The US is still a gas importer.The US is still the largest oil importer.
Sounds like a (pipe)dream to me.
This guy also has a vested interest in keeping the sector well capitalized.
Look at this and you will see how the US oil and gas boom came about:
http://www.itulip.com/images2/USoilProductionPerRig1987-2012wtmk.png
Very nice chart....
Can you think of a more productive use of $150 billion p.a. in CAPEX esp. given the declining return on BTU per $ CAPEX....
you hit the while saying "energy independancy" if this is really the driving force of the US interest no Saudi Arabia will be able to step on the way.
Fosil fuels although still the number one source of energy will be eventually substituted. who knows really what would be the next source.
Will Saudi Arabia allow it?
What I don't understand is how Obama can be as puppet of Saudi Arabia, China and Israel at the same time without them getting their strings twisted.
A picture is worth a thousand word in reference to Obama's relation to his masters.
http://www.nowtheendbegins.com/images/obamaIMAGES/obama-bows-to-saudi-king.jpg
Bow down before the one you serve
You're gonna get what you deserve...
He's not bowing, he's just looking at the King's Rolex.
Perphas he's showing the king his engraved ring.
http://www.wnd.com/2012/10/obamas-ring-there-is-no-god-but-allah/
Please tell us that you don't actually believe that bullshit....
I have a hilarious picture of Dubya holding hands with his Saudi master in a garden at the Bush ranch or some other insane asylum.
No Crap, I'm still traumatized by the image of him holding hands on live TV, as they are walking up the WH stairs or something. It's still gross, no matter what the MSM media (even Fox) said. Especially for a Texan.
while US is thinking of energy independance, Mr Maduro sales bellow price to lebanon on new agreement. http://www.facebook.com/MccCode
funny thing is that Venezuela no longer is able to process its crude oil, and purchases close to 1 MiLL barrels from US every day from the refined product.
Awesome! Now can we completely pull out troops out of the Middle East?
Let's let the government provide us with energy. You would need mucho green and tons of gold to pay for it. Dollar per dollar, BTU per BTU, green energy is a waste of capital. I mean taxpayer dollars.
Really, simply making shit up I see...
I guess you think it is ok to underprice coal export licences such that privately owned interests get to exploit and unduly proifit at public expense, i.e. screw the taxpayers....
The so called "US energy boom", or more the media noise around it, is much more financial calls for investment than anything else, check for instance Robert Ayres below :
http://www.forbes.com/sites/insead/2013/05/08/shale-oil-and-gas-the-cont...
Or Rune Likvern analysis :
http://www.theoildrum.com/node/9954#comment-960153
"How Bakken has turned the US into an economic powerhouse"
the old fashion way. buying protection through legislation (i.e. oh, not liable for spills of 'that' kind of oil), painting a stawman as god (this shall set you free), and getting out of dodge once the fungible has reached its port.
sorry ameicans, somebody else is willing to pay freight + to get it. thanks for the pipeline.
maybe next time.
honest.
signed,
Mr. Big Oil.
The Tyee – Difficult Truths about 'Difficult Oil'
Quote: "If we get to the point where we are bringing gas from the Arctic to boil water to make steam to extract the bitumen to fuel three tonne SUVs so people can drive five kilometres to a gym to spend 15 minutes on a stationary bike, we will have let down their generation and the next!"
LMFAO
I've been saying from the start that "tight" oil extraction is just a way to convert natural gas (not being useful for personal vehicular travel) into gasoline (which obviously is) except doing so in the least efficient way possible, all the while destroying vast tracts of land and huge quantities of water. In so doing we're just pushing back the day when we have to abandon liquid hydrocarbons as an energy choice for fueling the suburban way of life (which we have known less than 60 years) in the process burning up any ready supply of natural gas we might have instead used to provide electricity.
At which point we hit a very unyielding entropic wall very, very hard.
Electricity is actually far more useful than gasoline. Modern life really does grind to a halt without it. So we're burning up our future as a civilized species (ahem) just so we can rumble around in metal cans in and out of fast food drive-ins, getting obese and making the oil and auto companies rich.
The real "...and it's gone."
That's why, with that kind of Neanderthal thinking, we will continue to worship mere space aliens (Vulcans, Klingons...) as "gods" or "Angels of God".
Dumb sheeple deserve everything they get from their shepherds: A regular milking & rogering, periodic shearing and once-in-a-lifetime fleecing. /sarc
+1 for creative use of the term "rogering"....
If you'd get a periodic shearing maybe you could have a once-in-a-lifetime rogering.
My best guess is they may find that joining up with Iran as a regional partner will be their best move. Hey... They chair OPEC, we don't.
Their going to be pretty pissed when they try to warrant their T-Bonds. What comes around, goes around.
Could have done with this too >
http://news.firedoglake.com/2013/06/04/china-gets-iraqs-oil/
Cool. All the oil in the Bakken will pay for 10 months of Federal deficits.
Only have to look at US foreign policy over the last decade i mean what are the cost estimates for the Iraq and Afghanistan debacles six trillion USD and counting. US energy independence what utter bullshit.
Will the US allow the Saud royal family to keep drawing air while surrounded by angry, hungry kids they've repressed for years?
Same answer!