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Page added on July 1, 2017

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Oil Export Madness

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We’ve been on quite a ride since the U.S. tight oil boom took off a decade ago.

In fact, you can say that drillers in the Lower 48 have exceeded expectations.

Back in 2013, the EIA never saw U.S. crude output topping 8 million barrels per day. I told you at the time that our tight oil plays would drive production higher.


Today, more than 9.3 million barrels of oil are being extracted from U.S. fields every day.

And the general consensus right now is that next year, the United States will break its previous production record of 10.44 million barrels per day, which was set back in November of 1970.

Personally, I wouldn’t be surprised if we blow past that record before we ring in the New Year.

So, like I’ve said… we’ve come a long way.

Yet in today’s low price environment, there’s just one thing missing for those drillers: profits.

Burning Cash

The last few years in the oil market have seen a major shift from spending fast to saving every penny.

When prices were back in triple digits, it was easy to portend the land rush that ensued, as companies were in a frenzy to buy up as much acreage as possible, with the hopes of drilling every last inch of it they could.

Well, you’ve got to spend money to make money, after all.

As you can expect, the name of the game changed once prices started plummeting. It’s more than simply where a company is drilling; it’s about efficiency.

In each of the top oil-producing regions in the U.S., new well production has surged since 2014.

Yet despite the success the sector has had boosting production, most companies aren’t seeing the profits they were hoping for.

Here’s a not-so-fun fact regarding the shale sector: Nearly everyone has been operating at a loss since crude tanked during the summer of 2014.

But this doesn’t necessarily mean it’s a bad place to be…

You and I both know we’re not going to see $100 oil again anytime soon.

Thing is, we don’t need $100/bbl oil anymore.

Getting Paid… Finally!

By now, I can tell you that we already know where the best reserves are held.

The first and most obvious choice is none other than the Permian Basin in West Texas. Not only is it a personal favorite, but drillers there are tapping into a world-class play, since it was the only shale play to continue building production when prices were at their lowest.

Even though production lagged virtually everywhere across the United States, West Texas has been pumping more and more oil out of the ground.

And now that we’re barreling toward a new peak in U.S. production, companies have a little more wiggle room.

energy and capital

5 Comments on "Oil Export Madness"

  1. bobinget on Sat, 1st Jul 2017 5:53 pm 

    The real bad news remains hidden in financial reports . In shale, there’s no long term profit for late comers .

    Tight rock=Ponzi. OK, agree or not.
    If we keep giving away gas and oil below cost of production, at some point investors will run the other way.

  2. MASTERMIND on Sat, 1st Jul 2017 7:00 pm 

    According to the Houston Chronicle shale oil and gas investment dropped in June by 97%. That is almost hand to mouth. And the wall street urinal had an article last week. Which asked why they are not making any cash. And quoted one hedge fund ceo who called them “The mother frackers, and said ‘They are all hat and no cattle”. And the NYT just had an article yesterday which talked about one banks CEO’s confession that his 20 billion dollar investment in shale was a mistake.

  3. Plantagenet on Sat, 1st Jul 2017 11:05 pm 

    Shale Oil has saved the planet from Peak Oil.

    And yet people kvetch about it.

    Imagine what kind of shape the global economy would be in without TOS. We’d be 10 years past peak oil and heading down into permanent economic chaos. Instead, thanks to TOS, we’ve got abundant cheap energy and a growing global economy. Slow growth to be sure—-but still growing.


  4. twocats on Sun, 2nd Jul 2017 9:06 am 

    This article is a mess, almost as incoherent at Plant’s comment, which is saying something.

    but the truth is so obvious to everyone that even E&C (a hyper-shill for every crackpot energy pitch) has to admit that profits haven’t been a strong suit.

    this isn’t kvetching, its the reality of the economics & physics of shale oil – without slave labor (cheap energy or humans), shale oil ain’t cheap.

    will shale ever be “handed the bill” and sent packing into the dustbin of history? hard to say – it might coincide so closely with societal collapse that no one will even notice.

  5. dissident on Sun, 2nd Jul 2017 11:51 am 

    That EIA graph is hilarious delusion. They expect 30 years of conventional and non-conventional production with essentially zero decline. The clowns at the EIA need to lay off the meth and the crack.

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