by Tanada » Thu 04 Jan 2018, 06:02:44
AdamB wrote:
The U.S. shale resurgence has been one of the main themes in oil markets this year, while OPEC’s production cut deal to deplete the oil overhang and boost oil prices has been the other key development in 2017. U.S. shale production is expected to grow over the next few years as the companies that survived the worst of the downturn showed resilience in the face of the lower-for-longer oil prices. But three years of low oil prices also led to the global oil industry slashing investments in conventional oil exploration, and deferring or revisiting development plans. This has led to the lowest ever volumes of oil discoveries in 2017, Rystad Energy said last week. While the low level of discoveries is not an immediate threat to global oil supply, it could become such ten years down the road, according to Rystad Energy. In
US Shale Can’t Offset Record-Low Oil Discoveries
Edward Jones Financial Planners are totally sold on the shale fixes everything story and I see this as somewhat painting the oil industry into a corner. There simply havn't been much funds spent for exploration during the glut. This pattern has repeated umpteen times through the history of the oil industry so nobody should be surprised by this happening. However this time the financial industry appears convinced fracking can ramp up overnight to any arbitrary rate needed to match demand in a still growing world economy.
This means IMO that the financial institutions are willing to pour some more funds into fracking as world prices rise, but will still actively discourage oil majors from doing large exploration and development projects when those funds could flow back out as dividends to the shareholder which include those same financial institutions.
IOW they are at the moment betting everything on Fracking as the solution to the oil supply for the foreseeable future. So long as Fracking satisfies world demand growth and continues to offset conventional field depletion this will work out OK. However if Fracking stalls out from lack of resources which could mean drillable leases, formation exhaustion or financial shortfalls, there is no plan B. Deep water exploration and development is not something that can go from zero to rapid deployment, the lead times are on the scale of a decade. By the same token the remaining unfound conventional oil unless it is discovered in a place that already has connections to the distribution system will take 3 to 9 years to bring online the same way Fracking the Bakken did. There was not enough rail and effectively no pipeline capacity when the Bakken boom began so it took years to ramp up in lock step with transportation infrastructure.
It doesn't do a lot of good to complete a well in the middle of nowhere that lacks decent roads, railroads or pipelines to transport the oil as it is produced. Discover a field that is as productive as all of Kuwait under the bottom of Lake Michigan and you will need years of work to be able to exploit that oil effectively no matter how many billions of barrels are there.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.