Outcast_Searcher wrote:C8 wrote:Maybe Saudi Arabia has no choice but to pump as they would just lose market share and prices may crash anyway.
I am not sure they even know entirely what is geologically possible on their land. I haven't heard of exploratory fracking attempts. In the end, after all the models have been run, the only truth is to try.
I read what I considered a real good book on the shale fracking revolution (which I need to get around to reviewing at some point -- maybe when my taxes are done.
It's called "The Domino Effect", by a guy (Russell Braziel) with 40 years in the business, with lots of real world experience in natural gas, NGL's, and oil production.
I'll summarize some key points here, as they're germane to your post.
He says the US has at least a ten year head start on the rest of the world in Shale fracking. He says between some countries banning shale fracking, the big economic downturn in 2008 delaying some projects for a long time are two minor reasons. He gives the major reason as that each major shale formation is different. It takes a long lead time to explore, experiment, and find the "keys" to most productively drill each formation. In an entrepreneurial country like the US, some businesses will take such risks (and hope for the big payoff). Not so in the vast majority of big state-owned oil behemoths, he claims. (This is one of the reasons they tend to be inefficient).
So if this is correct, the KSA well might not know what is possible on their oil lands via fracking.
To me, if they see the writing on the wall and fear longer term high production and low oil prices due to US shale fracking for oil (and eventually global fracking), like you say, they may feel they have no choice.
I don't know what will happen, but Braziel points out that US shale fracking is responsible for the long term abundance and price crash in natural gas. He says now that's been hitting crude oil and NGL's. And he thinks there's lots more to come. He does NOT give specific forecasts, forecast specific product prices (or crude prices), but instead shows a general picture about how over time, abundance tends to push the whole complex down, especially since many wells produce all three drill bit hydrobarbons.
This, for example, is why dry NG prices continued to be pummelled, even as frackers were targeting wet gas when oil was still expensive. Well, wet gas wells produce lots of dry gas too, so the volumes increased, even though the dry gas wasn't the primary target.
He claims a lot is known in the US about shale formations, which is why he's confident shale oil plays will tend to be lucrative. Drillers can be confident a given formation will produce when fracked once it is intensively studied. They won't know HOW lucrative until they've done early drilling/experimenting on the formation for months to years though.
There are a LOT of shale formations around the world. He is confident that there will be a lot of oil produced from such shales -- but it may be decades before we see it, especially if US fracking keeps prices averaging well below $100 for quite a while.
He could be wrong of course, but his analysis of the history of the drill bit hydrocarbons uses data, logic, dates, economics, and plenty of analysis, along with historical pricing events and trends to build a case that demonstrates (to me) that the man knows what he's talking about.
So you're clearly right -- the only truth is to try. However, statistically, apparently overall there is a lot of oil in the globe's shale, and a meaningful amount of that will be profitably recoverable -- when the oil price is right.
