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Page added on March 15, 2019

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Is shale in late innings as Big Oil comes to bat?


The long-term viability of the U.S. shale boom is uncertain, but the world’s biggest oil companies are making big bets on its success as smaller firms struggle with debt and the lack of scale needed to operate more efficiently.

Chevron and Exxon Mobil are emerging as top players in the booming Permian Basin, while European majors such as BP and Royal Dutch Shell are growing in West Texas as well. They have size, economic diversity and the finances to theoretically produce oil and gas with fewer emissions as the world transitions to a lower-carbon future.

These companies discussed the importance of growing in American shale oil while pushing for environmental sustainability on Tuesday at the CERAWeek energy conference in Houston.

Last week, California-based Chevron and its Texas rival Exxon Mobil made waves when they said they each plan to produce almost 1 million barrels of oil equivalent a day from the Permian within five years — roughly triple their current output.

Chevron holds more than 2 million net acres in the Permian. Chief Executive Michael Wirth said Tuesday that Chevron watched and waited as smaller companies eventually found success in the Permian with horizontal drilling techniques and hydraulic fracturing, called fracking.

Now, Chevron is using its size and technology to rapidly ramp up production, employing a factory-model in which many wells are drilled, fracked and completed in a standardized, repeatable way.

“Trial and error may not be our wheelhouse, but it’s technology and scale,” Wirth said. “In a factory-drilling operation, you do the same thing many times, and quickly you learn better ways to do things.”

Climate always there

Royal Dutch Shell has a more modest Permian position, but is looking to grow there even as it begins to link its carbon emission targets to its executive pay compensation.

On Tuesday, Gretchen Watkins, president of Shell’s U.S. subsidiary, Shell Oil of Houston, called on the White House to tighten the rules on methane leaks from oil and gas production, rather than roll them back as proposed.

“We need to do more,” Watkins said.

Methane, the main component of natural gas, is a potent greenhouse gas that traps considerably more heat in the atmosphere than carbon dioxide, helping to accelerate climate change.

Likewise, BP last year vowed to hold greenhouse gas emissions from its operations at or below its 2015 levels in the years ahead. That includes keeping its methane emissions down to 0.2 percent of the gas produced.

At the same time, BP paid $10.5 billion to buy the Texas shale assets, including in the Permian, of Australia’s BHP Billiton. That was the largest energy deal of the year in 2018.

BP Chief Executive Bob Dudley said Tuesday that the British energy giant must be “progressive for society and pragmatic for investors,” and nimble enough to shift as the market changes. At the beginning of this century, BP invested heavily in renewable energy, perhaps before it was economically viable.

The company lost money then. Now, it’s strategically investing again on a smaller scale.

“We have to move from being pure-play oil and gas companies into broader energy businesses,” Dudley said. “Our focus has to be on developing an energy system that is cleaner, better and kinder to the planet.”

But some environmental groups, including Greenpeace, are calling BP hypocritical for lobbying the White House to roll back some methane emissions regulations.


4 Comments on "Is shale in late innings as Big Oil comes to bat?"

  1. Robert Inget on Fri, 15th Mar 2019 11:32 am 

    For Exxon and Chevron getting into shale at this late stage should be front page on this web site and others. Exxon figures (or is saying) they can lift crude for $15 bucks a barrel.

    Live in the same house for 43 years. Pay about $2,500 a year in taxes. Since I have solar, my power and water are ‘free’. Why doesn’t everyone
    have this?

    Bottom line: Exxon and Chevron will be hiring robots who also work ‘free’.
    XOM owns miles and miles of ‘free’ drill pipe, rigs of stout steel. So, here’s MY question:
    Can shale give returns for many years, like GOM ultra deep water? (where lifting costs are over $50 a barrel?

    Today the world burned 100.8+ Million barrels.
    Demand has NEVER been higher.
    Next year, even at 1.2 % + CONSUMPTION, what then?

  2. Cloggie on Fri, 15th Mar 2019 1:38 pm 

    “Russia can become world’s top natural gas producer – Shell CEO”

    With the biggest natural gas reserves on the planet, Russia could become the world’s number one producer of the fuel, according to Ben van Beurden, the CEO of Anglo-Dutch energy major Shell.
    The top executive says that rapidly increasing demand for natural gas has occurred due to the worldwide trend aimed at forcing out coal from power generation and the widening opportunity of available renewable energy sources.

    “Russia’s chances in the field are huge,” van Beurden wrote in an article for RIA Novosti, stressing that the country is the world’s largest exporter of natural gas.

    “It is the second largest producer of natural gas. It could be the largest,” he said.

    Shell clearly “pivoting” towards Russia.

  3. Cloggie on Sat, 16th Mar 2019 7:28 am 

    Major US UCG report from 2017 (Lawrence Livermore):

    Conclusion: UCG can very well be a viable source of fossil fuel. UCG began in the USSR (to improve the fate of mine workers by abandoning mine working) and was picked up in the US and had its heyday there in the seventies and eighties. The technology has abandoned since, probably because of cheaper alternatives, and senior knowledge and skills have evaporated since.

    But the potential is still there.

    Morale: don’t worry about depletion of fossil fuel. Worry about getting rid of fossil fuel as soon as possible.

  4. print baby print on Sat, 16th Mar 2019 1:13 pm 

    “We have to move from being pure-play oil and gas companies into broader energy businesses,” Dudley said. “Our focus has to be on developing an energy system that is cleaner, better and kinder to the planet.” Fucking bastards they didnt care about anything else exept for profit. Now when the holes come up dry they are talking about planet . Fracking – yes they smell money- fresh paint is still on the notes

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