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Page added on October 30, 2019

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Texas Hit Hard By Shale Slowdown

Production
Texas Shale Slowdown

Texas’ economy is perhaps the most vulnerable to oil price swings given its leading role in the country’s oil industry. Recently, as prices have remained low, talk has begun about the outlook for the state’s economy.

According to a recent Reuters report, for example, smaller independent oil and gas producers in the Lone Star State are struggling to get loans from banks as the latter become increasingly wary of the ability of the borrowers to return the money when the time comes.

Jobs in the Texas oil and gas industry are falling, too. The Houston Business Journal reported this month that September saw a 1,100 decline in the number of jobs in the mining and logging sector—the category that includes oil and gas jobs. Over the 12 months from September 2018, the state’s oil and gas industry added just 1,700 new jobs, which was the lowest number of new job additions to any Texas industry over the same period, data from the Texas Workforce Commission showed.

Yet not everyone is worried. The University of Houston Energy Fellows, for instance, wrote in an article for Forbes that “the alarm bells are premature.” While the experts that make up the group acknowledge there are plenty of reasons to be worried about the economy of Houston—the article focuses on the city—oil prices are not among them.

The trade war with China and the anticipation of a global economic slowdown caused by it is a top concern for any economy and Houston is no exception. Political economic problems in Europe are also a cause for worry. Yet, according to the University of Houston Energy Fellows, bankruptcies in the Houston oil and gas industry are only slightly higher this year than last, and the credit crunch energy independents are facing now is “far from comparable to 2015-16.”

True as this may be, there is no guarantee things will plateau at this level of problems and not deteriorate further. Reuters reports that banks have marked down the perceived value of U.S. oil and gas not just for next year but for the next five years. This value makes the foundation of reserve-based loans, so the lower it is, the less money the banks would be willing to give businesses.

And then there is the question of exposure. Related: Pakistan’s New Energy Proposal Is A Double-Edged Sword

“Some banks believe they have too much energy exposure and want to reduce some of this risk,” a senior executive from private equity firm Warwick Energy, Ian Rainbolt, told Reuters.

“I expect the biggest issues to be with over-leveraged natural gas producers, especially those without firm transportation in geographically-disadvantaged areas,” said another financial services executive, the managing director of investment bank Carl Marks Advisors. To be fair, this executive said the biggest trouble is for companies in the Appalachia, the Rocky Mountains, and Oklahoma.

Meanwhile Texas has begun exporting pure Permian crude—the light, sweet kind of crude pumped from the most prolific shale play in the U.S. Buyers, especially in Asia, want the so-called ‘neat’ barrels with consistent quality of the Midland grade—the purer, the better. That’s a new market that can grow if producers maintain consistent quality. Any new market would strengthen the resilience of the industry despite problems with banks and benchmark prices.

By Irina Slav for Oilprice.com



23 Comments on "Texas Hit Hard By Shale Slowdown"

  1. Outcast_Searcher on Wed, 30th Oct 2019 5:56 pm 

    The title of this definitely should not have been “Texas hit Hard”, but when trying to clickbait, why should integrity matter?

  2. Duncan Idaho on Wed, 30th Oct 2019 6:06 pm 

    1893 — Atlas Shrugged?: Charles Atlas, the “World’s Most Perfectly Developed Man”. Gets a missile & a tire company named in his honor, & better yet, is the central character in a rather badly-writ fiction by Ayn Rand.

  3. Theedrich on Thu, 31st Oct 2019 12:31 am 

    The “whistleblower” is Eric Ciarmella, CIA analyst, a 33-year-old registered Democrat and Trump-hater:

    See RealClear Investigations

    More Democrat corruption.

  4. Davy on Thu, 31st Oct 2019 3:49 am 

    “The “whistleblower” is Eric Ciarmella, CIA analyst, a 33-year-old registered Democrat and Trump-hater: See RealClear Investigations More Democrat corruption.”

    Thank you for the find Thee. This is disgusting and the dumbcrats should be ashamed. I can understand their desire to get Trump out but do it by getting your fucking act together and at the ballot box. Don’t destroy the body politics and the constitution like they are doing.

  5. Dredd on Thu, 31st Oct 2019 11:23 am 

    Karma?

  6. Antius on Fri, 1st Nov 2019 8:02 am 

    “World ‘Awash’ in Oil as U.S. Sees Its Shale Boom Barreling Ahead”

    “Texas Hit Hard By Shale Slowdown”

    Two new topics within a couple of days of each other. Presumably, they cannot both be true at the same time. If the shale boom is really ‘barrelling ahead’ then the Texas Permian basin should be booming as well.

  7. Cloggie on Fri, 1st Nov 2019 8:02 am 

    The German recession has been called off:

    https://m.spiegel.de/wirtschaft/soziales/konjunktur-deutschland-schrammt-wohl-doch-an-rezession-vorbei-a-1294419.html

    +0.5% in 2019

  8. Cloggie on Fri, 1st Nov 2019 8:05 am 

    Meditarenean gate crashers arriving in Italy:

    2018: 22,000
    2019: 9,600

    Irrelevant.

    https://m.spiegel.de/politik/ausland/italien-innenministerin-luciana-lamorgese-verweist-auf-sinkende-zahl-von-migranten-a-1294381.html

  9. Hello on Fri, 1st Nov 2019 8:07 am 

    >>> konjunktur-deutschland-schrammt-wohl-doch-an-rezession-vorbei

    That means they need a lot of new workers. Where to get them from? Ah yes, negros are already knocking.

  10. Cloggie on Fri, 1st Nov 2019 8:10 am 

    Brexit Party could torpedo Brexit because they insist on no deal:

    https://www.dailymail.co.uk/news/article-7638411/Nigel-Farage-prepares-unveil-Brexit-Party-election-hit-list-HUNDREDS-seats.html

    “‘Drop the deal or we’ll contest EVERY single seat’: Nigel Farage declares war on Labour AND Tories – delivering Boris Johnson a November 14 deadline to abandon his EU agreement and form a pact with Brexit Party”

    It looks like will become a permanent feature of British political life.

  11. Dredd on Fri, 1st Nov 2019 12:01 pm 

    Oil-Qaeda kills itself as it kills civilization.

    Natch ( War is the Highway 61 of the 1%).

  12. Robert Inget on Fri, 1st Nov 2019 3:31 pm 

    https://www.marketwatch.com/story/producers-are-putting-the-brakes-on-the-shale-boom-heres-what-that-means-for-oil-prices-2019-11-01?mod=mw_latestnews

    U.S. shale oil, which was viewed as a key reason the U.S. became the world’s top oil producer last year, has seen a slowdown in production growth since late 2018. That may contribute to a rise in crude prices as other major oil producers look to adjust production levels to better balance the market.

    U.S. crude-oil production reached a record of 10.96 million barrels a day in 2018, according to the U.S. Energy Information Administration. About 6.5 million barrels a day of crude oil, accounting for 59% of total domestic crude output in 2018, came from shale resources.

    There’s been a “gradual” slowdown from the historical peak in shale oil production growth of about 1.8 million barrels a day year-over-year in the third quarter of 2018, says Teodora Cowie, an analyst at Rystad Energy. Shale production is likely to grow by about one million barrels a day year-over-year for the fourth quarter of this year, she says.

    Cowie attributes the slowdown to the “significant expansion in well activity during 2017-2018,” which came at the “cost of a steeper base decline.” So-called young wells produce large amounts of oil in their first few quarters, then see output rapidly decline, she explains.

    Also, once oil prices started to drop at the end of 2018, investors pressured public exploration and production companies to adopt more “disciplined” spending and focus on cash flow generation. That led to a decrease in investments and fewer wells drilled, she says.

    Rystad Energy expects the sluggish growth pace to last into next year as shale E&P companies feel pressure from investors to limit spending, Cowie says, adding that weak oil prices don’t help. WTI oil futures CLZ19, +3.49% settled at $56.20 on Friday, down 15% from the year’s peak at $66.30 in April.

    The Organization of the Petroleum Exporting Countries will have to take into account the outlook for U.S. shale production as it readies for the next meetings with allied non-OPEC producers, such as Russia, on Dec. 5-6 in Vienna. “OPEC is concerned with overall global inventories, global balances, global prices,” says Shin Kim, head of oil supply and production analytics at S&P Global Platts.

    “They want to see the signals that the market is tightening,” she says. So OPEC is “watching the shale story and how that develops.” If “shale growth slows down, that is more bullish for oil prices.”

    Other factors are driving oil prices, some of which have been bearish, with macroeconomic sentiment “worrisome,” says Kim. There’s a lot of “overhang on the risk of potential supply that could come back on the market,” from Iran and Venezuela—volumes that aren’t allowed on the market right now because of U.S. sanctions.

    However, among the bullish price factors is “the potential for shale to disappoint faster than the industry thinks,” she says. U.S. shale has driven global oil supply growth for several years, Kim says. Nothing else out there that can match U.S. shale’s production growth rate of a million or a million and a half barrels of oil a day, and it’s a “consistent level of growth,” she says.

    So “if shale slows down much faster than people think, then that would leave the market searching for other sources of big supply,” says Kim.

  13. Robert Inget on Fri, 1st Nov 2019 3:51 pm 

    Slow down, smoodown.
    We are using more oil today than ever in history.

    https://ycharts.com/indicators/world_oil_consumption

    People seem to confuse ‘growth’ with actual consumption or DEMAND.

    Just because Trump’s war on trade slowed GROWTH a few percentage points, doesn’t mean China, Asia, isn’t still buying record amounts of oil.

    Facts are clear. Printing money has less value.
    The Fed is printing, Hail Mary, twenty, thirty,
    billions daily. Every effort is being made to diminish Oil’s value in order to prop-up employment.
    All this fakery is being done, Trump style, out in the open. “if you see me commit a crime it isn’t a crime.”

    Of course ‘the world is awash in oil’. You try coming up with 100 million barrels 24/7/365

  14. makati1 on Fri, 1st Nov 2019 6:29 pm 

    Barrels/day do NOT mean much when there is a lack of NET energy comparison. As I keep pointing out, all that is required in the barrels per day bullshit today is that they are burnable. Why not add in all the alcohols and vegetable oils produced? Lies and more lies.

    If truth be told, the barrels today are way down the NET energy chart from even 10 years ago. I read that it takes a barrel equivalent of energy to get about 10 barrel equivalent today when it once was one to get 100.

    Perspective people, not bullshit advertising for the failing oily industry. Gotta keep them ‘inverter’ suckers onboard the sinking ship USS Frak.

  15. full woke supremacist muzzies jerk on Fri, 1st Nov 2019 6:50 pm 

    Supertard david wood said dog prevented gabriel from protecting muzzie

  16. Cloggie on Sat, 2nd Nov 2019 5:48 am 

    Energy autonomy for farmers:

    https://deepresource.wordpress.com/2019/11/02/energy-autonomy-for-farmers/

    The perfect means to combat the NIMBYs.

  17. Cloggie on Sat, 2nd Nov 2019 6:23 am 

    “Fracking banned in UK as government makes major U-turn”

    https://www.theguardian.com/environment/2019/nov/02/fracking-banned-in-uk-as-government-makes-major-u-turn

    Britain is a European country with European standards after all.

    https://images.spot.im/v1/production/k5r8ifrphx7dmgiqxs9w

    LOL

  18. Cloggie on Sat, 2nd Nov 2019 6:26 am 

    Precisely the reason why Brexit needs to happen:

    https://www.theguardian.com/business/2019/nov/02/george-soros-brexit-hurts-both-sides-money-educate-british-public

    “George Soros: ‘Brexit hurts both sides – my money was used to educate the British public’”

    George is afraid that Brexit undermines his 1945-ZOG-empire, a correct assessment.

  19. REAL Green on Sat, 2nd Nov 2019 6:28 am 

    “How to Solve the Big Problems That Small Family Farms Are Facing”
    https://tinyurl.com/y485oj9g ecowatch

    “Under relentless and steadily increasing financial pressures, talented young farmers are giving farming their all for five to 10 years, then quitting. Experienced farmers, including organic farmers, are admitting defeat, selling what they can and finding “real” jobs. The prices farmers receive for crops do not cover all the costs of keeping farms viable, not to mention the extra costs of ecological or regenerative farming systems. The farm crisis is not over.”

  20. REAL Green on Sat, 2nd Nov 2019 6:29 am 

    The referenced article is an important REAL Green topic. Permaculture is central to REAL Green. There are a thousand different types both urban and rural. I can tell you from experience that animals, gardens, orchards, grapes, wood, solar, and hay do not pencil out smaller scale. Yet, smaller scale is what is needed to reduce our planetary foot print with resulting resilience and sustainability. When I say resilience and sustainability this is even relative. Our world is so path dependent, carbon trapped, and delocalized that even those who have the resources and motivation should be aware you can only go so far. Beyond a point a TRUE Green lifestyle are an expense except for a few who can find a niche. It takes an investment and then it needs to be subsidized. FAKE Greens will go on and on about organic eco living. They will talk about EV’s and solar homes and act like this is all affordable and green. This is not the case in reality. The reality the world is dirty and trapped in dirtiness. It requires funds and things and those come from a dirty world that is concerned with growth.

    REAL Green has a solution for those who can. REAL Green is not for everyone and not meant to be although the basic fundamentals are for everyone and should become part of the greater social narrative. These basics are about behavior and acceptance of path dependency and our collective carbon trap. Path dependency is about a global competitive cooperative system of socio/economics that is locked into an arrangement we see right now in the status quo. We want to do this or that but other forces push back. The reason for this is competitive cooperation. We have to accept the will of others to get our will. We compete to try to push our way over others. This is then trapped further in a highly productive but also destructive system of economic globalism. REAL Green acknowledges this and accepts that this is a recipe for a decline process that risks collapse at some point. Decline now and beat the rush. Behaviorally this means accept doom and begin a REAL Green prep.

    REAL Green prep is about localism with the basics of the old-world ways of harvesting and gathering of carbon energy. It is about the lowering one’s footprint for one’s local but also the planet. Since the truth of the matter is the planet is telling us these things the essence of your effort is emulating the truth. Once you do the Kubler Roth of late stage capitalism and its faith in techno-modernity you then realize a gradient of change is ahead. This will be overwhelmingly destructive change yet you can be part of the constructive change that is like Green cover over a Brown land. This acceptance leads you to do two things one is triage and the other is gathering and harvesting. Triage out bad behavior and lifestyles. Triage out things you don’t need. Gather tools, hardware, and material with a future. Begin situations where you can harvest carbon in the form of food calories and biomass heat. None of this is revolutionary because it is all out there. It is proven and just requires a different frame of mind. The nuts and bolts of REAL Green are readily available. What turbo changes REAL Green is the behavior side.

    REAL Green behavior uses the status quo to leave it in relativity. You will need to continue to live your status quo life playing the game that is required to survive. You will need to harness globalism with consumerism and even the delocalizing forces of the car culture. You do this to leave it though. This is the critical element that offer much needed meaning. You are harnessing a powerful force that has huge resource base. You are cherry picking the best of it and fortifying your local. You are doing this in a camouflaged way with stealth. Even with your significant others you may need to hide your true purpose. You can call it a hobby or just light prepping. Nobody minds small prepping or hobbies like gardening, animals, and vital skills. What make people nervous is a full-scale dooming and prepping IOW people can’t handle the Truth. People do not want their life system upended. This then means you have a tight rope to walk. On the one hand you live the status quo and on the other you are dedicating your life to leave it.

    Where you are going is into a world with more meaning because you are accepting the fact that life as we know it has no future FAKE Green or Brown. You are building a lifeboat of skills and things that will help you in an existential crisis. You are creating a hospice that is a lifestyle of adaptation and mitigation of decline because decline is about pain and suffering. The decline of affluence means hard times and for some total disenfranchisement even with REAL Green warriors.

    You are going to do things that economically do not add up. A REAL Green homestead will not pencil out. You will not be able to live off of it. You can make it work and it will mean increased resilience to collapse and sustainability once collapse has taken a stair step down. You will acquire skills and attitudes that will assist you on the way down. You will then have what it takes to guide others that will go into this process unprepared and rudderless. REAL Green is about leadership of this process but it is not exposed until it is time. In the mean time you act FAKE Green and even Brown to fit in. You harness your existing local to make it more REAL Green. You harness by using those who are not REAL Green and, in the process, you turn your local a little Greener. This is not about success but about the management of failure.

  21. Davy on Sat, 2nd Nov 2019 6:45 am 

    “The Third Wave Of Globalization Has Ended”
    https://tinyurl.com/y646crwu zero hedge

    “The global economy is certainly at crossroads. Protectionism and nationalism, a well-matched marriage of global chaos at the moment, has threatened to end the third wave of globalization that began in the late 1980s. Capital Economics has published a compelling research note, titled “The end of globalization,” specifying how 150 years of globalization could’ve put in a significant peak in the last several years, all thanks to President Trump’s trade war with China. The third wave of globalization began in the late 1980s, mostly driven by technological advancements and shifting labor and capital around the world to the most cost-effective regions. While the Western hemisphere consumed for three decades, the Eastern hemisphere manufactured the goods (which produced rising inequality in the West and thus how protectionism and nationalism were sparked), but the status quo of how supply chains are organized around the world could be changing as world trade volumes have hit a significant wall. In terms of the Elliott wave principle, a third wave eventually gives out to a corrective fourth wave. Capital Economics believes the world is headed towards a period of de-globalization, or as history will call it a fourth corrective wave.”

  22. Cloggie on Sat, 2nd Nov 2019 1:30 pm 

    No need for a huge crane anymore to get the modern onshore wind turbine installed anyway. Use the tower as its own crane:

    https://deepresource.wordpress.com/2019/11/02/pictures-lagerwey-self-climbing-crane/

  23. Kenz300 on Mon, 4th Nov 2019 10:44 am 

    Financial institutions and insurance companies are now starting to factor in the risk of the Climate Crisis into their investing decisions. The risks of fossil fuels is too high.

    Before long people living on the coasts will have trouble selling their property because no one will be able to get a loan or insurance. Looking out 30 years the property may be under water.

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