- Saudi Aramco’s CEO says he does not worry about the booming U.S. shale oil output.
- The “sweet spots” that American frackers are focusing on will eventually deplete, forcing them to tap less lucrative acreage, Amin Nasser says.
Saudi Aramco’s Amin Nasser, CEO of the world’s largest oil company, says he does not spend much time worrying about booming production from U.S. shale fields.
One reason, says Nasser, is that shale drillers will eventually deplete the low-cost, high-quality “sweet spots” they’ve focused on throughout much of the three-year oil price downturn. American energy companies have driven down the cost of producing a barrel of crude, staved off bankruptcy and prevented output declines by tapping their best oil fields first.
“The concentration that we are seeing today is on the sweet spot of shale, and this will not last forever,” Nasser said in an exclusive interview on CNBC’s “Squawk Box.”
“You can concentrate for some time on the sweet spots and produce more oil. But ultimately you need to venture downward, and that’s where you have less quality and you require more cost to produce these barrels,” Nasser said Sunday from the command center at Saudi Aramco headquarters in Dhahran.
“Shale oil will contribute additional barrels, but it will all depend on the price of crude.”
American drillers use expensive advanced methods like hydraulic fracturing to free oil and natural gas from underground shale formations.
A surge in U.S. shale production is one of several factors that has frustrated the Saudi-led effort to drain the world’s stockpiles of excess crude. OPEC and several other exporting nations, including Russia, have agreed to keep 1.8 million barrels a day off the market in a bid to boost oil prices.
The cost of U.S. crude rose to about $55 a barrel in January after OPEC struck the deal in December, allowing more frackers to break even on production from new wells. U.S. output has grown by 467,000 barrels a day this year through July, the last month for which final data were available.
While Saudi Arabia is cutting its oil exports, U.S. shipments have filled in the gap and surged to record highs.
Nasser said the market can absorb the bump in U.S. output, given the International Energy Agency’s forecast that global oil demand will grow by 1.6 million barrels a day in 2017. Production from the world’s existing wells also declines by about 5 percent, or roughly 5 million barrels a day, he added.
Further, the recovery in U.S. drilling activity has stalled recently, Nasser notes. The number of oil rigs operating in U.S. fields rebounded to a total of 768 in August. The count has since ticked down to 736, as U.S. crude prices consolidate at about $52 a barrel.
“Shale oil will contribute additional barrels, but it will all depend on the price of crude,” Nasser said.
As for Saudi Aramco’s influence on oil prices, Nasser said the market — and not his company — will determine the price of oil.
“Even the production currently is dictated by the Ministry of Energy rather than Aramco,” he said.
“When there is an agreement within OPEC, we will adhere to whatever the ministry asks for. But whatever is put on the market, in terms of supply-demand balances, will dictate the price.”
MASTERMIND on Tue, 24th Oct 2017 8:04 am
Chevron CEO warns US shale oil alone cannot meet the world’s growing demand for crude
https://www.cnbc.com/2017/05/01/us-shale-cannot-meet-the-worlds-growing-oil-demand-chevron-ceo-warns.html
Saudi Arabia may be out of oil to export by 2030 – Citibank
http://www.aljazeera.com/blogs/middleeast/2012/09/35876.html
Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead
https://www.wsj.com/articles/saudi-minister-sees-end-of-oil-price-slump-1476870790
Saudi Aramco CEO believes oil shortage coming despite U.S. shale boom
http://www.foxbusiness.com/markets/2017/07/10/saudi-aramco-ceo-believes-oil-shortage-coming-despite-u-s-shale-boom.html
The world’s largest oil trader Vitol says US oil production will peak in 2018
https://www.reuters.com/article/us-commodities-summit-vitol/u-s-oil-output-may-be-set-for-last-spike-in-2018-vitolidUSKBN1CF1MZ
The Mighty U.S. Shale Oil Industry To Lose Another $20 Billion In 2017
https://srsroccoreport.com/the-mighty-u-s-shale-oil-industry-to-lose-another-20-billion-in-2017/
MIT Technology Review: Shale Oil Will Boost U.S. Production, But It Won’t Bring Energy Independence
https://www.technologyreview.com/s/507446/shale-oil-will-boost-us-production-but-it-wont-bring-energy-independence/
MASTERMIND on Tue, 24th Oct 2017 8:39 am
TV interview was hilarious “Shale oil has barely offset demand. Not too mention there is a natural decline…”…Cut….LOL
coffeeguyzz on Tue, 24th Oct 2017 9:53 am
… neither will Ghawar.
Cloggie on Tue, 24th Oct 2017 10:16 am
Here a promotional video of “Neom”, a new to be build city state of 26,000 km2 (with room for tens of millions of people) … located at the southern tip of Israel
https://www.youtube.com/watch?v=VC66tTbmgxc
…full with Arabs. You can easily hide a giant army in that city for a surprise attack against Israel.
They intend to build a bridge between KSA (Jordan?) and Egypt, in the face of Eilat.
Boat on Tue, 24th Oct 2017 10:27 am
We should thank US shale for driving down the cost of gasoline for the world. Evil forces driven by greed have joined together and cut production to force higher prices but so far the N American producers have foiled that attempt.
So tonight as we eat apple pie and watch the world series remember your $2.19 gal of gas would be $4.00.
fmr-paultard on Tue, 24th Oct 2017 10:30 am
eurotard, i know you are fan of fuhrer who conducted ungentlementaly attack against britain using U-boat but launching attacks under civilian over is isis tactics and not usually frowned upon in modern battlefield.
Cloggie on Tue, 24th Oct 2017 10:39 am
eurotard, i know you are fan of fuhrer who conducted ungentlementaly attack against britain using U-boat but launching attacks under civilian over is isis tactics and not usually frowned upon in modern battlefield.
commietard, I am mostly a fan of getting the stories straight. how about reading up a little on history. Britain and France declared war against Germany, not the other way around.
So if you don’t want your u-boats attacked “ungentlemanly”, don’t declare war.
It is not rocket science.
Apneaman on Tue, 24th Oct 2017 11:08 am
Boat, who is we? And how exactly would you thank US shale? Meet up with rockman and blow him?
‘Oh thank you soooooooo much rockman/US shale…gulp…slurp…gag…gulp’.
fmr-paultard on Tue, 24th Oct 2017 11:48 am
aptard i don’t know you know but supertards are beyond reproach. this is what i have to do to keep them from being Cambridge Five. excuseme but if i may borrow the shorthand notation, you’re just a regular ((tard)). you can be a supertard if you work on it.
peace,love
Boat on Tue, 24th Oct 2017 12:18 pm
ape,
I will thank shale by buying an EV when they become cheaper. The lowest cost producer wins in the end. Work on taking the emotion out of the data you consume. Emotion causes stress and drives up health care cost.
rockman on Tue, 24th Oct 2017 12:36 pm
Apeman – Don’t thank me: the Rockman and his owner did touch the shale plays…not enough profit.
And ole Amin should know about running out of sweet spots to drill: Aramco ran out of them many decades ago. LOL.
deadlykillerbeaz on Tue, 24th Oct 2017 1:04 pm
Those sweet spots will last longer than the Saudi Aramco CEOs projection.
So there!
Apneaman on Tue, 24th Oct 2017 4:03 pm
Boat, is absurdity an emotion? If it is then I am highly emotional. I giggle my ass off many times a day watching the humans and trolling them too.
Hey boat, about that data. It’s on the internet but it’s just an electronic version of a book right? Further, the people who compile it for the IEA or IMF or EIA etc, are educated and have degrees. So boat, how is it that you put all your faith in information that you got from a book written by people with degrees, yet scoff at any information you don’t like and eye roll and hand wave and dismiss the information because that information came out of a book written by people with degrees?
You want it both ways. A blanket anti intellectual stance when the info/data/findings challenge your beliefs (beliefs are emotional btw) but then when you have a point you are trying to prove you whip out numbers from university educated people in an electronic book? See the contradiction boat? It’s quite obvious buddy. Most would say you can’t have it both ways, but not me. You can believe whatever the hell you want in as many ways as you want and square all the circles your heart desires. It’s your brain & your life.
Boat on Tue, 24th Oct 2017 4:54 pm
ape,
I read hundreds of books in my youth. They gave thousands of examples of different points of view. Taking debate in high school taught me a lot about the grey areas of opinions coming from a single issue, not to mention having to argue or defend both sides of that issue in a competitive format.
The internet provides fresh facts and historical context. Some of the data is just numbers, and much of it is opinion based like a book. Books are selling systems of thinking, ideas, agendas etc.
I like to expose myself to that kind of shyt just enough to stay semi-current.
For example, I can listen to Rush Limbaugh for 5 min to know he is like Hannity, Beck etc, no need to buy a book. However, I do like their topics so I can research and find the 1/2 truths. Just like here at peakoil.com. I am willing to debate what I consider spin. In part for fun, part to stay engaged, part to learn and in part to counter what I consider extream.
Anonymouse1 on Tue, 24th Oct 2017 5:18 pm
Boatietard is a severely mentally retarded individual, he has little understanding of the words and images he encounters every day. Though by amerikan standards, boatietard might be considered of ‘average’ intelligence. Reality for boatietard, is, and will be, an endless, confusing montage of noise and imagery he struggles to put in some kind of coherent order. Needless to say, these efforts fail, often comically.
fmr-paultard on Tue, 24th Oct 2017 5:37 pm
http://taskandpurpose.com/time-address-staggering-rate-suicide-among-servicewomen-female-vets/
Female veterans have a 250% higher risk than civilian women for suicide, according to VA data, and women who do not use VA services have seen a 98% increase in rates
Boat on Tue, 24th Oct 2017 6:20 pm
amous,
You’re not exceptional. I get that. The idea someone thinks differently than you just makes you feel angry and insufficient. You may mature and grow out of your toxic tendencies if the Jews put you in therapy. lol
Not everyone is fueled by hate and anger.
MASTERMIND on Tue, 24th Oct 2017 6:22 pm
German Government (leaked) Peak Oil study concludes: oil is used directly or indirectly in the production of 90% of all manufactured products, so a shortage of oil would collapse the world economy & world governments
https://www.permaculture.org.au/files/Peak%20Oil_Study%20EN.pdf
It’s coming…..Tick…Tock…
Sissyfuss on Tue, 24th Oct 2017 8:45 pm
Boast says he likes to expose himself. Not surprised.
antaris on Tue, 24th Oct 2017 10:06 pm
EV for Boat ? . Some places hydro and nuke powered, most Coal and NG powered, a few wind powered.
Boat on Tue, 24th Oct 2017 11:15 pm
antaris,
Houston runs on 50 percent renewable electricity. As Texas keeps adding wind and solar that number will grow. Three coal plants are shutting down soon with more projected.
antaris on Tue, 24th Oct 2017 11:22 pm
That’s good Boat. Lots of people think they are being alll “green” driving an EV not realizing it is actually a new fangled steam engine.
rockman on Wed, 25th Oct 2017 11:44 am
Apologises…sloppy: “Don’t thank me: the Rockman and his owner DID NOT touch the shale plays…not enough profit.