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Page added on October 28, 2019

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

Production

Global markets are “awash” in crude thanks to the surge in U.S. oil output, and the boom looks set to continue, U.S. Energy Secretary Rick Perry said in a Bloomberg TV interview.

U.S. shale production has turned the world “on its head,” and Goldman Sachs Group Inc. is “off a bit” in a report last week saying that the bonanza is fading, Perry said on Sunday in Dubai.

Oil and natural gas from American shale fields have made the U.S. one of the world’s largest producers and enabled it to become a net energy exporter. Perry will travel in the coming week to Saudi Arabia to discuss possible sales of U.S. liquefied natural gas and Saudi efforts to develop a nuclear power program. Perry held talks in the United Arab Emirates and visited the country’s largest solar-power facility at a site near the U.A.E.’s commercial hub of Dubai.

The U.S. sent 11 LNG shipments to the U.A.E. over the past three years and is seeking to sell more of the fuel there and to Saudi Arabia, Perry said.

The world needs to be prepared for attacks disrupting the global economy, and the U.S., Saudi Arabia and other allies are discussing the safety of oil supply routes, he said. Aerial strikes against Saudi oil facilities on Sept. 14 temporarily knocked out half of the kingdom’s output, and the U.S. is currently doing enough to help Saudi Arabia defend against such attacks in the future, Perry said.

Energy Secretary Rick Perry Speaks At The White House

Rick Perry.

Washington won’t hold a grudge forever against Saudi Arabia over the murder last October of government critic and U.S. columnist Jamal Khashoggi, though there’s not a “massive amount of forgiveness” in Congress for his killing in the Saudi consulate in Istanbul, Perry said.

The energy secretary said he asked U.S. President Donald Trump to call Ukraine to try to sell U.S. LNG there. The approach to Ukraine is important for energy sales and to break that country’s over-reliance on Russian gas, he said.

The U.S. is “making progress” with its Middle East foreign policy, while efforts to impeach Trump won’t be an issue in the U.S. presidential election next year and will go away in six months, Perry said.

bloomberg



24 Comments on "World ‘Awash’ in Oil as U.S. Sees Its Shale Boom Barreling Ahead"

  1. Antius on Mon, 28th Oct 2019 6:39 am 

    Oh dear. The European Union shows its true Orwellian nature (again).

    https://www.zerohedge.com/geopolitical/eu-rewriting-wwii-history-demonize-russia

    State controlled, Soviet style propaganda. No sign here of trying to build a more constructive relationship with Russia. The EU is run by the same anti-democratic thought controllers as it has been since its creation.

    It was to escape this sort of nonsense that the UK voted to leave. It had nothing to do with imperial nostalgia and everything to do with not wanting to be part of a western rerun of the USSR. Unfortunately, the UK is run by the same sorts of people, who are right now trying the hardest to prevent us from escaping.

  2. shortonoil on Mon, 28th Oct 2019 7:51 am 

    “enabled it to become a net energy exporter”

    That is because the US IMPORTS 7 million barrels a day. Maybe he is just practicing his Double Speak.

  3. Robert Inget on Mon, 28th Oct 2019 9:53 am 

    1) IMO: ISIS will launch attacks on international oil infrastructure. (as revenge for eliminating Daddy BagMan) IS needs to show they are still a force.
    2) ARAMCO IPO smaller than first announced.
    (all hat too few cattle)
    3) When the biggest oil companies on Earth resorting to last ditch efforts like shale, a person
    must ask, ‘what are they going to do for an
    encore?’ Funding for mid sized companies drying up.

    This current situation reminds one of lasting effects of global warming.

    Take Pakistan, please.
    Because Pakistan needs to deal with excess glacier melt, building infrastructure to deal with flooding is paramount. (near term)
    Because Pakistan has always depended on glacier melt for agriculture, someone needs to ask, what to do when those glaciers completely melt?

    Peak oil came, we ignored it because alternatives arrived in the nick of time.

  4. Duncan Idaho on Mon, 28th Oct 2019 10:21 am 

    2006 — US: Beloved & Respected Comrade Leader George Dubya Bush signs, in the dead of night, a rewrite of the Insurrection Act (10 U.S.C.331 -335) giving himself the power to declare a state of emergency anywhere at any time & to use federal troops to suppress any public disorder, as well as to take control of any state troops, forces, or national guard.

  5. Robert Inget on Mon, 28th Oct 2019 10:39 am 

    Shale Doubters Finally Get Their Moment as Revolution Falters

    2019-10-28 11:00:23.0 GMT

    By Rachel Adams-Heard

    (Bloomberg) — It was just a year ago that Tom Loughrey
    tried pitching a fund to bet against shale producers.
    “I was basically kicked out of every office in New York
    City,” Loughrey said.

    In the months since, an exchange-traded fund that tracks oil
    drillers has lost half its value, shale production growth has
    slowed, funding has gotten scarce andmore than two dozen
    companies have collapsed into bankruptcy.

    Things have changed for Loughrey, too. The 43-year-old
    former hedge fund manager no longer looks to invest the money
    himself. He ditched the fund and teamed with Michael Friezo, an
    ex-Credit Suisse Group investment banker who once gave him a
    job.

    They formed Chapel Hill, North Carolina-based Friezo
    Loughrey Oil Well Partners LLC, or FLOW, to advise others.
    Loughrey’s sweet spot is the gap between expectation and
    reality when it comes to drillers’ projections of what their
    wells will actually produce. He uses data number-crunched from
    state records and applies assumptions he says are more realistic
    than those offered by companies in investor presentations.

    As the shale boom decelerates, other data shops are selling
    similar services. They include Enverus, formerly known as
    Drillinginfo Inc., RS Energy and Rystad Energy.

    ‘Rosy View’

    “Independent, unbiased analysis can shed a light of truth
    on management projections,” said Nick Volkmer, RS Energy’s vice
    president of intelligence. “It’s well-known that management
    teams are often compensated for production and reserves growth,
    incentivizing optimism and a rosy view of the future.”

    One of Loughrey’s favorite targets is Apache Corp. and its
    flagship Alpine High oil discovery in West Texas.
    Others have criticized Apache’s little-drilled corner of
    the Permian Basin because it promises more liquids-rich gas than
    the preferred, more expensive oil.

    Apache touts a typical well there that would ultimately
    recover a stew of hydrocarbons that’s, at most, 15% oil.
    Loughrey, however, says that in some places, Apache’s
    projections are about 80% too high.

    “I think there should be a brouhaha about this,” Loughrey
    said.

    Apache said it hasn’t reviewed Loughrey’s methodology and
    his work may include “exploratory wells” and “concept tests”
    that aren’t meant to optimize the company’s projections. The
    number Apache used in its most recent Alpine High presentation
    was initially published in October 2017, before the company had
    fracked any multi-well development pads, spokesman Phil West
    said in an email.

    After drilling “a handful of large, multi-well, multi-zone
    pads at Alpine High,” the company is evaluating the play’s
    performance, West said. In the meantime, Apache suspended some
    activity there in response to low commodity prices.

    Investors have largely written off Alpine High since Apache
    announced it three years ago. The company’s stock is down more
    than 60%, and a pipeline entity that serves the patch has lost
    three-quarters of its market value since it was spun off from
    Apache last year. The geologist geophysicist (I know him) credited with the Alpine High resigned last week, sending shares and bonds plummeting.

  6. Robert Inget on Mon, 28th Oct 2019 10:43 am 

    But wait, there’s more;

    Loughrey warns there are other companies that face a
    reckoning once their reserve estimates fail to pan out.
    “Shale wells make money,” Loughrey said. “It’s a question
    of if the stocks will make you money.”

    Data analysts working the shale patch can thank a quirk in
    federal oversight for their ability to build businesses based on
    providing investors with outside data.

    The Securities and Exchange Commission sets strict criteria
    for what holdings oil companies can report as “proved reserves.”

    But forecasts pitched in press releases and investor
    presentations aren’t subject to the same restraints. Instead,
    explorers like to publicize so-called EURs, or estimated
    ultimate recoveries.

    “That’s basically a petroleum-engineering term that means
    that, with all the data, what the well will ultimately recover,”
    said Dean Rietz, chief executive officer of reservoir
    engineering firmRyder Scott Co. “But none of it may be
    reserves.”

    Instead, those projections include “contingent resources”
    that can’t be profitably pumped under current conditions.

    Optimistic expectations are compounded by assumptions about
    how close wells can be drilled to one another. Newer wells,
    called “child wells,” can sometimes interfere with output from
    the “parent well,” diminishing profits. But the risk of drilling
    them too far apart means leaving crude underground.

    Diminished Output

    It’s a problem that’s worried even some of the industry’s
    bigger players. Concho Resources Inc. revised down its
    production goals for the year after it drilled 23 wells too
    close together. Earlier this year, Diamondback Energy Inc. CEO
    Travis Stice said producers should do a better job of
    representing the problem of diminished output due to parent and
    child wells in their forecasts.

    Counting on companies to alter the way they pitch growth is
    probably a “lost cause,” said Kevin Kaiser, a consultant who
    successfully bet against some of the biggest names in the
    pipeline industry.

    The warning that drillers routinely cram single-spaced on
    the first slide of a company presentation to investors is
    considered by the SEC sufficient enough that the next hour of
    line graphs and bullet points is essentially wishful thinking.

    Allowing producers to advertise oil and gas reserves that
    aren’t proved is meant “to enable companies to provide investors
    with more insight,” the SEC said in 2008.

    Companies are required by law to report well results to
    state regulators, but often that data is difficult to find and
    hard to aggregate. As Loughrey puts it: “It’s like a bunch of
    dusty old phone books.”

    That gives Loughrey an edge when it comes to analyzing oil
    producers.

    “They’re losing money every year,” Loughrey said. “There’s
    something wrong with this.”

    To contact the reporter on this story:
    Rachel Adams-Heard in Houston at radamsheard@bloomberg.net
    To contact the editors responsible for this story:
    Simon Casey at scasey4@bloomberg.net
    Bob Ivry, Joe Carroll

    side bar;
    Tough SEC laws are what prohibited ARAMCO from offering shares in the US.

  7. Robert Inget on Mon, 28th Oct 2019 10:57 am 

    “Capital goes where it’s welcome and stays where it’s well treated.”—Walter Wriston

    Capital is fleeing O&G because it has not been well treated. In fact, shale industry as a whole has been destroying capital since its inception.

  8. print baby print on Mon, 28th Oct 2019 1:03 pm 

    Yes Robert, but here is more at stake ,Collapse of an industrial civilization. In my opinion world oil market is rigged and it is better that way , otherwise we would have a total collapse of the industrial civilization. Which of course will happen because fiat money can’t make oil . Human kind has obviously deserved what is going to happen next. We had our chance and we miss it .

  9. Robert Inget on Mon, 28th Oct 2019 1:34 pm 

    Russians Launch ARMED Icebreaker.

    https://www.newsweek.com/russia-arctic-ivan-papanin-icebreaker-1468057

    Looks like S/400 just went to sea.
    (Russia can now shoot down missiles traveling over the Arctic)
    New icebreaker is either looking for Arctic oil or
    protecting sites already mapped. OR using S/400
    as the ultimate anti missile system.

  10. Robert Inget on Mon, 28th Oct 2019 1:40 pm 

    print baby print,

    The Fed has been feeding markets on the order of
    50 to 150 BILLION almost daily.

    https://investorplace.com/2019/09/how-to-profit-from-the-federal-reserves-repo-market-troubles/

  11. makati1 on Mon, 28th Oct 2019 5:32 pm 

    The Western world is going to hell and being led by deluded psychopaths bought and paid for by the greedy, billionaire oligarchs. And, yes, Trumpet is one of them. The most deluded, uneducated psychopath of them all.

    I don’t read many oily articles as they are ALL bullshit trying to keep their dying industry alive and the investor suckers on board the sinking USS Petroleum. Especially the Frakers in the US. Not a good choice to tie your future to an oily career.

    If the US has to boast about their “energy independence” then they don’t have independence, which is obvious to the intelligent thinkers here. The next banking crisis will see the end of fraking and many other propped up ideas. I hope it is soon. Tomorrow?

  12. twocats on Tue, 29th Oct 2019 12:11 am 

    yes robert, the US is firing up the printing presses again, after barely a year of tightening. and it will go into the stock market and liquid assets for a quick profit. will enough of it go into O&G? i imagine if the CIA has anything to say about it, yes.

  13. twocats on Tue, 29th Oct 2019 12:12 am 

    i only say the CIA because they’re one of the the only entities I know of that would be willing to lose billions of dollars on something they know will lose money just to protect the continuity of the US government

  14. twocats on Tue, 29th Oct 2019 12:28 am 

    and of course, people will say “it can’t go on, the debt isn’t sustainable”. but every central bank is monetizing, every corporation is ballooning with debt to pay dividends. the ratings agencies aren’t going to start downgrading everyone. there’s only one thing that will stop it and there’s always only been one thing – physical limitations on oil extraction. shale oil has allowed yet another mechanism for front loading that extraction. when the gig is up, whether it be 2021 or 2025, who knows what the reaction will be.

  15. Davy on Tue, 29th Oct 2019 1:02 am 

    “when the gig is up, whether it be 2021 or 2025, who knows what the reaction will be.”

    CW2 for us hear in the US. For sure. It’s already fermenting. Better stock up on guns and ammo twocats. Everybody else is. Heck, I even gots me a few full auto keltecs. Fun fer the hole family!

    🙂

  16. Cloggie on Tue, 29th Oct 2019 3:08 am 

    BMW chief admits: cars are controversial, justifiably so.

    https://m.spiegel.de/auto/aktuell/bmw-chef-zipse-hat-verstaendnis-fuer-kritik-am-auto-a-1293367.html

    “Das Auto ist zu Recht umstritten”

  17. supremacist muzzies jerk on Tue, 29th Oct 2019 3:53 am 

    supertard SAW SAWS pbuh swt., thank you for exceeding the goal of my project. please tend to REAL Green play goats, take a rest on Learjet.

    supertard Davy plays Old MacDonald farm playset.

  18. JuanP stupidity on Tue, 29th Oct 2019 5:32 am 

    This is from stupid last night:

    supremacist muzzies jerk said supertard SAW SAWS pbuh swt., thank you for exceed…

    Davy said “when the gig is up, whether it be 2021 or 2025, w…

    Davy said If I had even a lick of common sense, I would clai…

    The REAL Davy said Davy on Mon, 28th Oct 2019 4:11 pm Hi, in case yo…

    The Real Davy said JuanP ID theft on Mon, 28th Oct 2019 4:17 pm Not…

    More Lunatic Davy ID Fraud Shit said NOT MOBster on Mon, 28th Oct 2019 5:32 pm

  19. Antius on Tue, 29th Oct 2019 8:09 am 

    More evidence that economic activity depends directly upon the amount of exergy (thermodynamic work) available to an economy.

    https://www.researchgate.net/publication/223438204_Evidence_of_causality_between_the_quantity_and_quality_of_energy_consumption_and_economic_growth

    https://www.sciencedirect.com/science/article/abs/pii/S0360544209005374

    This should surprise no one. Economic activity is merely the action of energy on matter, to produce goods and services that humans desire.

  20. Davy on Tue, 29th Oct 2019 8:33 am 

    “More evidence that economic activity depends directly upon the amount of exergy (thermodynamic work) available to an economy. This should surprise no one. Economic activity is merely the action of energy on matter, to produce goods and services that humans desire.”

    Direct effects to economic activity is more than “merely” energy on matter it is also the proper use of economic activity and energy. This is often overlooked by scientist and engineers who prefer to keep it closer to scientific processes. I believe modern society has plenty of changes at hand to lengthen out the dropping of net energy gradient and the level of activity and energy needed to maintain modern civilization. The degree of mitigation to decline is not clear because of the systematic thresholds that dwell. Also, not clear is randomness and nonlinearity that could sink even the best behavior. Yet, it only takes a few looks at behavior everywhere that is unsustainable and not resilient to see the amount of low hanging fruit for change. The problem is the longer we take to make painful changes the longer the built-up infrastructure and behavior habituation of activities and things with no future. This is why I always say change in behavior is more important than tech.

  21. marmico on Tue, 29th Oct 2019 12:29 pm 

    US primary energy consumption and electricity consumption decoupled from GDP in 1973 and 1996.

    https://www.koomey.com/post/183799578018

  22. shortonoil on Tue, 29th Oct 2019 1:30 pm 

    Shale’s impact has been so significant that the leverage from a marginal barrel of oil in the economy has fallen from 10.7:1 to 1.1:1, in GDP/GB terms. Oil, and its products are now adding nothing to GDP other than their own cost of production. The incentive to pump more oil is getting a little thin, and when $341 trillion in world debt comes crashing down there isn’t going to be anyone interested in pumping more oil. The title of the article should be changed from “awash” to “got drowned”.

  23. print baby print on Tue, 29th Oct 2019 1:52 pm 

    Short a question for you
    Is it possible to write off all the debts and start from the beginning , what do you think?

  24. Antius on Tue, 29th Oct 2019 2:17 pm 

    “US primary energy consumption and electricity consumption decoupled from GDP in 1973 and 1996.”

    Generally false. The growing proportion of electricity in final energy consumption; the use of natural gas for heating and electricity production and improvements in engine technology; have all been useful in reducing primary energy use. But most of this has been accomplished by switching to different fuels, with limited improvements due to technological improvements. It was a one time change. Critically, it increased the exergy gained from primary energy.

    Since the 1990s, globalization has hollowed out US industry. A growing proportion of GDP is fake – the simple result of spending borrowed money and accumulating debt. None of this would be possible without owning the global reserve currency.

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