ConocoPhillips CEO: Skeptics’ warnings of shale bubble are unfounded

30 Comments on "ConocoPhillips CEO: Skeptics’ warnings of shale bubble are unfounded"

Meld on Fri, 21st Feb 2014 10:21 pm 



Why so desperate Ryan?

Scientist points out truth

Business man points big wobbly finger towards his religious belief in technology.

I wonder which one I am more likely to believe.

Newfie on Fri, 21st Feb 2014 10:28 pm 



Brazil had it warmest January on record. They are having a record drought. The American West is drying up. California is rationing water. England is having record breaking floods. We’re cooking the planet with fossil fuel emissions. If we burn all the oil in the ground the planet is going to fry. Literally.

Plantagenet on Fri, 21st Feb 2014 10:31 pm 



Obama says there is a 100 year supply of NG due to fracking. Hard to believe we won’t use it……

ghung on Fri, 21st Feb 2014 10:36 pm 



His company has only bet about 1 1/4 $billion on shale, so his objectivity is certainly unquestionable. No point in listening to those with no skin in the game. What could they know?

“Sugar plum fairies…” You gotta love Art. I knew a sugar plum fairy once. She was a Cajun carny….

Northwest Resident on Fri, 21st Feb 2014 10:39 pm 



Who is Ryan Lance? No dummy, that is for sure. But is he surrounded by “yes men” who only tell him what he wants to hear, who shiver in their boots whenever they feel the slightest need to give him anything that resembles bad news? Or, is he fully and adequately informed, and he is standing there with a straight face lying his ass off?

From Wikipedia:

He received a Bachelor of Science in Petroleum Engineering from Montana Tech of the University of Montana in Butte, Montana.

He started his career with ARCO Alaska in 1984.[1][4] In 1989, he moved to the ARCO operations in Bakersfield, California.[1] In 1992, he transferred to Midland, Texas to work on ARCO’s coalbed methane operations in the San Juan Basin.[1] In 1994, he returned to Alaska as Exploration Engineering Manager. From 1996 to 1998, he worked for Vastar Resources (a spin-off from ARCO, later merged with Amoco, and finally BP) in Houston, Texas as Planning Manager.[1] In 1998, he served as Vice President of the Western North Slope for ARCO Alaska.[1] In 2001, he returned to Houston as the General Manager of Lower 48 and Canadian operations for the Phillips Petroleum Company.[1][4] Upon the merger between Conoco, Inc. and Phillips Petroleum Company in 2002, he became Vice President Lower 48 for ConocoPhillips. He has been Chairman and CEO of ConocoPhillips since May 2012.

DC on Fri, 21st Feb 2014 11:06 pm 



Why didnt he just say there is 500 or 1000 years of frak\shale\tar\asphalt whatever in the uS of Oil and leave it at that? He was being a little cagey there. The compliant and brain-dead US financial media would have parroted his words without a shred of analysis and would even have invented ‘experts’ on the clownish Us networks to back him up.

Case closed! The media would repeat the 500-1000 years of Wall-mart, suburbia and endless commuting trope for years before anyone said anything to the contrary.

Right?

Laci on Fri, 21st Feb 2014 11:23 pm 



This analysis of Eagle Ford is saying otherwise and also explains why this guy is so desperate to paint situation so rosy. They may never get a chance to recoup money invested:

http://seekingalpha.com/article/2033431-eagle-ford-treadmill-speeding-up-time-running-out-to-recuperate-investments

action on Sat, 22nd Feb 2014 12:00 am 



Look at the enormous gleaming cranium on that guy, it wouldn’t surprise me one bit if can see the future; he’s the next step in our psychic evolution, bear witness for he has spoken.

Davy, Hermann, MO on Sat, 22nd Feb 2014 1:04 am 



@ – What we’re learning is we’ve only scratched the surface of what technology can do to improve the outlook over the years,” said Lance,
We have covered that there are plenty of qualified people, the machines, the expertise, the reserves, and the LACK of future capex. Ryan Lance doesn’t want to talk about the economy because many know the economy is the wildcard. This guy is pumping for money so industry capex issues were not brought up.
@ – But, he said, not all of the dozens of proposed natural gas export facilities in North America will be built, given their enormous expense and the fact that collectively they would have vastly more capacity to export LNG than the global market needs.
I counted 14 proposed. Only one approved. The ferc approval is 1 year. Most I saw were planned for 2017 – 2018. We can expect delays I am sure. Costs for the recently certified Camron LNG in Louisiana is $9Bil – $10Bil. I find it hard to place certainty with such undertakings. We know the capex costs are skyrocketing. I am forecasting interest rates will go up. I don’t see a solid pitch here for dozens of export facilities happening anytime soon. I feel the economy will get in the way of much more than 2 to 4 facilities

Nony on Sat, 22nd Feb 2014 1:26 am 



1. David Hughes is pretty biased and tree hugger. If he really thinks there isn’t the oil, why fight it? I don’t trust his analysis.

2. There is a HUGE amount of gas. It flows much more readily than oil from shale formations. The Marcellus and Utica are stocked. And there are several other good gas shales around the country. Be a tight oil skeptic, fine. But gas? That’s just not being intellectually honest to deny the gas shale revolution. Peakers were way, way, way off on the gas “cliff”. We have hugely expanded US consumption AND have a much lower price than 2005.

DMyers on Sat, 22nd Feb 2014 1:29 am 



All I really hear this guy saying is this. “Hey, don’t listen to those guys. This thing is gonna be big. Really, really big. The technology we have comin’, it’s gonna CREATE fukkun’ oil.” [“the industry’s technology advances could compensate for any projected production declines.” quoting the article]

I don’t take this to be “…refuting arguments that the surge in oil and gas production will be short-lived,” as promised in the opening paragraph. This doesn’t refute anything but simply states an opposing position with extra positive spin.

If we were to look at the numbers, I believe we would see that depletion rates justify the skepticism of the skeptics.

He mentions a: “….well-established energy workforce and pipeline network.” This is the new economic miracle for those who jump right in and buy a pipeline network. “DON’T WAIT! BUY NOW!!”

GregT on Sat, 22nd Feb 2014 3:04 am 



Tree huggers care about life on Earth, which according to some, is not a worthy cause.

There are massive amounts of gas, oil, coal, and methane hydrates left. More than enough to kill every living thing on our planet, many times over.

We need to consume it all as quickly as possible, who really cares about the future, after all we won’t be here anyways.

Money, power, and greed, above all else, because we are just too effing immature, to think about anything other than ourselves.

Go gas, go oil, go greed! Blah Blah Blah!

Maybe it’s a good thing that our economies are collapsing, maybe collectively we deserve it. Too bad so many good things need to be destroyed as well.

calhoun on Sat, 22nd Feb 2014 3:39 am 



If I were him I’d be saying exactly the same thing. I’d be lying, but I’d be saying it all the same.

rollin on Sat, 22nd Feb 2014 5:20 am 



Really Lance? You really think we can access even 50% of the oil stored in the shale layer?
This new technology had better be less expensive an less resource intensive compared to current technology.

So show us the new technology Lance. Don’t keep us waiting or we might just find some other ways.

Nony on Sat, 22nd Feb 2014 5:59 am 



Rollin:

I don’t think anyone is counting on 50% of tight oil being extracted.

In many cases technology is about cost reduction (pad drilling, zipper fracks, slickwater fracks, walking rigs, etc.) But technology does not have to be cheaper to be useful. If I can get double the production with 1.5 the capital, I spend the capital. Conversely an extra 10% production for double the well cost is probably not worth it. .

I do think it’s possible that learning is going on and will continue to go on. They did not figure out the Barnett immediately. The didn’t figure out the Bakken immediately. There are a lot of wells being drilled and experiments being done. There is a middle ground between inventing fusion and “it was all done in the Austin Chalk”.

Nony on Sat, 22nd Feb 2014 6:34 am 



Laci:

Not that impressed with that article. Of course the decline has gone up (the production has grown!)

Also, all the fol de rol about how much money came out in 2008 versus how much was invested in drilling is silly. You drill a well now, for the future production right after it’s completed…not for what some other well was done last year. If anything his numbers look like a 1 year simple payback (131 MMM revenue over the same period of 143 MMM drilling). Of course there are extra expenses above drilling, but of course the wells don’t shut off after the first year either.

Shell wrote down some assets. Big deal. Assets get written up and down all the time with knowledge. These are not Fed bonds. They’re investments. If the price changes that will affect value also. Look, when you prove additional reserves (e.g. what EOG did at the beginning of operations), then you write up assets.

Chesapeak is mostly a gas company, but anyway, whey should their entrance into an oil play have to be financed solely by previous year’s revenue from oil? Drilling a well is an investment. You could have ZERO revenue the year before and just sink the cash in and drill 100 wells your first year (if you have the play that merits it).

Mining analogy: so what. Hamm makes the anology himself. So what. If you want more coal, dig more. You want more oil, dig more. If the NPV merits it, do it. It’s not a plant that you water and it just sort of grows on its own. Heck, even conventional production has a decline and a type curve. You have to invest in a conventional play with more drilling if you want to maintain production.

GregT on Sat, 22nd Feb 2014 7:18 am 



Like I have said twice before on these forums, you can lead cattle to water, but you can’t make them drink.

Some people are so fixated with BAU and greed, that they will more than likely keep spewing the same old crap, right up until the last breath of modern industrial society. They will do nothing to prepare themselves for what is so obviously heading their way, that I ‘almost’ feel sorry for them.

So sad, that people walk this earth with absolutely no clue about why they are here, or where they are ultimately going, and all they care about in the interim, is personal monetary and financial gain, the markets, economics, revenues, production, profit margins and greed.

It really is no wonder why, we face our own extinction. Too bad we couldn’t figure out a way to get rid of the greedy, so the rest of our children would be able to survive.

Makati1 on Sat, 22nd Feb 2014 1:10 pm 



GregT, Amen!

Nony on Sat, 22nd Feb 2014 3:40 pm 



What is BAU?

Northwest Resident on Sat, 22nd Feb 2014 3:52 pm 



BAU = Business As Usual. Please tell me you’re just playing dumb, Nony… 🙂

rockman on Sat, 22nd Feb 2014 4:13 pm 



Going to keep it short and blunt. There is no “technology revolution”. Some minor improvements on the edge. But we are doing nothing significantly different than what we were doing 20 years ago. Not MHO for a change…I’ve been doing this for a living for almost 4 decades. I was drilling and frac’ng horizontal wells in the Austin Chalk in Texas during the 90’s. And some were more complex then we see being done today.

But there has definitely been a “revolution”. But it’s been a price revolution…not a technical one. There is not a single Eagle Ford well drilled today that I could not have drilled in 1994 with the same results. All I needed was oil prices more than 300% greater then I had at the time. Frac’ng new? About 35 years ago I frac’d a vertical well in a carbonate shale formation that used much more proppant then being used in current jobs.

And once again I’ll have repeat and bore with the same unavoidable fact: his (or anyone else’s) prediction of future production is meaningless without the price assumptions used to make such a forecast.

hillco on Sat, 22nd Feb 2014 4:33 pm 



And all that technology will really help because the companies started by drilling the worst plays and left the really good ones for last. Sure they did…

Nony on Sat, 22nd Feb 2014 4:44 pm 



IP (divided by lateral length) in the Bakken is constant for the last four years, despite a huge amount of drilling. I’m sure they will run out of sweet spots eventually, but either they are still learning the geology (IOW, they didn’t drill the best spots first) or there is some counterbalance of technology and geology.

Nony on Sat, 22nd Feb 2014 5:06 pm 



Places like the Barnett or Chalk were laboratories for a lot of the techniques being used now. Advancement in heavy metal commodity industries can take time. Definitely price is a key factor driving any of these tight plays. That said, a lot of wells are being drilled and people are learning something. I don’t think it’s as simple as all the geology was known, all the techniques perfected and sitting on a shelf. Yes, price drove the response dehfunitetely, but some work and screwing around was still needed. And at this point, the sheer amount of repetition, the $$ driving experiments in the field is leading to incremental learning.

P.s. Were the horizontal fracks in the Austin Chalk the key technique (replicated throughout the wells?) Or experiments. I thought I read that rock did not need much stimulation. I think Barnett was the trickier one, where they really did need horizontal fracks, no?

Nony on Sat, 22nd Feb 2014 5:08 pm 



Article about growing use of pad drilling. Kind of interesting. (And I’m not saying it’s an “invention”, but definitely enabling technology).

http://info.drillinginfo.com/launch-pad-rise-pad-drilling/

Beery on Sat, 22nd Feb 2014 11:30 pm 



Big Oil CEO says shale surge is not a bubble.

In other news, Wall Street executives say investing in the stock market is not gambling and hobby store owners say model trains are a good investment.

Meld on Sun, 23rd Feb 2014 8:24 am 



I’m proud to be a tree hugger. Just planted 1000 saplings in the last few months. All with edible crops.

Businessmen without an understanding of ecology tend think that we care about animals and trees more than humans. What is really true is that we understand that humans and animals and trees have a symbiotic relationship. Killing plants and animals needlessly is pretty much the same as mercilessly killing a bunch of humans as far as I’m concerned, not because I think trees have the same life value as humans but because I know without trees we’d all die.

This article smacks of someone who has bet big in an industry and is now shitting himself that he might of got it wrong. He’s screaming from the pulpit as the bubble pops around him. Poor bugger

Davy, Hermann, MO on Sun, 23rd Feb 2014 12:49 pm 



@Meld – tree hugger here. We have CRP areas here on my farm along the water shed. Planted 3000 trees 10 years ago 1/5 survived but many sprouted voluntarily. I just planted an apple orchard. Garden is getting prepped. This farm has a habitat component for deer, turkey, quail, and rabbit. I have a habitat effort to create a mosaic of living conditions for these animals. I do not hunt. We have hunters come here but they are respectable in their hunts. I look at it as a management strategy. The deer population especially has to be managed. I have a small cattle, chicken, and goat effort. I am like you and feel a deep sadness for what humans have become and done through animal meat production and plant community destructions for industrial and ag efforts. We are a nasty species in this respect. How about places in China where they harvest bears bile or the large scale hog confinement operations in the US. The problem is without industrial ag at this current time many will perish. Many people that had no impute into being born and no impute into these destructive activities of our species. It is an awful dilemma. Do we allow a nasty food system to die and with it a significant population through hunger. Trying to change the food system at this point will have unintended negative consequences of loss of productive abilities. We know nature will change these industrial AG processes because we will have to with the energy gradient ahead. No simple answers for the rape and pillage of the natural world.

Nony on Sun, 23rd Feb 2014 2:05 pm 



CP can make a lot more money from gas running out than from it being abundant. You don’t need to be a conspiracy theorist or assume he’s lying. He’s just saying the same thing Obama, EIA, Miller, etc. are. Gas is abundant.

That doesn’t mean oil is. Things are allowed to be different. And it doesn’t mean for certainty, gas will be here 100 years from now. But for now? Pretty fracking abundant.

Aaron on Tue, 6th Jan 2015 1:46 am 



In hindsight, with oil prices dropping, it is clear that OPEC’s recent indecision has burst the bubble.

What many fail to understand is that a bubble is a profitable option which requires greater income than other options. When the income takes a hit, options turning a deficit must either be paid out of your pocket until once again profitable, or must be abandoned. For every decision, you must be prepared to face consequences. Companies need exit plans to survive speculative markets.

The problem wasn’t the abundance of gas. The problem was some sectors choosing to acquire gas through financially risky means, such as fracking, which are more exposed to sudden reductions in gas prices.