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Cheap Oil and Amazing Energy: The World According to Dan Yergin
Even six months ago, the question about oil was, How low will it go? Now, with crude prices at $52 a barrel, the question is, How long will low prices last?
When it comes to understanding the oil market’s crazy gyrations, it helps to talk with someone like Dan Yergin. I first encountered Yergin’s name when, as a graduate student, I read a paper that he’d written on the theory of nuclear deterrence. Remember that? So I was surprised a few years later when, living in London and covering energy, I met Dan Yergin the oil guy, co-founder of Cambridge Energy Research Associates and soon-to-be Pulitzer Prize-winning author of The Prize, an engrossing granular history of the oil industry and the amazing personalities who built it. I asked him — same guy? Yes, for sure.
Yergin, who is now vice chair of the research and consulting firm IHS (which bought Cambridge Energy a few years back), remains a man of many interests. He’s co-authored a book on the worldwide intellectual and political battle over government and markets (The Commanding Heights), another on the future of Russia (Russia 2010) and yet another solo on energy’s most recent history (The Quest). Last week, OZY sat down with Yergin to get his take on what the longer-term energy future might look like. An edited version of our conversation follows.
OZY: What’s changed in the oil market and surprised you?
Dan Yergin: One surprise has been the resilience of U.S. tight oil, or shale oil. People in OPEC and elsewhere thought shale was high-cost oil. It turns out it’s not. The high-cost oil — that’s the big, long-term, multibillion-dollar megaprojects. So U.S. production has been resilient. It actually has gone up this spring. It could cycle down but go up again, because it’s short-cycle and very responsive to price — very different from the five- or 10-year multibillion-dollar project.
OZY: Anything else weighing on the market?
D.Y.: If Iran comes back, that’s going to put a lot of supply into the market. The debate now is whether the Iranians will be prudent or whether they will just go for market share. If they go for market share, that would be a downward pressure for prices. I think we’ll only know when they do it — and they’ll only know when they do it. A lot depends on the state of their rivalry with Saudi Arabia at that point.
OZY: What’s the big picture?
D.Y.: Sixty percent of the growth in world oil markets between 2004 and 2014 was in China. You have to go back to 2004, when oil was going to 20 dollars a barrel forever, and it took off, and the big surprise was Chinese demand growth. Chinese demand became an underlying assumption of not just oil, but investment in all commodities, and it led to overcapacity. And in oil, of course, the new capacity came from the United States in ways that it was just not expected. U.S. oil production at the end of last year was 90 percent higher than it had been in 2008, and just the growth in U.S. oil production since 2008 was greater than the output of every single OPEC country except Saudi Arabia.
OZY: So is cheap oil here to stay?
D.Y.: This two-year period is where we’re going to see a lot of volatility. When the price goes up, people are going to assume it will continue going up, and when it goes down, they are going to assume it will continue to stay down. Where we’ll see the impact three or four years from now is in the postponements, delays and cancellations of big megaprojects — the conventional, big offshore projects.
OZY: Where does it hurt?
D.Y.: Those who will struggle with low prices and volatility — aside from the companies — are governments that assumed they held all the high cards: would-be oil and gas states, like in East Africa. They thought they could get 85 or 90 percent of the revenues and make high demands for local investment. Now the competition is going to be not so much among companies, but among countries seeking investment. Many of them haven’t realized that yet. Mexico is attuned to the new reality. It’s competitive and wants to draw in investment, but you could see a country that could be producing more natural gas, Ukraine, demanding terms that make people say they won’t invest. They’ll go elsewhere.
OZY: What’s the long-term future?
D.Y.: There will be worldwide peak oil demand. We think it’s going to be in the 2030s. If you have a really strong commitment and you are willing to pay for it, like Germany, you can accelerate it. If you just look at the car ownership in emerging markets versus car ownership in the United States, that’s where you’ll see the growth until then. Still, you see in the U.S. the younger generation, millennials, don’t have the mad passion for automobiles that was part of the rite de passage for 16-year-olds here 20 or 30 or 40 years ago, because they are too busy in the virtual world on Facebook and social networks, and that’s where their imagination is.
41 Comments on "Cheap Oil and Amazing Energy: The World According to Dan Yergin"
steve on Thu, 16th Jul 2015 9:24 am
damn I wish I could have done what this guy has done…fool the masses and charge lots of money! He has made millions in telling people what they want to hear…if the ship is going down you might as well live it up!!!
BobInget on Thu, 16th Jul 2015 9:25 am
Refinery throughput hit highest level since 1982 last week, data show
U.S. refineries last week processed the most oil into gasoline since 1982, data from the Energy Information Administration showed. The record throughput hit 16.8 million barrels per day as motorists set a record pace for driving. Bloomberg (7/15)
joe on Thu, 16th Jul 2015 9:28 am
Wow, that guy sounds really positive. He may be right about millenials, those guys follow Caitlin Jenner more than Chevrolet. But on oil his views don’t add up. How can oil prices go up if demand will ‘peak’ and supply go up?
Jimmy on Thu, 16th Jul 2015 9:29 am
50 bucks a barrel is the new cheap. I remember not long ago when 8 bucks was cheap and 20 bucks was expensive. How times have changed.
BobInget on Thu, 16th Jul 2015 9:32 am
If oil continues to be priced at $50 levels,
in six months we will experience shortages not seen since WW 2.
We’re being set-up for disaster.
Nations we call ‘friendly allies’, Israel and Saudi Arabia are sharpening their knives to further their own interests, not protect ours.
Nony on Thu, 16th Jul 2015 9:34 am
I suck cock for wooden nickels and give change
joe on Thu, 16th Jul 2015 9:40 am
This what some would call a buyers market. For 50 bucks I can magically make a huge profit on refined product. The cracked spread I believe they call it. Consumer goods are supposed to get cheaper and demand increase. The strong dollar should make China pick up too. But it’s not. Wonder why? Guess there are only so many empty cities to build.
Spain has a few too, Ireland towns half empty with houses nobody wants to buy as the government supports yet more house building. UK is the only country that really needs them. 1 in 4 new births is to non UK nationals. What a trend! It’s not been like that since the dark ages.
Boat on Thu, 16th Jul 2015 10:00 am
BobInget
If oil continues to be priced at $50 levels,
in six months we will experience shortages not seen since WW 2……..Please explain: there is a 2 mbpd glut now. If the Iran deal goes through they will add 1-1.5 billion over the next 1-1/1/2 years.
For your estimate to be correct oil would have to drop a lot farther and shut down a lot more of drilling.
Boat on Thu, 16th Jul 2015 10:03 am
Jimmy
50 bucks a barrel is the new cheap. I remember not long ago when 8 bucks was cheap and 20 bucks was expensive. How times have changed.
Yea, I remember $.27 gas wars.
BC on Thu, 16th Jul 2015 10:08 am
“Cheap oil”. 😀
C+C and total oil supply PER CAPITA peaked in 1970 in the US and is down 45% since (at the level of the late 1940s), whereas global C+C and oil supply PER CAPITA is no higher than in 2001 and 2004-05 respectively.
Moreover, the 3-, 5-, and 10-year average prices of oil in 2015US$ are at $95-$100, which is at or near a RECORD HIGH going back to the Civil War era and the Second Industrial Revolution.
“Cheap oil”. 😀
BC on Thu, 16th Jul 2015 10:10 am
@Boat: “If the Iran deal goes through they will add 1-1.5 billion over the next 1-1/1/2 years.
For your estimate to be correct oil would have to drop a lot farther and shut down a lot more of drilling.”
I expect a global recession (reported or otherwise) and a test of the price low for WTI in the $40s, if not the $30s.
Boat on Thu, 16th Jul 2015 10:26 am
BC
@Boat: “If the Iran deal goes through they will add 1-1.5 billion over the next 1-1/1/2 years.
For your estimate to be correct oil would have to drop a lot farther and shut down a lot more of drilling.”
I expect a global recession (reported or otherwise) and a test of the price low for WTI in the $40s, if not the $30s.
When? I would phrase it differently. Low prices till the market senses the glut is being eaten by demand. I don’t predict the prices to go high but for a short time, like less than 1-2 years because the fracking revolution # 2 will have started. There is a chance the frackers may come back at lower prices if the refracking of old fields turns out to be widespread.
John D on Thu, 16th Jul 2015 10:33 am
I am confused about the supposed increase in supply from Iran. Aren’t they producing and shipping all they can to countries that are not part of the embargo? Maybe their customers will change, but the amount of oil on the market should stay the same, correct?
BC on Thu, 16th Jul 2015 11:21 am
@Boat: “When?”
Now. Most of the growth of incremental demand for oil since 2008-09 is coming from growth of consumption by the energy and energy-related transport sectors in the US and worldwide to extract the costlier, unprofitable, lower-quality crude oil substitutes, which has a self-reinforcing effect against the backdrop of peak supply and demand and the resulting decelerating growth of real GDP PER CAPITA to ~0% since 2007.
70-75% of world real GDP per capita decelerated below the historical “stall speed” in 2014, which occurred ahead of every global recession since 1960.
http://meritocracycapital.com/2015-06-10-global-recession-before-us/
Ned Davis Research’s Global Recession Probability Model implies that recession began in Q4 2014 or Q1 2015, which confirms my own work.
But I fully expect that gov’t officials and their surrogate technocrats will perceive an existential imperative to prevent reporting data that indicates recessionary conditions; therefore, I expect them to expertly “manage” the deflator, inventory, and import price data to avoid reporting sustained negative real GDP prints that would indicate contraction and thus risk causing a self-fulfilling, self-reinforcing recessionary/deflationary response by firms and households.
Thus, one must have complete faith in the Establishment meritocracy, gov’t data, and the wisdom and expertise of central banks to prevent bear markets and recessions.
No worries, mates! It’s all good!
Northwest Resident on Thu, 16th Jul 2015 11:42 am
BC — From my point of view, TPTB have done a superb job of managing perceptions and public opinion since around 2008 and up to now, probably long before 2008. When the naked truth is so terrifying in its ramifications that social instability and economic collapse would surely ensue were that truth to become widely known, then it becomes a national security imperative to prevent that truth from leaking out to the public. This is where the corporate owned MSM and their hired henchmen, the politicians, come together and work long hours through the night to manage the messaging for broadcast to the bug-eyed populace. The survival of each and every national government is on the line here. And so, like cutthroat thieves under threat from powerful external forces, they drop their differences (temporarily) and band together to fight the common enemy, which in this case is the absolute guarantee of societal breakdown were The Truth to be widely known. That Truth, frankly, is that the world as we have come to know it can not endure much longer. We are rapidly running out of energy. Modern high-tech civilization is hanging by a thread, and that thread is unraveling as each minute passes. The lifestyle to which we have all become accustomed is totally unsustainable. It never was sustainable, but now we have reached the end of the road. Given the large coordination that I perceive in international finance + government + corporate propaganda messaging, I personally do not doubt but that there are plans in the works that are Top Secret, plans that are intended to deal with the coming calamity. The “buying time” strategy has worked fantastically up to now, and probably will for a little while longer. But no amount of propaganda can prevent physical reality from exerting itself in ways that only Mother Nature controls. More and more people with less and less food, water and security can only be obscured and hidden for so long — then it goes critical, and that is the end of the game. Coming soon, very soon, I’m fairly certain.
Boat on Thu, 16th Jul 2015 11:58 am
John D…..the sanctions took a big hit on Iran exports of oil. Down 1 bbpd since they were instituted.
Plantagenet on Thu, 16th Jul 2015 1:35 pm
This is the first time I’ve seen Yergin say peak oil is coming. He says it will be in the 2030s—so its still about 15-20 years out, according to Yergin.
Plantagenet on Thu, 16th Jul 2015 2:21 pm
Alternatively, you can blow off Yergins ideas. After all, he’s just a brilliant pullitzer-prize winning author, consultant, business man, and world-renowned expert on the oil biz.
Much better to go with nrodent’s claim that peak oil will happen in a few days.
Boat on Thu, 16th Jul 2015 2:33 pm
BC,….. I don’t think you understand the political partisanship with a strong under current of racism that would not allow any hiding a recession. The US is already in election mode and the Republicans would love to stick Obama and tie Hillary to any recession.
Northwest Resident on Thu, 16th Jul 2015 3:21 pm
Boat — Unless the Republicans and the Democrats are merely the right and left hand puppets of the same puppet master, putting on a rancorous show of partisanship to distract the voters and keep them occupied with petty bickering while the puppet masters move freely behind the curtain, unseen, doing whatever it is they do.
Boat on Thu, 16th Jul 2015 3:59 pm
NWR, that is impossible. I will use one example to explain my position. Coal, Wind, Nat gas, Solar, nuclear, Chemical plants, Resin plants, etc. They all fight over the electric market in the US. Oil Refineries.
Coal is getting killed by all of the above suppliers. Wind, oil, Nat gas, solar. There are huge dollars spent by lobbyists trying to protect and enhance their turf.
GE is doing great under Obama, more and better subsities for wind , Nat Gas turbines, transmission lines. Who lost? Nuclear and coal who the Republicans support.
Obama has come under fire by the Republicans for slowing down and limiting Nat gas exports by ship. They wanted much higher volumes to make US nat gas a global commodity to give producers the global price. Who else lost. Nuclear plants which are losing market share. This was a Republican darling. Who won but Obama who limited the export. Who else won. The plastic manufactories, US consumers. CHP is a big winner because it pairs well with nat gas. Much higher efficiency in refining and many other applications.
These are multiple billion investment every year. The nuts and bolts of energy. Trust me the Republicans don’t wanna be sock puppets and lose their support base and certainly want to win the white house back and control the agenda. There is no master that can keep companies and engery sectors that big happy. One party wins or the other.
Plantagenet on Thu, 16th Jul 2015 4:30 pm
@Boat
Your suggestion that Rs want NG export and Ds don’t doesn’t make any sense. Its the Obama administration that has approved a half dozen new NG export ports here in the US, not the Rs.
Similarly, the explosion of oil drilling and shale fracking and he drill baby drill approach to US energy production over the last 7 years has occurred under O not the Rs.
As Rockman has pointed out many times, ts hard to imagine an energy policy more friendly to oil and NG than that carried out by O and the Ds over the last 7 years.
CHEERS!
Apneaman on Thu, 16th Jul 2015 5:04 pm
Study finds those living near shale wells more likely to be hospitalized
http://powersource.post-gazette.com/powersource/policy-powersource/2015/07/15/Study-finds-those-living-near-Marcellus-shale-wells-more-likely-to-be-hospitalized-Pennsylvania/stories/201507150215
Steve on Thu, 16th Jul 2015 6:09 pm
Even if Iran is able to produce that much more oil I don’t think it will make a difference on the oil treadmill…What happens when you factor in declining wells and fracking shutting down and the closure of Tar Sands?!! Plant it does not take a brilliant man to be where he is just saying the right things and rewarded for it. I have met some “big” “Smart” politicians in my day and what I am left with is this “Holy Sh*t! This guy is a walking idiot and we are trusting the controls with them!!!!” Yes I would love to believe in Yergin but I know he is wrong in many ways..Lets just hope we have enough left to allow for a slow…..crash…and maybe a transition….one can only hope…
Northwest Resident on Thu, 16th Jul 2015 8:03 pm
Talk to Mexico about cheap oil and amazing energy. Remember that big auction of their oil reserves they announced a while back? The one that would finally open up their vast oil deposits to foreign (major) oil companies? Well, they held the auction and nobody is interested. Which means that we might have to beef up our border patrol “a little” pretty soon because there is a very good chance that we’re going to have a flat out failed state a la Greece right on our Southern doorstep.
It just keeps getting better.
Is Mexico Ready For Life Without Its Sugar Daddy?
http://wolfstreet.com/2015/07/16/is-mexico-ready-for-life-without-its-sugar-daddy/
shortonoil on Fri, 17th Jul 2015 6:51 am
“People in OPEC and elsewhere thought shale was high-cost oil. It turns out it’s not.”
That is a flat out, bold faced lie, and anyone with an IQ higher than their age knows it. The shale industry has piled up over $1 trillion in debt to produce $360 billion per year in product, and the debt is still growing faster than their sales. Yergin is a bought and paid for industry cheerleader. The industry buys CERA’s crapping reports for $10,000 apiece. He lies to people year after year, and still people listen to him? It must be a “sheep thing”!
Boat on Fri, 17th Jul 2015 7:31 am
http://thehill.com/policy/energy-environment/276525-wyden-criticizes-doe-natural-gas-export-study-calls-for-do-over
http://www.wsj.com/articles/SB10001424052702303725404579459313806209976
http://www.forbes.com/sites/christopherhelman/2013/04/17/first-mover-how-cheniere-energy-is-leading-americas-lng-revolution/
Plant, Read the articals. I didn’t dream the stuff up. Lot’s more out there. This was a hot button topic you must have missed.
Boat on Fri, 17th Jul 2015 7:42 am
Short, can you prove that?
“People in OPEC and elsewhere thought shale was high-cost oil. It turns out it’s not.”
That is a flat out, bold faced lie, and anyone with an IQ higher than their age knows it. The shale industry has piled up over $1 trillion in debt to produce $360 billion per year in product, and the debt is still growing faster than their sales.
We need to know how much was paid in dividend.
We know 244 billion is in junk bonds and their paying out a healthy interest rate. Where is the rest of the trillion comeing and who is at risk in this so called ponzi scheme.
Part of this conumdrm is where has all the money gone when oil was at $90 per barrell and higher. Numbers please, not theories please.
Davy on Fri, 17th Jul 2015 8:08 am
Boat, get out of here man. Please, you are descending into the irrelevant as a poster on this board. You can do better than the above! You have before. Sometimes it is better off not saying anything.
Dredd on Fri, 17th Jul 2015 9:41 am
Polls show that the people have figured out who is poisoning them (Oil-Qaeda: The Indictment – 6).
Boat on Fri, 17th Jul 2015 10:42 am
Davy I can find story after story talking about how if it takes $65 to break even there was huge profits to be made when oil was at $90. You know every well is different and has a different break even.
point.http://fortune.com/2015/01/09/oil-prices-shale-fracking/
Please explain how my logic is unreasonable. Why am I skeptial of a trillion dollar loss. Are you saying the fracking industry has never made a penny and lost this trillion over the decade?
Davy on Fri, 17th Jul 2015 11:35 am
Boat, there is a huge debt overhang in the shale business. Until that debt is negotiated down it remains to be seen if shale was economic or if it was a mal-investment bubble.
We can acknowledged one negative economic factor when determining if they are economic and that is repressed financial markets and central bank debt monitarization. The bar would be considerably higher if we had normal rates and no quantitative easing. That said we are in that environment so we can’t hold that against them.
We can hold the debt outstanding against them. We can argue rates will likely go up. We can argue oil prices are stagnant for a variety of dynamics especially demand issues.
I feel within the next year we will see how economic shale is. This is not only with shale many other oil industry activities are marginal. We will see what oil producing nations can survive in this low oil price environment.
So Boat considering the complexities of the financial system and the oil industry especially shale we will have to wait some months. It does not look good but this industry has surprised us in the past.
Northwest Resident on Fri, 17th Jul 2015 3:18 pm
Boat: “Part of this conumdrm is where has all the money gone when oil was at $90 per barrell and higher. Numbers please, not theories please.”
The Shale Industry Could Be Swallowed By Its Own Debt
http://www.bloomberg.com/news/articles/2015-06-18/next-threat-to-u-s-shale-rising-interest-payments
Industry Insiders Call Shale Gas a Ponzi Scheme, Invoke Enron — NYT Report
http://www.forbes.com/sites/ericagies/2011/06/27/industry-insiders-call-shale-gas-a-ponzi-scheme-invoke-enron-nyt-report/
The list of informed articles on this topic is endless.
Plantagenet on Fri, 17th Jul 2015 3:23 pm
@Boat
I’m not sure what point you trying to make about the Ds opposing the export of NG. Your own links show that the Ds in the Obama administration were the ones who supported and approved all the NG export facilities.
For instance you linked to:
http://thehill.com/policy/energy-environment/276525-wyden-criticizes-doe-natural-gas-export-study-calls-for-do-over
Yes, Ron Wyden is a D who opposes NG exports. But look what Wyden is criticizing—the decision by Obama and his fellow Ds in the Obama administration to support and approve the export of US NG.
Face facts—its the Ds who have approved the export of US NG.
CHEERS!
Boat on Fri, 17th Jul 2015 5:13 pm
Plant, part of the dissension was the Reps wanted all 20 ports or evaluated immediatly with more to come. So far Obama has allowed 7. If I remember right that would be the capacity of 4-6% of the Nat Gas market last year. A far cry from 20+ facilities that Obama fears would then change to North American price to a more global price which is much higher. Thus ending the the US advantage in high energy products.
Newfie on Fri, 17th Jul 2015 6:01 pm
Captain Cornucopia and his Horn of Plenty. LOL.
BobInget on Fri, 17th Jul 2015 7:48 pm
Mideast ripe for up-risings:
Lower oil prices may be a boon to European consumers but oil producing countries like Oman are experiencing a crisis.
Crude oil prices in the Gulf have dropped around 40 percent from their peak last year. As a result, oil exploration and drilling companies are not digging new wells and workers on existing oil rigs face unemployment, according to Saud al Salmi, chair of the trade union at Petroleum Development Oman, the country’s largest oil company.
Al Salmi says contracts between the workers and oil drillers used to be automatically renewed.
“Now some contracts are finishing and there is no other contract coming,” he said. “The companies basically started laying off staff.
And the impact of the crisis isn’t limited to those directly employed in the oil industry.
Slashing public spending
Oman is among the Gulf countries that are heavily dependent on oil to fund their national budgets. The Omani government made $4.35 billion from oil sales in the first quarter of this year, down 35 percent from one year ago.
It now plans to slash its spending on defense by a quarter, and halve social spending.
“We need to learn from previous ups and downs of the oil price, and not sleep when the prices are high,” said al Salmi. “Keep that money for the dark days when prices go down.”
But so far, that hasn’t happened. During boom times, the Omani government spent freely on subsidizing gasoline, as well as in social spending to appease Arab Spring demonstrators.
Corruption and lavish spending on the country’s autocratic monarchy also drained billions of dollars from the national budget.
According to Sadeq Sulaiman, a former Omani ambassador to the United States, the budget cuts won’t hurt the rich.
“The most affected is the middle class, not the top people,” he said. “They can survive, like the Gulf States, for another 30 years with the money they have.”
Omanis blame Saudi Arabia
Many Omanis believe Saudi Arabia holds at least part of the blame for their economic woes. They suspect their neighbor of maintaining high production in a deliberate bid to drive down prices, dealing a blow to its foes Iran and Russia, while grabbing market share from US oil producers.
Oil in Oman: Sadeq Sulaiman, former Omani ambassador to the USA
Sadeq Sulaiman is a former ambassador to the US who says the Saudis want to keep oil prices low.
Sulaiman says Saudi Arabia keeps production high for a number of reasons – including to fund its current war with Yemen.
“Their security needs have increased a lot,” said Sulaiman. They produce more to spend more.”
But he says political motives may also play a role.
“I wouldn’t discount completely that there is (an) element of a political kind of consideration as far as Russia is concerned, as far as Iran is concerned, by keeping production high.”
Diversifying the economy
Regardless of the cause, low oil prices are hitting Oman hard. A massive 77 percent of the country’s budget comes from oil revenue.
As far back as 1990, Oman’s leaders discussed the importance of diversifying the economy to become less dependent on oil. Yet today the country has almost no manufacturing or agricultural production.
Tawfeeq al Lawati, a member of the executive committee of Oman’s Shura Council or lower house of parliament, says the country plans to develop manufacturing, transportation and tourism.
Oil drilling
Oman depends on oil for more than two-thirds of its budget.
A first step is to develop refineries to process oil into diesel and other petrochemicals.
“We have a business plan,” he said. “Rather than exporting an oil barrel for 100 dollars, adding value to it by refining it and having different derivatives, which could also lead to different chemical products.”
Logistical hub
The government is also building a huge, modern port in Duqm, on Oman’s central coast. Currently, ships exporting oil from Iran or Iraq must pass through the Straits of Hormuz. Ships carrying manufactured goods traverse the Straits in the other direction.
In recent years, wars and political instability have closed the Straits. Al Lawati says the Duqm port could become an alternative shipping route.
Oil producers could store their product in Duqm and then load it onto modern tankers. Other ships could offload in Duqm and transport their goods by land to the nearby countries of the Gulf Cooperation Council, or GCC, such as United Arab Emirates or Qatar.
Poster’s note: “Slashing public spending by HALF”
Not only does KSA go over OPEC production limits, they rub everyone’s faces in it.
Yemen turned into another Syria. Syrian ‘civil’ war is four years oil and counting.
shortonoil on Fri, 17th Jul 2015 9:14 pm
“The list of informed articles on this topic is endless.”
I must have posted fifty such links over the last two year, and this guy wants proof?
“Mother Ship Earth to Boat, come in Boat?”
After completing the Etp Model it became very evident to us that shale could not succeed either thermodynamically, or economically. We started looking around for confirmation of our conclusion. We didn’t have far to look. As it turns out, it has been another Central Bank bubble pumping scheme since day one. ZIRP alone has financed it to the tune of $25/ barrel. It wasn’t $100 oil, the miracle of technology, or new discoveries that put shale in business; it was the FED!
BobInget on Fri, 17th Jul 2015 9:35 pm
re: shortonoil
Bakken crude oil production and rigs
Bakken Crude Oil Production Continues to Slide in June
By Alex Chamberlin – Disclosure • Jul 16, 2015 10:48 am EDT
On July 13, 2015, the EIA (U.S. Energy Information Administration) released its Drilling Productivity Report. It estimates that in June 2015, the Bakken shale produced 1.22 MMbpd (million barrels per day) of crude oil. This is 1.3% less than May production levels but 9% greater than production a year ago. In June, Bakken shale month-over-month crude oil production dipped for the second time in a row.
The number of rigs working at the Bakken decreased to 75 in June, down from 78 in May. A year ago, there were 174 drilling rigs in the region. Most of these rigs are horizontal in trajectory, or type.
BakkenEnlarge Graph
Shale oil production at the Bakken increased from ~136 Mbpd (thousand barrels per day) in June 2007 to ~1.22 MMbpd in June 2015. This represents nearly an 800% increase in eight years.
In June, the Bakken shale produced 642 barrels of crude oil per day per rig, a 51% gain in production per rig since June 2014.
Increasing US production has led to a fall in crude oil prices. As oil prices remain suppressed, oil producers will have less incentive to increase production. Production may even fall, as we’re now seeing with Bakken production.
What this means for energy companies
The recent fall in production will hurt Bakken shale producers that may be behind this drop. Some Bakken-based producers include Denbury Resources (DNR), Continental Resources (CLR), SM Energy (SM), Marathon Oil Corporation (MRO), and EOG Resources (EOG). SM Energy and Marathon Oil Corporation together account for 3.14% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
Lower Bakken production is also negative for OFS (oilfield service) companies like Schlumberger (SLB), Baker Hughes (BHI), and Nabors Industries (NBR).
Williston Basin has highest tight oil reserves
The Williston Basin’s large size and number of wells have unlocked huge oil reserves in the region. The most productive formations for horizontal drilling and hydraulic fracturing are in Williston Basin’s Bakken and Three Forks formations.
According to the EIA, the Bakken Three Forks play that covers portions of North Dakota, Montana, and South Dakota has the largest tight oil proved reserves in the United States.
apneaman on Fri, 17th Jul 2015 10:04 pm
More amazing energy – push back from momma
Wildfire near Cajon Pass in southern California overruns packed freeway, setting cars ablaze Pictures
http://www.abc.net.au/news/2015-07-18/wildfire-overruns-packed-freeway-setting-cars-ablaze/6630288
apneaman on Fri, 17th Jul 2015 10:09 pm
Cars set ablaze as wildfire jumps California freeway
https://www.youtube.com/watch?v=bjW7eTpsnQk