The U.S. shale oil recovery is now gaining momentum, and for the first time since September 2014, the U.S. oil and gas extraction and support services jobs increased by 3,300 in November, according to the U.S. Bureau of Labor Statistics (BLS) data.
Though the increase is small compared to the whopping 155,000 job cuts over the past two years, the increase is an indication that the cycle in the industry is finally starting to swing in another direction.
The shale oil companies should thank their OPEC counterparts—their talks to cut production boosted oil prices by about 25 percent since mid-November.
The shale oil drillers have taken advantage of the higher crude oil prices to hedge for 2017. Pioneer, one of the better run shale oil producers, has hedged 75 percent of its 2017 output at an average price of $50 per barrel.
This recovery in shale oil is gaining a foothold, and is likely to continue even in 2017 and 2018, barring any black swan event.
The total oil rig count has gone up to 529 in the week to January 6, from the lows of 316 rigs in May. Out of the total addition of 213 rigs, 104 rigs have been added since September 2016, the most since the first-quarter of 2014, when oil prices were trading above $100 per barrel.
The good news is that the industry will continue to add rigs both in 2017 and 2018, according to analysts from Simmons & Co, energy specialists for U.S. investment bank Piper Jaffray. They forecast the number of active oil and gas rigs to average 763 in 2017 and 877 in 2018, a considerable increase from the average 509 in 2016, reports Reuters.
Since the collapse in oil prices, oil companies have been squeezing their budget and have postponed their capital spending. However, things are looking up once again, as 25 exploration and production companies (E&P) plan to increase their spending by 33 percent in 2017 over 2016, according to analysts at U.S. financial services firm Cowen & Co. This is significant, as the spending had decreased 35 percent in 2015 and 47 percent in 2016, over the previous year.
Encouraged by the higher oil prices, shale oil companies are raising money to expand their operations in 2017. While November did not see any money being raised, December saw some big deals after the OPEC production cut deal – Diamondback Energy raised $1 billion and Gulfport Energy raised $717 million.
“It wouldn’t be surprising to see another wave of this in January,” said Jason Wangler, an analyst at Wunderlich Securities in Houston.
The energy industry is also hoping that the President-elect Donald Trump will reduce regulations and provide a boost to the industry.
Nevertheless, the shale oil industry will take calculated steps to avoid flooding the market with oil, thereby negating the effects of the production cut undertaken by the OPEC nations.
“There’s a real concern by industry that we could be in for another one of these price adjustments, if we get carried away with development,” Harold Hamm, chief executive officer of Oklahoma-based Continental, said in an interview in New York. “They’re going to be disciplined going forward.”
By Rakesh Upadhyay for Oilprice.com
baha on Fri, 13th Jan 2017 8:37 am
I think this follows the ETP model in that they are hoping they can make money on future production but, if they produce it, inventories will remain high.
If they are ‘hedging’ on the price going up they will lose…
Hello on Fri, 13th Jan 2017 9:02 am
baha: That stupid retarded piece of crap etp model written by that moronic idiot who hardly knows high school level math?
You are a follower?
Says much about you.
baha on Fri, 13th Jan 2017 9:29 am
If you notice the second word in my post…I’m a thinker. Never a follower.
joe on Fri, 13th Jan 2017 11:03 am
The last bit says everything, Trump has to deliver. Opec as a concept is outdated. People are not understanding that oil is not delivering the energy returns we need. A good chart I saw on Bloomberg this week showed the free cash flow of some dow jones companies versus the stock market share price the cash levels are dropping and the prices are too steep. The so called Obama recovery will become the Trump stock market tragedy. Yellen may be too late with the rate hikes to do anything in the next Great Recession. The jobs created now will be able to supply driving season in the summer when consumption spikes.
Davy on Fri, 13th Jan 2017 11:13 am
This will help shale.
How is this for opening shots of a trade war? Ouchy China, and you can be sure China will retaliate. Let’s see if the big shots of the business world let this slide without a fight. There is a lot of money to be made and lost with this proposal.
“Here Are The Winners And Losers From Trump’s “Border Tax Adjustment”
http://tinyurl.com/zvlcgs9
“A “border tax adjustment” would, roughly speaking, be equivalent to a 15% one-off devaluation of the dollar. Imports would be 20% more expensive, because corporates would have to pay the new 20% corporate tax rate on their value. Exports would be roughly 12% “cheaper”
“A border tax adjustment would be very inflationary. The price of exports doesn’t affect the US consumption basket so would have no impact on CPI. However, the cost of imports would go up by 20%,”
“A border tax adjustment would be very positive for the US trade balance…Keeping all else constant and applying standard trade elasticity impact parameters to an average of the two estimates results in a more than 2% drop in the trade deficit equivalent to more than 400bn USD, or equivalently, an almost complete closing of the US trade deficit.”
“Potential Winners: Companies with a majority of their input costs contained within the U.S.
Potentially lower tax rate of 20% on sales and full deduction for input costs, potential examples: Health Care Service Providers, U.S. Cable/Telecom, Oil Refiners that source from the U.S., U.S. based manufacturer. U.S. Exporters: as export revenues are not subject to U.S. tax.”
“Potential Losers: Products, services, and intangibles imported into the U.S. will be subject to the border adjustment. Bottom up exercise to determine global supply chain (Automakers, Oil and Gas, to Retailers can be impacted). U.S. Multinationals that have relied on aggressive tax planning to shift earning overseas.”
joe on Fri, 13th Jan 2017 11:26 am
Davy the irony is that China may let its currency fall for realsies now. Sadly such a move would bankrupt China as raw materials prices would spike as well. The world is becoming a game of begger thy neighbour, and the end result will not be pretty. If I lived in China I would be getting myself fitted for a new blue Mao suit and a a long stick with 2 buckets on the end.
onlooker on Fri, 13th Jan 2017 11:33 am
Hello, do you even know what the Etp model really states? Probably not because if you did you would state your logical fact based opposition to it. Instead you resort to ad hominems. The model is for serious people to ponder not knee jerk reaction wussies like you.
onlooker on Fri, 13th Jan 2017 11:36 am
Joe it if fast becoming a zero sum game. Ironic yes because of how hyped Free trade and Globalism have been and how much money they have made certain entities. Well this is just a sign of how desperate the situation is becoming that the Dog eat dog world has arrived. Expect though some MADOR as Rock has stated. The smaller competing countries will be sacrificed before the Big boys pit themselves against each other.
Hello on Fri, 13th Jan 2017 11:40 am
onlooker
I read that stupid etp report myself.
I’m sorry. The only things that can be said about it are ad homs. It is such a retarded piece of work it doesn’t even warrant a serious discussion.
Is there anything more retarded than Bill Hill the Shill? Yes. It’s all his retarded followers. You one of em?
onlooker on Fri, 13th Jan 2017 11:51 am
Yes I am. it is an empirical study doing something that was not done at least not thoroughly before. That is analyzing the thermodynamic/energy processes to determine the energy ratio of inputs and output of a particular energy product in this case Oil. Well we are discovering duh that the tight oil is not as energy favorable as the light sweet of years back. Again I repeat this though many here know all this. Can you Hello at least give some lucid opposition to this Model? Inquiring minds wish to know
Apneaman on Fri, 13th Jan 2017 12:31 pm
Hello, it’s obvious you lack the skill to understand and argue the “math”. If you did you would counter it with numbers of your own instead of just saying it’s “stupid” 500 times. Like most monkey people your belief system/ world view is offended by any challenge. Any time one hears the phrase “doesn’t even warrant a serious discussion” you know you are dealing with someone who is uninformed and unable to mount a real debate.
Boat on Fri, 13th Jan 2017 12:37 pm
Onlooker,
Short claimed the Etp model used 35-45 api in the study. US production along with imports uses oil outside that range for the majority. This is easily confirmned on the Eia web site. I have posted that link many times.
How can the US buy all that heavy oil, mix it with fracked oil and sell it on the world in increasing quantities. I have posted many times links that show the price per api. It is obvious it is more cost effective to use heavy and light oil mixed than the convential “good oil in the 35-45 api range”.
Refineries use primarily a mix of oil around 32 api so even this so called good oil is to light for refineries. Oil is just oil and mixed to get to this 32 api range. Cost factors like price, shipping and handling, nat gas, supply and demand, CHP, labor, cost of renting equipment, land purchase etc are all part of the of a gallon of gasoline. The amount of energy used in drilling a well and maybe fracking it has huge variables from area to area and sometimes well to well.
Fracked wells will creator in wells drilled if prices are at $30 but seemed to be recovering at $45. Can the worlds economy grow at $45. The answer appears to be yes. Can the oil industry keep up with 1.3 Mbpd growth? Can the world grow at $60? To me this is the base discussion. Not the Etp model which has very lazy inputs. Excluding most of the worlds oil in the model.
onlooker on Fri, 13th Jan 2017 1:20 pm
Look at the amount of Energy, China is using to maintain its Economy going. Sounds like a recipe for disaster as the era of cheap oil and abundant energy comes to a close.
*Energy consumption taken from the CIA Fact Book, GDP from the World Bank
Hello on Fri, 13th Jan 2017 1:30 pm
If Starbucks sells a cup of coffee to a tired roughneck, will that reduce the EROEI of the obtained oil?
shortonoil on Fri, 13th Jan 2017 4:46 pm
“baha: That stupid retarded piece of crap etp model written by that moronic idiot who hardly knows high school level math?
You are a follower?”
Why don’t you get a real job troll, and leave oil to people who can count to 21 without having to take off their shoes and socks, and drop their pants. Pathetic imbecile!
Short claimed the Etp model used 35-45 api in the study.
It is obvious that you have spent a great deal of time studying the report. That is how you know that it is based on the average API as reported by the EIA between 2000 and 2005; which happened to be 37.5° API crude. Is your shoe size the exact same as the size of your mouth?
“I have posted many times links that show the price per api. It is obvious it is more cost effective to use heavy and light oil mixed than the convential “good oil in the 35-45 api range”.
The heavier fractions must go through a secondary distillation process known as vacuum distillation. Mayan 21 is 28% more costly to process than 35.7° API WTI sweet.
We thank you for your expert appraisal of the situation. We are greatly enlighted!
Joe D on Fri, 13th Jan 2017 5:43 pm
Hey short, you’re giving ‘Hello’ more credit than he deserves. He’s an in-breed troll who doesn’t have all his fingers and toes, and is so fat, hasn’t seen his ding-a-ling in years… lol.
Great work on the ETP model. I always enjoy your input. Thanks!
peakyeast on Fri, 13th Jan 2017 6:58 pm
As said elsewhere: One can discuss the veracity of the timing and I/Os in the ETP.
But the basic idea behind it seems sound.
The criticism I have seen so far tells more about the people making the it than the model.
jjhman on Fri, 13th Jan 2017 7:35 pm
“If Starbucks sells a cup of coffee to a tired roughneck, will that reduce the EROEI of the obtained oil?”
Think of it this way. Yes, by an amount similar to the way the sunlight falling on the earth is using up the sun’s energy source or, maybe by the amnount that the A/C in your car reduces the fuel economy. Somewhere in between probably, but yes.
Boat on Fri, 13th Jan 2017 7:36 pm
Short,
A refinery will buy oil based on the profit it can make from it. You think they would be willing hurt their bottom line just to use one api over another? You are a shrill that makes no sense.
Sissyfuss on Fri, 13th Jan 2017 11:09 pm
Boat, you need to tell us a shrill what is Short supposed to be otherwise your defamation makes no sense. Oh wait, it’s Boat. Now I understand.
Boat on Fri, 13th Jan 2017 11:28 pm
Fuss must,
Since you obviously haven’t the skill to fact check you can follow o’l short until you will be proved the idiot you are. 2019 was the year it would all collaspe the short mister said. Hmmmm for such a huge collaspe brought on by depletion we have nations cutting oil to end a glut. Where are the signs of collaspe? World GDP to go above 3 percent.
Sissyfuss on Fri, 13th Jan 2017 11:53 pm
World GDP minus debt at negative 10%.
GregT on Fri, 13th Jan 2017 11:54 pm
Boat,
Do you ever stop making yourself look stupid? Give it a rest, it’s beyond ridiculous already.
Cloggie on Sat, 14th Jan 2017 5:00 am
World GDP minus debt at negative 10%.
My professional life started with a mortgage of 3 times my gross income, that’s 300% “debt”, or home-ownership in waiting rather. It was paid off after 15 years and I’m still living in that modest home, debt-free and hence carefree.
Here Dutch national debt over the last 100 years. In 1945, when Holland became colonized by the US empire, thanks to Canada, the debt was 240%:
https://nl.wikipedia.org/wiki/Overheidsschuld#/media/File:Staatsschuld_pct_bbp.PNG
By 1957 it had sunk to a bearable 80%.
110% global debt is not necessarily catastrophic. For some countries, we are not going to mention any names here, it will mean some serious belt tightening.
#MakeAmericaDebtFreeAgain
Hello on Sat, 14th Jan 2017 5:10 am
That retard Bill Hill short PREDICTED on his 99% accurate pile of shit a few years back that oil price would hit astronomical heights. Now it’s the opposite. It will hit 0 in a few years.
How stupid do you have to be to follow a fuck like that?
GregT, onloocker sissy, mak. Are you really that gullible? Really? Or you making it up?
With mak I know he’s beyond hope of redemption as he’s trying to rationalize he’s move to a 3rd world dump. But the rest of you?
Hello on Sat, 14th Jan 2017 5:24 am
“If Starbucks sells a cup of coffee to a tired roughneck, will that reduce the EROEI of the obtained oil?”
So if Starbuck sells a cup of coffee to an factory worker it’s good for the economy because, hey, that’s what the economy is, production and consumption.
But if Starbucks sells a cup of coffee to an oilhand it’s bad for the economy because it lowers the oils EROEI.
Davy on Sat, 14th Jan 2017 7:14 am
Hello, come on, you can’t dismiss and discredit everything that does not fit your world view. The ETP model has some valid ideas behind it just as many other peak oil dynamics. You look ridiculous if you dismissing these in the extreme. There are valid verifiable results that point to validity of some of this. You can logically take a side but dismissal does not work well. I am not buying into the ETP model completely because it is doing what the central banks are doing and that is basing reality on a model and that does not work well as we are plainly seeing in the world today. There are deeper realities going on that can’t be modeled. How do you model turbulence and randomness? How do you model human behavior? The psychological profession is a failure at some point. Why, because they think they understand human behavior and chemicals can be used to fix it. How has that turned out? LOL. When in a time of great turbulence models fail but that does not mean they cannot instruct.
We are talking about forces beyond human intellect at work here. Anyone acting like they have the answers should be suspect. I have fooled myself. Back in 2006 I made some dramatic changes to my life in anticipation of the 08 crisis. Yea, I got it right but you know what I was not smart enough to realize repression and easing where possible. I succeeded in failing. The crisis was averted and I was not better off as I would have been being dumb. That may not happen next time but that is my experience.
You make some good points. We have excessive doom here that doom has not been realized. Just 2 years ago we had regular comment here on imminent collapse. I even subscribe to them as a possibility more so than now. This has been tempered by a status quo that keeps on ticking. I am not sure what is coming but the extremes of any side tend to fail. Yet, extremes are possible. Trump was an extreme that was not supposed to succeed. You can read about statistics and probability and see the folly of human behavior. I have few answers accept change like we have never seen is in action.
Mark Ziegler on Sat, 14th Jan 2017 7:50 am
Temporary jobs available. Only the young need apply.
onlooker on Sat, 14th Jan 2017 7:51 am
Actually, I have a slightly different take on taking into account the realities of our situation. To me the biggest divide between reality and delusion occurs in regards to Economics. We have an economic system that relies on growth to maintain itself which not only is harmful to our environment but is now nearing the end its potential to achieve that growth. The Etp model is just trying to introduce some sanity to this economic insanity. It is doing demonstrably and empirically showing that the energy to maintain BAU is simply not going to be there very soon. It is straight forward mathematical equations and thermodynamic laws that form the basis of its conclusions. Very different from economics conjecture and wishful thinking. So in fact it IS addressing the deeper realities of our predicament
Boat on Sat, 14th Jan 2017 11:06 am
Onlooker,
You say growth is needed to maintain. Whatever that means. Japan how ever seems to have stagnated it’s economy and population and managing quite well. The US could shrink it’s economy slowly if we just stopped immigration. That doesn’t mean there has to be a collaspe.
Electricity may be the best example. the states with the most renewables are in the top 10 for the cheapest rates. A cheaper base energy rate is less money spent. Wind keeps getting more efficient and cheaper to install every year. Solar is another energy source that is undermining FF markets in large areas. As solar becomes even more cost competive sales and market share will dramatically increase. In Texas alone 7 large coal power plants are losing money and expected to close. As coal is replaced costs are expected to maintain or even drop for the consumer.
Yes change may be one or 2 percent a year but in large markets that’s a hell of a lot electricity. Does this improvement in air, water grow the economy on paper? No, it’s cheaper. Are we better off as a society? Of course.
onlooker on Sat, 14th Jan 2017 12:00 pm
Actually that is a good point Boat about growth. However, the problem is that we waited too long to transition to a more modest steady state-resource based Economy. When I say our Economy relies on growth is precisely because we have NOT transitioned yet. Debt is still being issued, fossil fuels are not being replaced by alternatives only supplemented and what is worse this only System is now in an impending mode of collapsing. Under these circumstances, we can cannot transition to anything NOW but to powerdown as best we can. And doing so even while the population is at this huge level. Any system that is powering down will run into huge problems to attend to the needs of this now huge population. Sorry Boat, too many factors denying this transition. If we had begun say 30 years ago, things could have been different.
Hello on Sat, 14th Jan 2017 12:25 pm
Davy.
ETP is simply wrong. Wrong wrong wrong wrong.
The reality is surprisingly simple.
Oil will lose its value not because people cannot afford, but because there’s a cheaper alternative.
The cheaper alternative is another energy source (solar/wind/nuclear, whatever), or it is direct human and animal labor.
That’s it. That’s when oil will lose its value. Once it becomes cheaper to hire a guy with a manual saw to cut a tree instead of buying a liter of gas to do so. You realize that the price of oil must be very very high before this happens.
So we summarize again: etp is as wrong as can be. Oil has zero value in year what? 2020? Really? I mean, really? But again, who’s to pity, the peddler or the fooled?
Apneaman on Sat, 14th Jan 2017 12:32 pm
Megastorms vs. megadroughts: Climate change brings a potentially devastating “atmospheric river” to California
After years of drought, the Golden State is hit by epic storms — and it’s just the beginning of climate chaos
http://www.salon.com/2017/01/14/megastorms-vs-megadroughts-climate-change-brings-a-potentially-devastating-atmospheric-river-to-california/
GregT on Sat, 14th Jan 2017 12:37 pm
“Oil has zero value in year what? 2020? Really? I mean, really?”
From the Hills group paper:
“2030 will be the year that a discontinuity appears on the P140 curve. It is when the
average barrel of crude will have reached the “dead state”. After that date petroleum will no longer
act as a primary energy source. This determination is derived from the calculation of the maximum
attainable Second Law Efficiency (SLE) for 35.7° API crude. The SLE gives the maximum
theoretical work that can be extracted from a fuel, and the minimum energy that must be given up
as waste heat for the process to go forward. It is computed by Exergy analysis using the
combustion equation of the hyrocarbon in question. Chart# 2 below shows the SLE for various
hydrocarbons: Exergy is given in BTU/gal.’
You are completely full of shit Hello.
Cloggie on Sat, 14th Jan 2017 12:52 pm
Heavy rain- and snow-fall in California, exactly what the Golden State needs:
https://www.washingtonpost.com/news/capital-weather-gang/wp/2017/01/03/atmospheric-river-will-blast-california-with-heavy-rain-and-snow-measured-in-feet/?utm_term=.f194408c675a
Apneaman on Sat, 14th Jan 2017 12:54 pm
Hello, yesterday your argument consisted of stupid, stupid stupid and today you have graduated to wrong, wrong, wrong.
Oh my, your debating skills are par excellence……………for a fucking retard.
GregT on Sat, 14th Jan 2017 1:48 pm
Boat,
“You say growth is needed to maintain. Whatever that means.”
Put your money where your mouth is Kevin, and park it in a savings account at your local bank branch, instead of trying to grow that same said money to at least keep up with inflation.
Or STFU.
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