re Is The Oil Industry Repeating A Critical Error | OilPrice.com

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: rvh40 () insightbb com
> Date: July 20, 2018 at 1:57:43 AM GMT+9
> To: David Farber <farber () gmail com>
> Subject: Re: [IP] Is The Oil Industry Repeating A Critical Error | OilPrice.com
>
> > Is The Oil Industry Repeating A Critical Error | OilPrice.com 
> ...
> > This fact, however, was obscured by the fawning media coverage of increasing supplies of shale oil in the United 
> > States (properly called >tight oil) which did little to stem the price rise. 
>
> The Shale Oil boom of the last decade or so has brought vast wealth to the Permian Basin of Texas and the Bakken 
> Formation of SD, ND, Manitoba and Saskatchewan.
>
> Oil profitability is measured by "Operating Netback", which is a non-GAAP measure of oil and gas sales revenue net of 
> royalties, production and transportation expenses.  A well one mile from Cushing, Oklahoma will have a higher netback 
> than a wellwith identical cost and production in the Yukon.
>
> There is so much oil (and Natural Gas, and NGL) coming out of the ground in the Permian and Bakken that there are 
> bottlenecks -- the pipelines are full.
>
> This means that the excess oil can either stay in the ground or it travels to a pipe by truck or rail.
>
> This additional transport cost adds environmental impact as well as cost.  (Trains are far more likely to wreck than 
> pipes are to break, and trucks are far more likely to wreck than trains.)
>
> This additional transport cost cuts netback.
>
> We need to build new pipelines (or add more pipes alongside existing pipes).
>
> That said, the Eagle Ford, Permian and Bakken Shales of North America are being developed pretty well, but the rest 
> of the planet is not.
>
> There is shale petroleum pretty much everywhere, but it's only being fully exploited in those three places.
>
> Operators are moving into Mexico.
>
> https://www.ugcenter.com/chasing-shales-mexico-1707496#p=full
>
> There is some shale oil activity starting in Argentina.
>
> https://oilprice.com/Energy/Crude-Oil/Argentina-Is-On-The-Cusp-Of-A-Shale-Boom.html 
>
> IEA projects the US shale boom will squeeze OPEC.
>
> https://www.investors.com/news/shale-boom-iea-sees-american-energy-dominance-squeezing-opec-into-2020s/
>
> US sanctions complicate the picture in Russia
>
> https://www.reuters.com/article/us-russia-usa-arms/days-after-helsinki-summit-russia-shows-off-putins-super-weapons-idUSKBN1K92HP
>
> There's a jeezly bunch of "tight oil".
>
> https://en.wikipedia.org/wiki/Countries_by_tight_oil_reserves
>
> If West Texas Crude price is around $26/boe, most of that tight oil stays in the ground.
>
> When the price goes above $50-60/boe, it becomes profitable to lift, assuming there are pipes to put it in.



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