Its CERA week in Houston and a time for all the big cheeses in the worldwide oil industry to put their collective heads together to discuss the current state of the world oil order. Front and center on the CERA "stage" this year is the International Energy Agency and the IEA is making some amazing, plum baffling, statements this week.
That gives Oily Stuff an opportunity to re-introduce to everyone, the "Estimators" from a previous post; the fella on the left with one eye, looking really confused, is the EIA from here in the US. On the right, losing all of his hair, is the International Energy Agency. These two dudes make guesses for a living and try to manipulate the price of oil the best they can.
On March 5th the IEA reported to the media that American oil production, led by shale, will grow to over 12 million barrels per day by the year 2023 and that the US will be the number one oil producer in the world. Discussing its OIL 2018 report in CERA this week, with OPEC and Russia in attendance, no less, the IEA further goes on to say that in the next 3-4 years American shale oil will meet over 85% of the worlds increasing demand for hydrocarbons. In fact, the IEA now warns that OPEC's market share, because of US LTO growth, will decline in coming years.
Where this shale oil is going to come from in America is a mystery because the fella on the left, the EIA, says that the US has only 39G BO of 1P proven reserves (AEO2017), about 6 years of American consumption. The IEA also ignores the number of wells it will take for the shale oil industry to grow, but still overcome its 28% annual decline rates on new wells, and 10% decline rates on legacy wells...all that equating to an incredible 3.5MM BOPD loss per year! Nor does the IEA address where in the hell all the money is going to come from, stacked on top of the $300 billion of long term debt the shale industry already has, to achieve this amazing American hydrocarbon accomplishment. David Hughes, in his 2017 Shale Reality Check, estimates over $7 trillion dollars to drill the wells necessary to meet the EIA's ridiculous assumptions...and the IEA's are even more ridiculous.
Mind you, again, the rest of the world is sitting there at CERA listening to this horse dookey. The IEA is sending everyone a big 'ol message...don't invest in your oil resources, you won't make any money doing it; relax...America's got you covered. Its not making any money either, but at least its got lots of money to borrow.
And here is the kicker, for this miracle of American oil growth to occur, OPEC and Russia are going to have to continue to CUT their respective production, to keep oil prices high, so America can GROW its production and take over OPEC and Russia's market share.
Like THAT is going to happen.
The International Energy Agency's O-rings are leaking hydraulic fluid all over the place.