Cartoon Of the Week

September 8, 2019

 

Bloomberg reports there are $90 billion worth of projects underway along the Texas and Louisiana Gulf Coasts to better facilitate the exporting of America's remaining hydrocarbons to foreign countries, oil and LNG. The money for buildout of these ports was borrowed on the basis that the US shale oil industry itself would continue to borrow to drill more shale wells and keep oil and gas flowing to those export facilities.

 

Any further growth in light tight oil in America, if there is any, will all have to be exported.  Currently the net revenue from hydrocarbon exports does not even come close to paying the interest on the shale oil industry's long term debt. Upstream producers export and re-invest that revenue in more shale oil wells; downstream refiners still pay for imports suitable for refinery yields; the two entities have nothing to do with each other. The energy "security" shale oil has provided the US is fleeting; the decline rates of shale oil wells is staggering. You decide how much lower oil imports to our nation, because of shale oil, has helped the trade deficit...

To facilitate the exporting of US LTO we are wasting an unbelievable amount of associated gas with it all, as the cartoon depicts.

 

The E in shale EUR's no longer stands for estimated, it stands for exaggerated. Wells are now being up-spaced, not down-spaced, because of over-drilling and poor economics. Two of the three largest shale oil basins in America have peaked, or are approaching peak production levels; essentially all of America's remaining oil resources lie in a few counties in the Permian Basin where increases in well productivity have stagnated and decline rates are accelerating. https://oilprice.com/Energy/Crude-Oil/Weakening-Shale-Productivity-VERY-Bullish-For-Oil-Prices.html At $55 WTI, going below $50 in the short term, HZ rigs are getting stacked, capital is drying up, hands are being sent home. 

 

Those that champion oil exports do so under the false premise of shale oil abundance and promote a monetary policy that will continue to fund it. Using unprofitable shale oil as foreign policy tool is dumb energy policy. It will take two more decades to completely transition away from fossil fuels; we are the largest consumer of oil and condensate in the world, we're going to need every drop we have in this country before it's all over.  

 

America's oil needs to stay IN America

 

 

 

 

 

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