Funny thing, this Hart article.
Now that the elections are over, the drill baby, drill squad is confessing to the fact that American gasoline prices cannot be slashed in half by increasing U.S. tight oil and exporting it all around the world.
Well, no shit.
Hamm is not the only one to now be crawfishing, but a big one; Kudlow, Woods and several others, all the same thing. Even Trump now says we have an "abundance of liquid gold" in our country instead of " we have more liquid gold under America than anybody in the entire world." You can google all that.
I would expect this all to leave a lot of working class Republicans scratching their heads wondering, WTF?!!
Just kidding, the pundits will say; thanks for playing!
I don't think the Permian has another 2.0 MM BOPD in it knowing that 4.5 MM BOPD has to be replaced every year from legacy decline. Exported, and diluted over the world oil market, an additional 2.0 MM BOPD of U.S, tight oil, sustained for six months, would have only a minumum effect on U.S. gasoline prices. 40 cents, tops.
And where 'o where are they going to put all that produced water to make another 2-4 MM BOPD and reduce the cost of gasoline by half in the U.S?
Politicians lie and don't think a thing about it. They then spend the first 2 years of their new term to spin the lie.
Americans are about to find out what the meaning of "peak oil" actually was. It was never about running out of oil; that was dumb. It was always about struggling to produce enough "AFFORDABLE" oil to meet demand. Well, we're there. man. I am hopeful the first 2 years of this new Administration will finally, FINALLY, open some eyes.
Depletion shows its ugly self in many forms, like lousy well economics, falling liquids productivity, rising GOR, more gas representing the percentage of production stream and...water, water everywhere.
Hey, its just life. All oilfields deplete. Even the Permian HZ play. Only the liers making money from it all told you it was never going to end.
Even Enverus is saying maybe 10 years of inventory for the Permian, <7 elsewhere. They see "productivity degradation" but currently think it's being offset by cost savings, whatever those are. Also seeing that EUR's are likely to be reduced due to adding more and more wells. Down to about 5000 locations still owned by private cos so from here on in looks like the clash of the titans over acreage. Prices of gas focused E&P companies already seem to be based on an expected $4/mmbtu price next year so pretty much fully valued. But if the water issues aren't addressed things will slow down sooner rather than later. And the Big Shale Supply Surprise will happen.
This popped up in Europe so I am asking . How is the oil patch holding up ? Just like construction most of the workers are out in the open .
https://www.theguardian.com/us-news/2023/aug/02/texas-construction-worker-water-break-law-heat-exhaustion-abbott
Mike, this comment sums it up in a way that even an analyst could figure out. It belongs on LinkedIn too. I attended a briefing on the Permian Basin this morning, and here's the 2022 Texas Water Plan forecast for how much water is needed to support food production for all the new people that are supposed to move here, vs what we currently have without treating produced water for at least ag use. Meanwhile the 'green hydrogen' crowd insists on distilled water purity to use in their Rube Goldberg electrolysis to hydrogen to ammonia to hydrogen projects. That kind of water would wash out the minerals in the soil and wreck the crops. And without some kind of forward progress on this, it won't matter what the oil price is. It's not just water disposal - the injection pressures for EOR are contributing to the challenge that lies beneath.
I personally believe that because longer laterals lead to higher IP90s, but much steeper 12 month decline rates (73% in the Permian!!), we are already past 4.5MM BOPD annualized decline rates. That means that approximately 85-88% of all HZ tight oil wells drilled in the U.S. each year do nothing more than replace the previous years shale oil decline. We are therfore relying on a diminishing number to HZ shale oil wells each year to show growth and when 13,000 foot laterals can no longer be drilled, for instance in the Permian Basin, because there is no more room to drill them in the middle of all those 5,000 foot laterals, Permian tight oil production is going to fall hard. When the Permian falls, so does U.S. shale oil production.
In almost all major U.S. tight oil basins new wells are less liquids (C+C) productive, associated gas is making up a larger percentage of the production stream and they are making more and more produced water. With fewer places to inject the stuff. 165,000 HZ shale oil wells in the U.S., and counting, one $9MM well at a time, well after well for 400,000 BO EUR's each.
The writing is on the wall.