The tendency now will be to blame onerous government regulations, lack of federal permits for this and that, OPEC, Trump...I dropped the ball because the sun was in my eyes. U.S. shale loves to whine and blame everybody else for its woes.
Debt, and depletion, finally got it. Not oil prices.
They key to surviving extreme price volatility in the oil business is to drill stuff that declines <3% per year, produces for 50 years, and has 1000% rates of return. In my 65 years I went as high as $143 and as low as $8. I got through all of it and no stupid U.S. president with dumb domestic oil policies ever beat me. The shale oil thing in the U.S was little more than a costly speed bump.
So, time to stop talking about dumb peak oil dates and worry about shale oil debt, and who is going to plug its wells. Then whether OPEC is going to help us in the future. If not we are in deep doo-doo.
The U.S. is the largest consuming oil nation on the planet, has only 4% of the worlds proven oil reserves, but have been hell bent on draining the rest of our hydrocarbon resources...for exports to foreign countries. We are 20 years away from an affordable transition to alternative transportation fuels.
Now what?
Thank you Mike, great insight.
No way. The U.S. shale oil business is unsustainable at net well head priced below $63. It cannot service debt, cover corporate overhead, pay dividends to investors AND actually pay long term debt back. At current prices it cannot cover 100% of its plugging and decommissioning costs.
No way. Its going to take more wells to sustain a plateau than it took to reach that plateau because of declining well quality (liquids), those wells will cost more, make less profit and decline faster.
No way. Not for a long enough period for U.S. shale to pay its $178 B of debt back and cover its $33 B of plugging liability.
Not a chance.
IEA captured, color me shocked.
Well the shale phenomena changed everything. The oil/gas bidness always had a high level of risk, and HZ removed much of that risk; but at the expense of reduced reward. I read EOG wants to prospect the shale in UAE, will be interesting... Thanks Mike, as I like to say- "this ain't your daddy's oil bidness.."