Oily Stuff

In the decade I tried to understand what the hell the U.S. tight oil sector was trying to accomplish with its growth before profit business model, on borrowed money, no less, I could never quite sort it out. Accordingly, I NEVER made predictions about the future because I had come to understand how stupid people can be in the oil and gas business when using other people's money. When it made no common sense whatsoever to drill HZ wells for IRR's less than one could realize on certificate of deposit at the bank, they kept going. The money the United States tight oil sector has lost up until now is staggering.

 

The Kingdom of Saudi Arabia has $390 B of national debt... the American shale industry will end up, I am certain, losing two times that amount. I am unclear why it was tought of as revolutionary; no oil play in the history of oil will lose as much money as shale will. 

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I then decided to focus on the remaining resource to understand better how much was left at various price scenarios. My main goal was to try and convince people that tight oil was a very finite resource that was basically unprofitable to produce at any price below $140, and that America should cease exporting the last of its oil and natural gas immediately. The Williston, Gulf Coast and Maverick Basins were already in significant decline, so I focused on the Permian Basin. I tried to forecast, not predict, and direct people down the right road, to let them make up their own mind. I used 60 years of experience as an operator, took advantage of friendships in the tight oil sector, of 60 memberships and associations with the AAPG, the WTGS, the PWS and the SPE, spent lots of money acquiring realized production data to back up my analyses and never stretched the truth. I didn't need to, it was as obviously as the nose of a face, shale oil was not going to make it 2030 and then America was going to be in a nine-line bind. 

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I did big work. Almost every concern I had about tight oil is coming to fruition. From its inability to cope with its massive debt to drilling wells too close together and ensuing pressure depletion; its happening like I thought it would. Not necessary when I thought it would, but it will. I give the Permian Basin another 4 years, maximum, before it falls and falls hard. War, and $150 oil could change that, and certainly more debt will delay that...which America certainly has a propensity for; eventually Mother Nature will put Her foot down the last time. 

 

America will be woefully unprepared and freak out. 

 

I'll probably be dead, but I am still gonna say... see, I told you.  

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