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Saudis unable to break US shale industry

Randy Daytona

Cold War Relic
pilot
Super Moderator
Good news for Deepwater Oil (and the helicopter pilots that fly the jobs)

Now There's Another Source of Oil That's Starting to Get Cheap
  • Deep-water drilling costs are coming down, Wood Mackenzie says
  • Oil at $50 seen sustaining some deep-water projects by 2018
https://www.bloomberg.com/news/articles/2017-05-30/trouble-brewing-for-opec-as-once-costly-deep-sea-oil-turns-cheap?utm_content=energy&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid==socialflow-twitter-energy


In a related development, the recent election in British Columbia might have a big impact. The previous government (Liberal - paradoxically the most conservative of the 3 parties) ended with 43 seats in the 87 seat the Legislative Assembly - 1 short of a majority. The 2nd place New Democrats had 41 seats - and the Green Party won 3 seats and thus held the balance of power. The Greens went left with the New Democrats to form a coalition and a majority. They have vowed to stop the new pipeline from oil rich Alberta, a LNG export facility and even stop hydro-electric. Big fight between Alberta which has the resources and British Columbia which has the ports - will be interesting to see how this fight turns out.

http://www.macleans.ca/politics/what-the-b-c-ndp-green-deal-means-for-rest-of-canada/

LATE EDIT:

From Bloomberg.

Oil's New World Disorder

And questions about its cost-effectiveness haven't just emanated from the White House. Earlier this year, an essay published in Foreign Affairs asked the question:

Is Persian Gulf oil still worth defending with American military might?

Back in 2010, Roger Stern, an energy specialist at the University of Tulsa, took a stab at calculating the cost to the U.S. of policing the Persian Gulf to keep oil supplies flowing. His estimate for 1976 through 2007: $6.8 trillion


https://www.bloomberg.com/gadfly/articles/2017-06-01/trump-threatens-new-world-disorder-for-oil
 
Last edited:

Randy Daytona

Cold War Relic
pilot
Super Moderator
Good news for the US oil industry from Clifford Krauss, energy correspondent for the New York Times.

Oil Boom Gives the U.S. a New Edge in Energy and Diplomacy
By CLIFFORD KRAUSSJAN. 28, 2018

https://www.nytimes.com/2018/01/28/business/energy-environment/oil-boom.html?rref=collection/byline/clifford-krauss

Saudi Arabia, which essentially runs OPEC, has put a floor under the oil price — probably around $50 a barrel — with its limits on output and exports over the last four years. But now the United States, by the sheer force of its production, the supremacy of its technology, and an unmatched pipeline, refinery and storage structure, has put a ceiling to the price.



 

Mos

Well-Known Member
None
So perhaps it's about time we finally told the Old World to go fuck itself, then?
 

Flash

SEVAL/ECMO
None
Super Moderator
Contributor
So perhaps it's about time we finally told the Old World to go fuck itself, then?
When we become completely self-sufficient as a country with no exports or imports, sure!
 

Randy Daytona

Cold War Relic
pilot
Super Moderator
So perhaps it's about time we finally told the Old World to go fuck itself, then?
Just this week, it was announced that US crude production has passed the 10 million BPD mark for the first time in nearly 50 years - and headed for 11 million. One of the other things not mentioned as much is not just the amount of oil being produced in the US, but also how unbelievably fast (weeks) it wells can be drilled and production brought online - which has stopped the vast majority of the supply concerns which caused price spikes in decades past.

There was a rather spirited debate of whether or not the US can disconnect from the global supply of oil. (US Politics Thunderdome, about page 141 if you want to review). The traditional theory that many here espouse - and one I considered correct a decade ago when arguing it at AJPME in Norfolk - is the many faucets, many drains but 1 container theory, i.e., it is a global market at all times. With the advent of massive US shale and Canadian tar sands - and how quickly the oil can come online - some analysis suggests if there is a systematic shock to the system (war between KSA and Iran taking 20 million BPD offline), a price spike to $150 - $200 per barrel would occur - but the US would re-enact legislation similar to the oil export ban of 1975 and the US market would likely remain in the $70 per barrel range. With no longer having to worry about overseas imported oil (or natural gas) the US has tremendously greater freedom to maneuver - whether or not the US needs to spend taxpayer dollars guaranteeing Saudi oil to the world is another debate.

The remarkable revival of US oil production
Shale is shaking up global markets to mostly positive effect
https://www.ft.com/content/a8314d06-0741-11e8-9650-9c0ad2d7c5b5



 

Mos

Well-Known Member
None
I was just remembering Peter Zeihan's book The Accidental Superpower, in which he predicted that US oil production would reach this point and it could be a huge turning point in our foreign policy. Granted, Zeihan's is the only book I've read on the subject, so I can't say how valid his points are, but they seem to correlate with what's happening.
 

Randy Daytona

Cold War Relic
pilot
Super Moderator
I was just remembering Peter Zeihan's book The Accidental Superpower, in which he predicted that US oil production would reach this point and it could be a huge turning point in our foreign policy. Granted, Zeihan's is the only book I've read on the subject, so I can't say how valid his points are, but they seem to correlate with what's happening.
Its not just the hydraulic fracturing of oil but also natural gas.

Trump 'energy dominance' policy pits Washington against Moscow
https://www.reuters.com/article/us-usa-oil-record-geopolitics/trump-energy-dominance-policy-pits-washington-against-moscow-idUSKBN1FT0OE


Very interesting to watch the pipeline diplomacy. Russia is/has built pipelines (Nordstream, Nordstream 2) directly to Germany under the Baltic Sea, thus being able to supply Western Europe and bypass Eastern Europe. To protect themselves, Poland has signed contracts with the Norway to supply natural gas via pipeline and with the US and Qatar via LNG, the intent being for Poland not to import any Russian natural gas by 2022.

Poland Waves Goodbye to Russian Gas After 74 Years
https://www.bloomberg.com/news/articles/2018-02-08/poland-bets-on-lng-norwegian-gas-as-divorce-with-russia-looms
 

Randy Daytona

Cold War Relic
pilot
Super Moderator

BackOrdered

Well-Known Member
Contributor
If I read these headlines 15 years ago, I would have thought it was all fantasy. Remarkable times!
 

Flash

SEVAL/ECMO
None
Super Moderator
Contributor
Its not just the US having a fight between the coast and the heartland, looks like Canada is having the same issues.

British Columbia is trying to block an expansion of the Kinder Morgan pipeline which is crucial for getting the tar sands oil from Alberta to market on the Pacific Coast - Alberta is now threatening to cut off oil to British Columbia.

http://www.cbc.ca/news/politics/saskatchewan-alberta-bc-pipeline-trans-mountain-expansion-1.4580650
Interesting the article doesn't mention First Nation opposition to expansion of the pipelines through BC, Canadian Native Americans are in some ways are more powerful than Native Americans iin this country and have recently flexed that power to try and block some of the proposed pipeline routes. For a Prime Minister who claims to be a champion of native rights it'll be an interesting political decision.
 

Randy Daytona

Cold War Relic
pilot
Super Moderator
Interesting the article doesn't mention First Nation opposition to expansion of the pipelines through BC, Canadian Native Americans are in some ways are more powerful than Native Americans iin this country and have recently flexed that power to try and block some of the proposed pipeline routes. For a Prime Minister who claims to be a champion of native rights it'll be an interesting political decision.
Prime Minister Trudeau is certainly in a quandary. He touts being green, but says the tar sands oil will not remain in the ground. Meanwhile, things continue to get uglier and uglier between British Columbia and Alberta. Reports are suggesting that gasoline at the pump could rise to $2 per liter. There are suggestions (coming from Alberta) that Canada cut funding to British Columbia if it continues to block the pipeline.

https://www.thestar.com/opinion/star-columnists/2018/04/11/as-bc-and-alberta-feud-ottawa-has-few-options-that-would-guarantee-pipeline-peace.html

Meanwhile, those blocking pipelines in the Northeast US have contributed to the following:

Viewpoint: Why is New England importing LNG from Russia?

https://www.bizjournals.com/boston/news/2018/03/01/viewpoint-domestic-natural-gas-production-is.html
https://www.heartland.org/news-opinion/news/new-england-imported-natural-gas-from-russia-this-winter
 
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