Additional "It Never Quits" Stories
August 13, 2012: America's revolution in energy -- led by the Bakken (oil) and the Marcellus (natural gas) could add 3.6 million jobs and 3% to GDP.
It's a harbinger of a nationwide investment boom spreading from the oil fields of North Dakota and the Marcellus gas shale in Pennsylvania to power plants in California and chemical refiners in Texas. A surge in U.S. natural gas development has spurred $226 billion in spending plans on pipelines, storage, processing facilities and power plants, most slated for the next five years, according to Industrial Info Resources, a market- intelligence provider in Sugar Land, Texas.
U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999. Citigroup Inc. (C) estimated in a March report that a "reindustrialization" of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.
Global oil supply capacity is growing at an unprecedented level, and could result in an overproduction glut and steep dip in oil prices, according to a June 2012 study from Harvard University's Kennedy School of Government.Then, note this:
Contrary to the idea among some that global oil supply is running out, additional production of 17.6 million barrels of oil per day (bopd) could come online by 2020, boosting global production capacity to 110.6 million bopd, even with depletion rates for currently producing oilfields and reserve growth.
The United States has more than 20 big shale oil formations, in particular the Eagle Ford shale, which has a hydrocarbon endowment on par with the Bakken. Most U.S shale and tight oil plays are also profitable at a West Texas Intermediate price ranging from $50 to $65 per barrel, making them "sufficiently resilient" to a significant downturn in oil prices.Repeat: a hydrocarbon endowment on par with the Bakken.
"The Bakken" may not be a household word east of Berthold or west of Bainville, but anyone who knows anything about the oil industry, knows about the Bakken.
Also, note this:
[The author of the study] estimates spare global oil capacity – the difference between the world's total oil production capacity that can be reached within 30 days and sustained for 90 days and the actual production – at about 4 million bopd, which seems capable of absorbing a major disruption from a big oil producer such as Iran.That explains why loss of Libya's oil had no appreciable effect on world markets, and current Iranian embargo: effects? Nada. Zip. Zilch. A Richmond, California, refinery fire that was put out in minutes will have a greater effect on price of gasoline in California than geopolitical events to date in the Mideast.
There is so much more at this linked article; enjoy. Check out the break-even price of oil in these unconventional plays at the linked article. It might surprise you.
By the way, speaking of the Iranian embargo, it looks like Asia isn't too concerned about President Obama's sanctions. On the world stage, he's become pretty irrelevant, notwithstanding Arab Spring or what will eventually be known as the Muslim Brotherhood resurgence.
For a dear friend (not for me):