Rigzone Essay On The American Shale Revolution: Exceedingly Difficult To Replicate The Bakken; Don't Hold Your Breath On The Monterrey Shale; Beware Of Saudi

Rigzone has a long article on the Bakken boom, the next Bakken, and whether Saudi will let it continue (although not much of an answer is provided).

Three excerpts that sound very, very familiar; MDW has said the very same thing; no links now, but they are there. .

First question/answer:

Q: Can the US really compete with Saudi Arabia in terms of production?

A: Sure, just as long as the Saudis will allow it. Don't forget the Kingdom is still the world's swing supplier, a role it's held since the late 1970s. It's important to remember that the Saudis not only have the largest proved reserves of oil, it's also the largest repository—by far—of low-cost oil reserves. Much of Canada's oil sands and US tight oil requires $75 per barrel or more to be economically viable. Saudi Arabia also needs $75 per barrel, but that's to support its current domestic budget. The Kingdom's lifting costs are somewhere around $5 at last report. So Saudi Arabia could easily flood the market, as it did in the early ‘80s, if it lost too much market share, dropping oil prices to $50 or less, and US drilling and production would collapse. Ideally, growing demand from China and other Asian markets will help sustain Saudi production levels and oil prices even as the Americas become self-sufficient in oil.

Second question answer:

Q: What's the next Bakken?

A: That's a tough one. In a sense, we've already seen it with the Three Forks reappraisal. But it would be exceedingly difficult to replicate the Bakken, with its vast areal extent and thick pays. 

Third question/answer:

Q: How excited should investors be about the Monterrey Shale?

A: Some restraint is in order. While preliminary estimates put potential Monterey Shale technically recoverable resources at more than 15 billion barrels, it's hardly a slam dunk. There has been a flurry of leasing and some drilling to date, but as of yet no operator has “cracked the code” for the Monterey. Even apart from the substantial technical challenges and complicated geology and petrophysics, a bigger hurdle would be the widespread and entrenched anti-oil development attitudes industry faces in California, which already has the most stringent regulatory regime in the nation. Furthermore, that anti-oil stance will just gain momentum with the anti-frac campaign that the environmental pressure groups are pushing now.