Sunday, July 9, 2017

Trump Launched An Energy Revolution -- Investor's Business Daily -- July 9, 2017

Updates

July 9, 2017: see first comment which included link to this story -- http://www.rigzone.com/news/oil_gas/a/150490/Key_ShaleBoom_Booster_Threatened_by_Trumps_SpendingCut_Plans
 
Original Post
 
Everyone was obsessing about President Trump's tweets -- meanwhile, he launched his energy revolution -- that's what the IBD op-ed writer suggests.

Op-ed link here.

The writer says that President Trump launched the US energy revolution. 

That's simply not accurate. The revolution began in 2000 when oil companies cracked the Bakken code in eastern Montana. That beginning was fairly unremarkable and would have probably died had the same operators not cracked the Bakken code in the Parshall oil field in western North Dakota in 2007.

It was all about timing and a lot of luck. Had faux environmentalists been just a bit quicker, it's a real possibility they could have killed hydraulic fracking in its infancy, but the public-private partnership developed too quickly for anyone to stop it. But that doesn't mean the faux environmentalists didn't try. They were successful in getting the Keystone XL killed (even though Hillary Clinton initially supported it); they came close to killing CBR; and, they delayed DAPL for several years. They tried their best to stop fracking with fake studies and fake news. It took a US senator to get the BLM moving in the Fort Berthold Indian Reservation, one of the key locations in the Bakken.

I maintain that President Trump caught the wave and rode it. He did not launch the revolution; he made sure it kept going. Hillary/Sanders/Schumer/Pelosi would have killed it; California would have seen $5-gasoline; and, America would have been dependent on Saudi Arabia and OPEC once again.
Having said all that, it will be interesting to see how IBD saw the development of the revolution.

From the linked op-ed:
Last week President Trump announced plans to make the U.S. not just energy independent, but a global energy powerhouse.
Too bad everyone was hyperfocused on his tweets.
On Thursday, Trump said he was ushering in a new energy policy that marked an end to decades of fretting about an alleged "energy crisis" brought on by supposed limited domestic supplies and an insatiable demand for fossil fuels.
"We now know that was all a big, beautiful myth," Trump said in remarks at the Department of Energy. "The truth is that we have near-limitless supplies of energy in our country."
Trump had already taken several steps toward unleashing domestic energy supplies, but he announced six more that he plans to take, including reviving nuclear energy, lifting barriers to building coal plants overseas, building more energy pipelines — including one into Mexico — increased natural gas exports, and creating a new offshore-leasing program.
Much more at the link.

I'm not sure why it was "too bad" everyone was hyperfocused on his tweets. I think it's great that the mainstream media is focused on his tweets -- mostly because it speaks volumes about those journalists. [By the way, the vast majority of Americans complaining about the president's tweets have never read one of his tweets at Twitter.]

00_Computer

9 comments:

  1. Bruce Oksol said: "....but the public-private partnership developed too quickly for anyone to stop it."

    That is absolutely right.

    Having been in the oil business for many moons, and having seen how senseless, purposeless and burdensome government regulation has hamstrung the industry, I of course tend to be somewhat libertarian and anti-government in my politics.

    Nevertheless, it is necessary to give credit where credit is due.

    The shale revolution required three ingredients to get off the ground: 1) revolutionary breakthroughs in horizontal drilling technology, 2) revolutionary breakthroughs in fracking technology, and 3) high oil prices.

    The revolution in horizontal drilling occurred mostly in Saudi Arabia. The high oil prices transcended any nation's control. But the revolution in fracking technology was all American. And yes, it was a "public-private partnership."

    Here's how Rigzone describes it:


    --Key Shale-Boom Booster Threatened by Trump's Spending-Cut Plans--
    http://www.rigzone.com/news/oil_gas/a/150490/Key_ShaleBoom_Booster_Threatened_by_Trumps_SpendingCut_Plans

    ReplyDelete
    Replies
    1. Excellent, excellent summary. Thank you. I will bring the link up to the stand-alone post for easier access for other readers. Much appreciated.

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    2. In the original comment, I believe the reader meant to say the revolution in horizontal drilling took place in the United States (either Bakken or Marcellus, depending on oil / gas emphasis) unless the reader was suggesting that high prices and cartel issues driven by Saudi Arabia led to the revolution, which would be correct.

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    3. I stand corrected: see note below -- apparently it was Saudi Aramco that was behind the horizontal fracking, developing the technology. I will have to spend some time researching that just for the fun of it. Unfortunately, Gregory Zuckerman's "The Frackers" (c. 2013) does not have an index, so I will have to read the book very closely to see any hints. A google search would be quicker but it feels like cheating. LOL. Regardless, I will keep all of this in the back of my mind over the next few weeks.

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    4. Bruce,

      It's important to remember that horizontal drilling technology and fracking technology are two separate technologies.

      It was undoubtedly the Americans that made the revolutionary breakthroughs in fracking technology. It was also the Americans that took these and combined them with the revolutionary breakthroughs in horizontal drilling technology (which I believe early on occurred in Saudi Arabia) to create the shale revolution.

      I never worked in international operations, so am only going by what I have read about Saudi Aramco's horizontal drilling prowess around the turn of the century. It would be interesting to see what some of your other readers who worked for Saudi Aramco have to say, whether they agree it was Saudi Aramco who was the world's leader in horizontal drilling back then.

      Nevertheless, the US certainly took the ball and ran with it, and as recently as just the last few years has made huge advances in horizontal drilling technology. See, for instance, in the chart below how the number of days to drill the shorter lateral-length wells has decreased so much over the last few years.

      https://s1.postimg.org/rp0qykrin/Captura_de_pantalla_974.png

      I believe the shale revolution is still a work in progress, still in its infancy, with many more improvments to come.

      Time will tell.

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    5. I agree completely that the shale revolution is still a work in progress. As I've said many times, the "Bakken" never ceases to surprise me. And in this case, I mean the entire shale phenomenon.

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    6. The graph at the link
      (https://s1.postimg.org/rp0qykrin/Captura_de_pantalla_974.png) only goes from 2012. It would be interesting to see the same graph taken back to 2007 when the Bakken boom began.

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  2. Bruce, in 2000 I believe that Saudi Aramco was the world's leader in deploying horizontal drilling technology. I remember reading about some of the stuff they were doing back then and was just floored. In the 80s we couldn't have even imagined doing what they were doing. Granted, the international service companies may have been the inovators who developed this technology, but Saudi Aramco footed the bill and was clairvoyant enough to discern the immense potential of the technology.

    And you're right that the OPEC cartel created the high oil price environment that allowed the tiny shoot of the shale revolution to spring forth and then grow into the mighty oak it is today.

    ReplyDelete
    Replies
    1. Thank you very much. See my updated reply above, noting that I stand corrected.

      Delete