Wednesday, January 13, 2021

Shale Is Dead! Long Live Shale! Back To The Future -- Swing Producer Argument -- January 13, 2021

Two notes today from twitter:

  • shale: output needs to rise to offset possible year-end supply squeeze, Vitol: link here.
  • if oil supply comes up short, shale comes to the rescue; not OPEC+: link here.

Goldman Sachs: Brent oil could rise to $65/bbl by the end of the summer.

  • Obama: we can't just drill our way to lower prices:
  • Biden: slightly higher gasoline prices: the price we pay to save the earth;

First, the S&P Global Platts story:

  • OPEC+ slows down output rises more than expected;
  • 2021 demand increases to hover around 6 million to 6.5 million b/d;
  • oil prices rising due to potential supply squeeze;

Remember the graphic at this post? Rigs matter:

A reader noted that Saudi Arabia generally contracts rigs for two to three years -- which suggests, it's not easy to pivot in the Mideast -- then add the cash crunch Saudi is facing -- and then add the jump in the oil price Saudi now sees -- on the other hand, there are thousands of wells drilled but waiting to be completed (DUCs) and several thousand more that are off-line for operational reasons in the Permian and the Bakken. This will be fascinating to watch. 

Now, the other link. Considering the source, this is a pretty big deal:


  1. Trying to connect the dots with Saudi's money problems. IMHO the only thing that is keeping their reserves from dropping more is offshore investments. Looking at the Baker Hughes rig counts, down for both gas and oil rigs. Some reports out there is that the Super Giant oil field output dropping. Cutting drilling and completions to pay the dividends for Armco spin off.

    Looking at the EIA report, shows that crude production has leveled off at about 11mm bbls/day for several weeks. Seeing the well reports that you provide, a lot of high production new wells. No shortage of $55/bbl crude for some time

    1. I'm blown away by what MRO is doing and QEP, now. Waiting to see how CR and Slawson do. Hess doing pretty well, also with their recent wells.

  2. Yeah, I might have to do some calculations. LOL.

  3. Anas has a strong peak oiler bias and has also made some very questionable comments on oil quality. I would take him with a shaker full of salt.

    1. That is so funny. I agree completely. I never taken this guy seriously. I didn't know about the "peak oiler bias" but he certainly seemed to have a bias against shale in the past (maybe I'm mistaken, maybe I misread what the wrote in the past) but I have never taken him seriously. And then when I saw his note on shale -- that appeared the very same day Vitol made similar comments -- it certainly caught my attention.