Monday, March 12, 2018

A story I never thought I would see over at NPR (link here; sent by a reader, thank you very much): America's oil boom is fueled by a tech boom. 

The U.S. is on track to become the world's biggest oil producer [this is forecast to happen in the next year or so, during the Trump administration], pumping out more crude than at its peak nearly a half century ago. For decades, few expected such a comeback, and it's all the more remarkable because the price of a barrel of oil is nowhere near what it was during the last, recent boom.

"This is an incredible statement, but we're probably making more money at fifty dollars a barrel than a hundred," says Kirk Edwards, president of Latigo Petroleum in Midland, the de facto oil capitol of West Texas.

ConocoPhillips has even boasted that his company can now break even when the price of oil is below $40 a barrel.

The flat, khaki-colored plains outside Midland are crowded again with rigs and pump jacks. Tommy Taylor of Fasken Oil and Ranch shows me a fracking operation where water, sand and chemicals are injected into the earth to separate oil from rock. Inside an air conditioned control center, called a frack van, men can monitor information coming out of the well.

"Look at all the computer screens," Taylor says. "We used to frack jobs on the tailgate of a pickup, and so we've come a long ways."

Fracking has been around for years, but companies have managed to continually increase its speed and efficiency, a trend sometimes referred to as "fracking 2.0." Plus, Taylor says, companies are getting more oil than they used to thanks to expanded use of horizontal drilling. That means drilling down, through layers of oil rich shale formation, and then drilling across, sometimes for miles.

And then this -- due to efficiencies, technology, and robots, far fewer people are required -- and thus all those concerns about there not being enough workers may be unwarranted.
Much, much more at the link.

What a Doofus  

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Sand. All those concerns about adequate supplies of fracking sand seem to be dissipating. I remember one analyst -- some years ago -- suggesting the cost of sand would go parabolic. If it did (go parabolic), that lasted for a very, very short time. The other day I mentioned that the Permian operators will source this sand from in-basin, which puts much less pressure on Bakken operators for their sand sourced in Minnesota and Wisconsin.  Today, the Emergent Group used the phrase "dramatic shift" with regard to frack sand.

Not all the frac sand mines proposed for the Permian Basin are online yet, but some operators are already reporting plans to source their sand locally.

A study just released by Energent, an energy market research consultancy, supports that trend, predicting operators will increasingly turn to in-basin frac sand.

By doing so, they will be able to save 40 to 50 percent on the cost of sand. This will result in potential savings of $500,000 or 10 to 20 percent per well.

Active rigs:

$62.18→	3/12/2018	03/12/2017	03/12/2016	03/12/2015	03/12/2014
Active Rigs	59	45	32	111	193

RBN Energy: midstream pay-to-play in the Permian's Delaware Basin.