Wednesday, November 28, 2018

How American Fracking Changes The World -- Op-Ed -- WSJ -- November 26, 2018

Great op-ed. Nothing new here for those following the Bakken revolution.

Link here.
Until recently, observers expected American energy production to reach a plateau. A lack of pipeline capacity was expected to constrain output in the Permian Basin through 2020. Instead, shippers found ways to use existing pipelines more efficiently, and new pipelines were constructed faster than expected. U.S. crude-oil production is expected to average 12.1 million barrels a day in 2019, 28% higher than in 2017. Surging production has roiled world energy markets. 
Ever since the shale boom began, diplomats and politicians have underestimated its importance. The U.S. has regained the position it lost in 1973 as the world’s largest oil producer, which it will likely hold through at least the 2040s. The consequences for energy markets and world politics will be far-reaching. Roughnecks in the American Southwest are doing more than most foreign ministries to change the world. 
Data points from the op-ed:
  • Iran is the biggest loser
  • Russia: second biggest loser
  • but also bad news for the Gulf sheikhdoms
  • additional pressure on Venezuela
  • Mexico? A sixth of the Mexican government's revenue comes from energy; falling prices will force the incoming government to find ways to attract more foreign capital (Mexico will ban fracking)
  • France/Macron will feel the relief
New York Movers And Shakers Appear Envious


Later, 3:32 p.m. CT: see first two comments below regarding how much better the Bakken wells have become over the years. Now this very observant comment from another reader:
The subtle importance of Larne's comment ought not to be underestimated as it pertains to the Bakken, other shale plays, and future potential shale targets. 
To now drill WAY faster, with more precision, and MUCH higher recovery factor (20%+ according to some operators) will vastly expand the US productive acreage.

I strongly suspect that Helms et al want an updated USGS assessment for the Bakken as the current recovery rate of OOIP is now 3 to 5 times higher than earlier when the USGS projected 7+ billion barrels oil Technically Recoverable Resource (TRR).
 Original Post

Speculators buying up mineral rights in eastern Montana for pennies. The article is behind a New York Times paywall. It's been my experience that if these "efforts" pay off, it is the grandchildren that benefit. The vast majority of these mineral acres will never be developed. But they are great for "flipping" to unsophisticated investors who get caught up in the "Bakken revolution."

Good luck to all.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

We saw a lot of this in North Dakota some decades ago. My hunch is that Harold Hamm picked up a lot of minerals in North Dakota many, many years ago, well before the boom.

From the linked op-ed:

If Only Waffle House Had Free Wi-Fi

Maybe they do; I've never checked. Something tells me an Apple computer would feel unwelcome.

Add that to my "to-do" list. We have a Waffle House just down the street. People super friendly. Noted for being open regardless of the situation. "Active-shooters" at Waffle Houses don't stick around very long.


  1. We had a poor Ratcliffe well in Richland county NW of Fairview that had been abandoned. A year ago after an offer by a newcomer to the area of $200/acre and 18%, we pooled our families interest for negotiation purposes and was able to get $450/acre and 20%. Well less then we could of 8 years ago. One well has been drilled and had produced 89,000/b in the first four months. A 2007 Bakken well drilled in the area produced 7300/b in its first four full months and another 2012 well 23,00/b. This company has similar recent results in the area. These result are similar throughout the area. Its amazing to see the improvements over the years.

    1. Wow, good for you. Seriously, that's awesome. And yes, you are so correct: the results are getting better and better. And incredibly better.