Link here -- "the shale boom is about to go bust."
Consider the source. This linked site is a "peak oil" site.
Biggest problem with the article: no time line as to when "shale" will go bust. This year, next year, five years from now, 35 years from now? The article does not say. As least as far as I could tell.
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.
Note: I would never, never recommend anyone invest in oil companies. However, oil companies are providing great jobs for millions of workers; the CEOs and directors are doing very, very well; mineral owners love their "oil checks." In other words, investors may or may not do well, but a lot of people working in the industry are actually doing quite well.
Again: I am not convinced the average investor can make money investing in oil. But talking about profits and losses as ways to evaluate investment opportunities went out the window with Amazon, Tesla, GM, and any number of other publicly traded companies.
Second biggest problem with the article: opinions interspersed with facts -- and impossible to separate the two (facts/opinions). I do the same thing: intersperse facts with opinions.
Third biggest problem: a lot of the statements -- which read like facts, but cannot possibly be -- are completely wrong. The analysts seem to misunderstand "shale."
At some point, common sense suggests we will see peak production in "shale" but it will be a chicken and egg question: will "shale" end even as the world needs more oil, or will the world simply need less oil from shale.
Right now, production from "shale" basins is "advancing" by any metric one wants to measure.
Chevron, OXY, Anadarko, Warren Buffett are probably not investing for the short term.
Be that as it may, here's the headline.
Considering that the "shale boom" is about to go bust, oil prices certainly aren't going anywhere. "We" came close to seeing WTI drop below $60. US crude oil inventories are off the charts -- now over 460 million bbls in storage, when historically, 350 million bbls would have been more than enough, and 300 million bbls is what we generally had in storage. Crude oil supply -- at about 30 days -- is near a(n) historic high, link here.Gasoline supply used to be 18 - 21 days; now it's routinely 28 days, a full week longer, link here. In fact, this post needs to be updated.
For more, see Art Berman's School of Peak Oil.
Meanwhile, Argentina never got the memo from Art Berman, Nick Cunningham et al. Due to its shale oil and natural gas production, mostly in Vaca Muerta, it now has such a glut of oil and natural gas, it has to cut back production until processing facilities and storage facilities can be put in place to handle all the production. This is absolutely incredible.
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Cheap Oil
From oilprice.com:
U.S. shale oil—which just four years ago was the world’s second most expensive oil resource—is now the second cheapest source of new oil supply globally, just behind the giant onshore oil fields in the Middle East, Rystad Energy said on Thursday.
North America’s tight oil has reduced costs over the past four-five years and has proven to be a competitive source of oil supply even when oil prices are not very high, according to the energy research firm.
Rystad Energy estimates in its latest cost of supply curve update that the average Brent Crude breakeven price for tight oil is now US$46 a barrel, just four dollars above the average $42 per barrel breakeven oil price for the giant onshore fields in Saudi Arabia and other Middle Eastern countries.US oil: second least expensive oil in the world. In. The. World. But California prefers Saudi oil.
This story will be re-posted. Many, many talking points.
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Meanwhile ... Indications The Boom Is Over
Schlumberger subsidiary cuts jobs in the Permian.
Product & Logistics Services LLC (P&LS), a subsidiary of Schlumberger Limited, is ceasing operations at its facility in the Permian Basin, resulting in layoffs of 124 employees, according to a letter sent this week to the Texas Workforce Commission (TWC).
The trucking company said it would be “closing employee-serviced operations out of Monahans, Texas, and surrounding areas.” Monahans has been dubbed ‘the center of the Permian Basin.’
Nick Cunningham is an old peak oiler. A few years ago, he tried (semisuccesfully) to stealthily change from that to being a general oil commenter. But there's still the tug of that first love and you see it come out at times at oilprice.com.
ReplyDeleteThe other thing is they are in the cut rate, rapid production of high volumes of content. So the story quality can be spotty, especially from him. Also, I have even seen them have one story saying A, and then next story less than 24 hours later said not A. So, you just can't take them too serious. Low value news.
1000% correct and exactly how I feel. I hate using that site for stories, information. But the oil price data is what pulls most of us to that site. And since they do the same thing I do, aggregate/link from other sources, one can go to the original source if any questions. Fortunately oilprice.com does link reputable sources such as EIA, Rystad, Mackenzie Consulting, etc.
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