$1.50-Gasoline -- March 11, 2020

Saudi Arabia: after that reported telephone call with President Trump, Saudi Arabia says it it will "up" the amount of production it had already threatened.

Currently producing about 9.5 million bopd, Saudi initially said they would up that to 12.5 million bbls, and scrolling through twitter this morning, Saudi is said to be reporting that they will increase production to 13.5 million bbls. Three things:

• I will believe it when I see it;
• every summer, Saudi Arabia increases production; they run a/c off oil; and,
• Saudi Arabia's own refineries may have increased capacity (I don't know, but that was their plan)

So, production numbers are important, but export numbers and destinations are just as important.

Gas Buddy, Oklahoma City: $1.47, 7-Eleven, southwest side of Oklahoma City.

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Back to the Bakken

Active rigs: 

$33.46	3/11/2020	03/11/2019	03/11/2018	03/11/2017	03/11/2016
Active Rigs	55	65	59	45	32

No wells scheduled to come off the confidential list today. Maybe that's why I'm in a bad mood. Nothing to report.

RBN Energy: US shale and Canadian oil sands production in a "cheap crude" world. We've come full circle. We've been here before. Do you remember all those posts about the Bakken having lower breakeven costs than Canadian oil sands, and if the sands survived, shale would survive. We're back to that discussion.

It’s a new world, folks. The Saudis and Russians, who until a few days ago had been trying to prop up crude oil prices through supply management, are now engaged in an all-out war for market share. Crude oil prices are sharply lower. Three weeks ago, West Texas Intermediate was selling for $53/bbl and Western Canadian Select for $37/bbl; yesterday, they were selling for $34/bbl and $22/bbl, respectively.

And things may get worse.

All this has profound implications for North American production, but the effects on production in U.S. shale plays versus the Canadian oil sands will be very different. Today, we explain how the oil sands provide steady-as-she-goes baseload supply through pricing peaks and valleys while U.S. shale plays serve as a global swing supplier.

The crude-oil market gyrations of the past few days have left the energy industry shell-shocked, and for good reason. It’s been years since we’ve seen anything close to the once-unthinkable confluence of events that has dragged down oil prices.

A coronavirus pandemic that is now affecting more than 100 countries, including the U.S. and Canada, and crippling global oil demand. The utter collapse of a fragile-but-effective coalition of OPEC and non-OPEC producers — including Russia — that for more than three years had held crude supply in check to keep prices from tumbling. And then there’s the stock market, whose free fall in recent days has left a long list of North American exploration and production companies (E&Ps) in a financially precarious state.

This got us thinking about the challenges that U.S. shale and Canadian oil sands producers will be facing, particularly if crude oil prices stay low for a long time. The ups and downs of shale plays and the oil sands have been frequent topics in the RBN blogosphere.

In our new "Dakota" series, for example, we’ve been discussing how gathering-system development has been sustaining an oil-production resurgence in the Bakken Shale.

On the downside, we discussed slumping activity and production in the SCOOP and STACK plays of Oklahoma in "Broke Down Engine."

For the oil sands, there’s been more down than up since the crude oil price slump of 2014-16, as we noted in several series such as The "Thrill is Gone", although bitumen production keeps rising. And in our series "Everybody Wants to Rule the World," we covered the competitive strain that rising non-OPEC production had been putting on OPEC and its supply-management collaborators.

Much more at the link, of course.