Updates
March 11, 2022: there are operators that are trucking frack sand to the Permian from Oklahoma right now due to sand shortages ... link here.
March 8, 2022: this is not 2017 / 2018. Taps are tapped. Labor, pipe, sand, tools, etc., all harder and harder to come by every week. Covid wrecked supply chains; government stimulus made it worse. Link here.
Original Post
Fracking sand:
- Fracking sand: getting sand to location is now a huge issue due to rail logistics. No source for this tweet. I am unaware of rail logistic issues. February 7, 2022.
- Top story: we are out of fracking sand. February 26, 2022.
- North American oil patch: "We are out of sand." Link here. February 25, 2022.
Background:
- the fracking sand story, October 15, 2016.
- soaring cost of sand, April 23, 2017.
- to frack one well, 100 railcars and 200,000 truck loads (no typo), March 23, 2017.
- EOG: 23 million lbs to frack one well, December 31, 2016.
Rail:
- UNP: best performing stock this past week? March 4, 2022. What happened? There are two stories here.
Pet peeve: whining, and no analysis. Three problems with Javier Blas' tweet:
- one, no analysis; operators are not "not drilling" because they can't make money on $100 oil; they are "not drilling" for other reasons -- Javier: where's the analysis?
- two: in general, publicly-traded companies have a fiduciary responsibility to their shareholders first and foremost; not to any outside entity, or agency; why are they not drilling with $100 oil? Javier: where's the analysis?
- third: in general, most companies are in business to make money; companies are not "political." Companies work to adjust to all headwinds, including antagonistic government policies; companies are not "not drilling" because they don't like Biden, they are "not drilling" for other reasons. Javier: where's the analysis?
- I'm with Josh on this one.
I may or may not provide an essay / commentary with regard to my thoughts, but it seems most folks should be able to connect the dots.
The most difficult "dot" to connect / analyze is this week's list of wells coming off the confidential list and the initial production for those wells.
But my guess is that some folks won't be able to connect the dots. So, if I get the time (and haven't lost interest) I'll post the commentary.
By the way, part of the commentary, and don't take this out of context: rigs don't matter; fracking is what matters. It used to be fracking spreads, but now it's fracking sand.
It's not just supply prices. Remember sand prices in summer 2014? Remember ND man camps and hotel prices in 2012? The industry can cope with high supply prices.
ReplyDeleteUS oil industry is and has been impacted by the anti-FF administration. There's a reason, why they are not investing for growth. Pipeline cancellations, anti-growth FERC commissioner, (since ruled illegal) leasing freeze, permitting pause, methane rules, renewables push, etc. effing etc.
And they won't turn back on a dime either. Not because Biden does some inflation poll watching. Not because of short term geopolitical issues. They need a supportive climate, not an anti climate. And never forget Biden said he would ban fracking. Yes, he walked it back later. But he said it, knowing it would help him in the Donk primaries.
So, go freeze in the dark, Yanks. You had an incredible gift in the shale boom (pretty much pulled us out of the years long Obama recess/depress-ion). And you decided to piss on it. The time to worry about energy security was before the crisis. And nobody trusts you to not prison shank the industry a few months from now if the pressure is off.
It's that first paragraph that's the biggest problem: It's not just supply prices. Remember sand prices in summer 2014? Remember ND man camps and hotel prices in 2012? The industry can cope with high supply prices.
DeleteAgain, no matter how much I try, folks still don't get it. LOL.
DeleteAnalysts talk a lot about the "political environment" and oil -- that US shale is not drilling because of the unfavorable political environment. I have said that same thing many, many times. And I am wrong, really, really wrong. The same folks that suggest the "unfavorable political environment prevents US shale from drilling are the same folks that remind us that despite a war, sanctions, lack of tankers, etc., etc., Russia is still able to export and sell their oil. Yes, I know -- apples and oranges, to some extent, but at $110 / bbl US shale is not drilling because there's an unfavorable political environment. And US shale CEOs are not al altruistic as they are being made out to be. Harold Hamm seems to be the outlier in all this, at least with regard to the Bakken. And good for Harold Hamm. Damn the torpedoes, full speed ahead.
Delete"But Javier, we were told not to explore anymore, that we were evil and were destroying the world so we allocated people and capital to renewables. Why would the industry re-allocate back if in 2-3 years we are gonna be punished again?"
ReplyDeletehttps://twitter.com/b_genetics/status/1500102578868310016
Really, really poor analysis.
Delete