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A consolidation thread of sorts.
It's obviously rather geopolitically advantageous to remove foreign oil dependency and not be subject to the whims of global disruptions. When you can supply your own needs, it allows money to be cycled more easily back into the economy. The shale boom has lowered the cost of operations for American manufacturers, made for a growing field of domestic raw materials suppliers and accelerated the demise of the domestic coal industry.
Given that climate change is both very real and imminent, it goes without saying we should be concurrently doubling down on green tech investment and develop a coherent, realistic transition strategy to implement over the next couple decades. We can't do it within ten years per Green New Deal mandate, neither technologically nor logistically.
This has a recent precedent.
As political intelligence consultant Gary K. Busch put it:
"There were lessons learned in the production of fracked oil and gas in the United States with OPEC’s desire to drive the US industry to its knees and start an oil pricing war to make fracking uncompetitive. Instead of folding up their hands, US producers innovated new processes and introduced new technologies which drove down operating costs. Now, OPEC cannot compete and is fighting a losing battle to drive out US shale. America will be self-sufficient in energy by late 2019.
There are numerous new techniques being applied including smart drill-bits with computer chips that can seek out cracks in the rock and adjust the drilling accordingly, fully degradable fracture balls and seats to isolate zones during well stimulation that eliminates previous limitations on lateral lengths and maximizes estimated ultimate recovery while reducing risks and costs as well as expandable tubulars, more cost-effective rotary steerable systems, and intelligent drill pipe for high-rate bottomhole data telemetry drilling to depths no longer limited by initial hole diameter.”
The biggest difference today is that during the 2014-16 pricing war, shale drillers had a nearly endless supply of credit supplied by banks, investors and private equity. It gave them the breathing room to innovate at an insane, balls-to-the-wall level and stay afloat. The crude extraction industry is currently sitting on a mountain of debt and the Trump Administration has recently floated the idea of federal government intervention, to the loud outrage of Democrats on Capitol Hill who would have to approve of it.
But how long can Russia and Saudi Arabia turn the screws? There's no country in the world that can compete with Saudi Aramco's $15 average breakeven and it's quite easily the most profitable corporation on the planet. However, it's important to remember that oil producer breakevens aren't the same thing as fiscal breakevens. Unlike America, the economy of both countries is dangerously dependent on energy and in the KSA's case, their entire society virtually hinges on it.
Putin claimed last week that Russia could withstand oil at $25 for up to 10 years. The country's current budget balances at around $42 but it has a National Wealth Fund of around $120 billion to lean on and fund the gap. However, that NWF is supposed to serve a variety of social and infrastructure projects in the country. Saudi Arabia requires nearly double that but MBS is sitting on $500+ billion in foreign exchange reserves.
Anyway, in today's news...
$30 Oil Won’t Keep U.S. Shale From Setting Production Record
And in last year's news...
U.S. Shale Can Add A Saudi Arabia And (Easily) Pay Investors
It's obviously rather geopolitically advantageous to remove foreign oil dependency and not be subject to the whims of global disruptions. When you can supply your own needs, it allows money to be cycled more easily back into the economy. The shale boom has lowered the cost of operations for American manufacturers, made for a growing field of domestic raw materials suppliers and accelerated the demise of the domestic coal industry.
Given that climate change is both very real and imminent, it goes without saying we should be concurrently doubling down on green tech investment and develop a coherent, realistic transition strategy to implement over the next couple decades. We can't do it within ten years per Green New Deal mandate, neither technologically nor logistically.
This has a recent precedent.
As political intelligence consultant Gary K. Busch put it:
"There were lessons learned in the production of fracked oil and gas in the United States with OPEC’s desire to drive the US industry to its knees and start an oil pricing war to make fracking uncompetitive. Instead of folding up their hands, US producers innovated new processes and introduced new technologies which drove down operating costs. Now, OPEC cannot compete and is fighting a losing battle to drive out US shale. America will be self-sufficient in energy by late 2019.
There are numerous new techniques being applied including smart drill-bits with computer chips that can seek out cracks in the rock and adjust the drilling accordingly, fully degradable fracture balls and seats to isolate zones during well stimulation that eliminates previous limitations on lateral lengths and maximizes estimated ultimate recovery while reducing risks and costs as well as expandable tubulars, more cost-effective rotary steerable systems, and intelligent drill pipe for high-rate bottomhole data telemetry drilling to depths no longer limited by initial hole diameter.”
The biggest difference today is that during the 2014-16 pricing war, shale drillers had a nearly endless supply of credit supplied by banks, investors and private equity. It gave them the breathing room to innovate at an insane, balls-to-the-wall level and stay afloat. The crude extraction industry is currently sitting on a mountain of debt and the Trump Administration has recently floated the idea of federal government intervention, to the loud outrage of Democrats on Capitol Hill who would have to approve of it.
But how long can Russia and Saudi Arabia turn the screws? There's no country in the world that can compete with Saudi Aramco's $15 average breakeven and it's quite easily the most profitable corporation on the planet. However, it's important to remember that oil producer breakevens aren't the same thing as fiscal breakevens. Unlike America, the economy of both countries is dangerously dependent on energy and in the KSA's case, their entire society virtually hinges on it.
Putin claimed last week that Russia could withstand oil at $25 for up to 10 years. The country's current budget balances at around $42 but it has a National Wealth Fund of around $120 billion to lean on and fund the gap. However, that NWF is supposed to serve a variety of social and infrastructure projects in the country. Saudi Arabia requires nearly double that but MBS is sitting on $500+ billion in foreign exchange reserves.
Anyway, in today's news...
$30 Oil Won’t Keep U.S. Shale From Setting Production Record
And in last year's news...
U.S. Shale Can Add A Saudi Arabia And (Easily) Pay Investors
They're both going to lose.
