International Hydrocarbon Wars: Russia, Saudi Arabia, US Shale (1st American Domino Falls, MBS Gets The Urge)

Discussion in 'The War Room' started by MVelsor, Mar 16, 2020.

  1. MVelsor

    MVelsor Leather Belt Platinum Member

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    A consolidation thread of sorts.

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    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.

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    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.”


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    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.

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    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.

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    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

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  2. A.C.

    A.C. COVID-19 Task Force Commander Platinum Member

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    USA! USA!
     
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  3. dissectingaorticaneurysm

    dissectingaorticaneurysm Red Belt

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    The shale boom has obviously put us in a comfortable position with regards to energy supply, but we're still beholden to OPEC to prop up the petrodollar. Everything comes crashing down on us if they abandon it. How energy-independent are we when OPEC and the Saudis still crack the whip?
     
  4. MVelsor

    MVelsor Leather Belt Platinum Member

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    I've always been kind of skeptical of that whole thing given oil only accounts for a fraction of global daily dollar demand (forget the specifics). I'm not convinced it matters what currency they sell their shit oil in. On the contrary, what would happen if the US dropped its sanctions on Iran, pulled all military support for the Kingdom and let them determine their own destinies? The Saudis can barely handle the Houthis.

    If we want to get crazy, who would stop the US military from bringing international trade to a virtual standstill? 90% of it is maritime, the Navy owns the oceans and it's not like we need the oil anymore (refiners actually do for now). It'd be pretty bad for countries that aren't energy independent, buy US Shale. Or what if America decided to blow all of their energy infrastructure to shit or just invade Saudi Arabia itself? That's more like what a real Imperial era, evil empire would do. I think they'd be wise not to fuck around.

    <Fedor23>
     
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  5. MVelsor

    MVelsor Leather Belt Platinum Member

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    This whole thing started after Saudi Arabia told Russia it needed to make further production cuts and Putin refused to do so, effectively ending the OPEC+ alliance. In brazen response, MBS pulled a complete 180 of what had been planned - and was quite literally just requested of Putin - by ramping Saudi Aramco up to maximum production and crashing the market. Who doesn't love a dick measuring contest? :D They're both going to lose.

    And then on practically the same day, MBS also dusted off the only royal family rivals he had left to consolidate a full grip on power. Putin did the latter too. <45>


     
  6. MVelsor

    MVelsor Leather Belt Platinum Member

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    Lol @ "Big Oil", @ElKarlo.

    It's astonishing how goofy these elected officials are. Big Oil is going to mop up on stateside extraction after all the small and medium sized exploration firms go bust from this. That sucks because the majors weren't responsible for taking the risk or driving the innovation the revolution required. Dude should get back to threatening Supreme Court justices over tranny abortions, or whatever his lane is.

    I'm also not sure what Putin and MBS are thinking while they shoot themselves in the face. The resources, and the capital (plus labor) to access them are already in place. Do they really think operations won't be taken up and come right back online the second prices rise again? That's if they can even drive shale out of business to begin with. The early word is that $30 oil isn't putting a dent in US production.

     
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  7. Oceanmachine

    Oceanmachine Blue Belt

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    Yes the US is unstoppable. There is no debt or internal problems or demographic issues. Student loan debt is no problem, no possible fixed income crisis ever again, overly leveraged is not a problem, outsourced manufacturing or drugs 90% in china, yep no issue, best healthcare in the world. Yes Saudi and especially Russian deep state and ex KGB agent are stupid and dont know what they are doing. It is healthy for the Fed to pump hundrends of billions into the economy and trillions!! Greatest country ever. MAGA
     
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  8. ElKarlo

    ElKarlo Steel Belt

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    Yeah it's the small and medium guys who did it all. XOM and chevron are just writing checks.

    I do see a bailout being s good things though. Bloomberg reported on this and mentioned that the Saudis bringing oil to 8 a barrel in the 90s hurt US oil for a decade. Probably best to keep the little guys as they bring a dynamic to the table
     
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  9. MVelsor

    MVelsor Leather Belt Platinum Member

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    Yo grip, you got your eyes fixed on me like as if a bitch
    Caught me in a glitch reachin at cases no beef just fish
    Straight pitch, what the fuck is the problem?

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    ^ The saddest I ever seen, @Sketch. :(

    Some nice graphics cooked up by Petey Z.

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  10. ElKarlo

    ElKarlo Steel Belt

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    I can't believe how much more efficient fracking is now. In just a year or two I heard on the news that the extraction amounts have gone up 45%.

    I say swap out the small and mid sized producers debt with super low govt loans.
    And let idiots like occidental lay in the beds they made. That was pure greed there there ank deal was pure Greek tragedy level
     
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  11. Oceanmachine

    Oceanmachine Blue Belt

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    I mean you only want to think of the positive first. Idk what to say you refuse or only post positive stuff and never look at any potential faults. These threads are just boasting MAGA/KAG stuff USA is best and unstoppable. Carry on. I mean you know more than Putin and are smarter, you can forsee the future. This is how your posting style is
     
    Last edited: Mar 17, 2020
  12. dissectingaorticaneurysm

    dissectingaorticaneurysm Red Belt

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    MBS and Putin are determined to crash the world economy to win a pissing contest.

    Saudi oil war: ‘The beauty is you can blame it on the Russians’


    Moscow’s target is the US shale industry, whose output has soared by 4.5m barrels a day since Prince Mohammed and Mr Putin agreed to co-operate on production cuts in 2016, chipping away at Russian and Saudi market share.

    “With all the global criticism and people jumping on the Khashoggi killing, I think the feeling is, ‘we are not getting credit for being the responsible [oil] player that we are’, and ultimately everybody is in this for themselves. Why should we sit and sacrifice for nothing?” said a Saudi close to the royal court. “The beauty of this is you can blame it on the Russians. You have a legitimate answer, ‘Go talk to Vladimir, he’s the one who started this’.”

    “For Saudi Arabia, it believes that every country that has fought the kingdom in a serious price war has lost. But we are facing an unprecedented situation from both the rise of shale and Covid-19,” said Amy Myers Jaffe, a fellow at the Council on Foreign Relations. “Low prices won’t necessarily spur renewed demand.”
     
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  13. MVelsor

    MVelsor Leather Belt Platinum Member

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    [​IMG]

     
    Last edited: Mar 17, 2020
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  14. MilesAbove

    MilesAbove Gold Belt

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    Hey duder, what's with the titles?
     
  15. MVelsor

    MVelsor Leather Belt Platinum Member

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    It's a karate forum, FFS. <45>
     
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  16. MVelsor

    MVelsor Leather Belt Platinum Member

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    This was an excellent post from another thread.

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  17. MicroBrew

    MicroBrew Steel Belt

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    I fully support government subsidizing / aiding our Fracking producers. We can't let them go under.
     
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  18. Snackbar

    Snackbar Green Belt

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    Cool technology you got there, Canada, circa 2009 says 'sup.

    While Americans have done a great job developing their O&G in the past few years, to say that the tech is home grown is reaching.
     
  19. MVelsor

    MVelsor Leather Belt Platinum Member

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    I've always felt like Alberta would be a great 51st state.

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    Things looked grim for American energy in the mid-2000s.

    Oil production was in steep decline and natural gas was hard to find. The Iraq War threatened the nation’s already tenuous relations with the Middle East. China was rapidly industrializing and competing for resources. Major oil companies had just about given up on new discoveries on U.S. soil, and a new energy crisis seemed likely.

    Everyone knew it was crazy to try to extract oil and natural gas buried in shale rock deep below the ground. Everyone, that is, except a few reckless wildcatters - who risked their careers to prove the world wrong.

    Far from the limelight, Aubrey McClendon, Harold Hamm, Mark Papa, and other wildcatters were determined to tap massive deposits of oil and gas that Exxon, Chevron, and other giants had dismissed as a waste of time. By experimenting with hydraulic fracturing through extremely dense shale—a process now known as fracking—the wildcatters started a revolution.

    In just a few years, they solved America’s dependence on imported energy, triggered a global environmental controversy—and made and lost astonishing fortunes. No one understands these men—their ambitions, personalities, methods, and foibles—better than the award-winning Wall Street Journal reporter Gregory Zuckerman. His exclusive access enabled him to get close to the frackers and chronicle the untold story of how they transformed the nation and the world.
     
  20. RangerDanAndHisBigDogDick

    RangerDanAndHisBigDogDick Black Belt

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    I like this guys threads.
     
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