Entire fracking industry: "We can't increase production because we have to make money"
Getting it exactly backwards, American talking heads claim it's a refinery capacity problem and the US has 'lots of oil and gas.'
In my second last post I pointed out the little known fact that Russia, Saudi Arabia, + the entire world, except the US, using all available technologies, have not increased oil supply to the importing countries in 17 years.
A tremendous delusion has gripped many American talking heads who claim that the current rise in oil prices in the US stems from a lack of refining capacity, or that the US has ‘lots’ of oil and gas.
The ENTIRE fracking industry, as detailed below, sings a different tune.
Delotte stated the problem succinctly in a recent study:
Shales peaked without making money
“The year 2020 marks the 15-year anniversary of the US shale boom, which heralded an era of US energy independence and more than doubled tight shale oil production over the past five to six years. But beneath this phenomenal growth, the reality is that the shale boom peaked without making money for the industry in aggregate. In fact, the US shale industry registered net negative free cash flows of $300 billion, impaired more than $450 billion of invested capital, and saw more than 190 bankruptcies since 2010.”
The shortest, most condensed analysis of the fracking industry comes from SRSRoccoReport.com, with their recent articles: (behind a pay wall)
The Plateau is on the Horizon Source: OPEC Is Back In Control Of The Oil Market
“The U.S. Energy Information Administration estimates in its latest Short-Term Energy Outlook (STEO) from this week that U.S. crude oil production would rise from 11.88 million barrels per day (bpd) in 2022 to 12.44 million bpd this year.
The expected growth of 560,000 bpd year over year is half the pre-pandemic growth pace. For several years, U.S. oil production rose by more than 1 million bpd every year to 2019.
U.S. oil executives also expect just 500,000 bpd growth this year, some said at the CERAWeek energy conference in Houston this week.
Growth is set to further slow in 2024, with production seen to average 12.63 million bpd next year, per EIA estimates. That’s less than 200,000-bpd growth from the estimated average level for 2023.”
“The plateau is on the horizon,” ConocoPhillips’ CEO Ryan Lance said at CERAWeek…
“Scott Sheffield, CEO at the largest pure-play shale producer, Pioneer Natural Resources, told FT on the sidelines of CERAWeek, “I think the people that are in charge now are three countries — and they’ll be in charge the next 25 years.” “Saudi first, UAE second, Kuwait third.”
Pioneer CEO: The Shale Boom Is Over
“The aggressive growth era of US shale is over,” Scott Sheffield, the chief executive of Pioneer Natural Resources, the top shale independent in the country, told the FT in January. “The shale model definitely is no longer a swing producer.”
Earlier this month, the Wall Street Journal reported that many U.S. oil companies are making plans to spend more money this year but keep production either flat or modestly higher. The report listed two big reasons for that: maturing fields and inflation.
In a more recent report, from this week, the WSJ again cited data about well productivity that showed that in the Permian Basin, the biggest producing shale play in the United States and the focus of drillers’ attention, big wells are becoming harder to find. What’s more, existing big wells are producing less oil than before.
The rest of this article gathers quotes from the fracking industry that support this idea.
Most recent quotes will appear right under this headline. Please send any links to me and I will compile them right here.
Why Fracking Won’t Solve the Global Oil and Gas Squeeze
washingtonpost.com
“Recent oil busts, exacerbated by the pandemic, drove many producers to bankruptcy. Coming out of the wreckage, investors demanded that publicly traded producers show more austerity and return profits to shareholders rather than plow it all back into drilling.”
businessinsider.com
…the special sand required for hydraulic fracturing (frac sand) in shale oil production has gotten a lot more expensive.investors are urging caution and "capital discipline" after large numbers of speculative companies went out of business in the previous boom-and-bust cycle.
Five Reasons Why U.S. Shale Production Won't Soar In 2023
oilprice.com
In fact, Goehring and Rozencwajg note that drillers in the Eagle Ford and Bakken formations have largely run out of profitable drilling spots and production in these two plays is likely to plateau soon and start declining.
The resource investment firm mentioned the story of Oasis Petroleum which illustrates this trend: Oasis said in 2017 that it had 20 years’ worth of top drilling locations in the Bakken. But months later, the company quit the Bakken and moved to the Permian with the acquisition of acreage from Forge Energy. Three short years later, it filed for bankruptcy protection.
Hess CEO says OPEC 'back in the driver's seat' as U.S. shale growth slows
reuters.com
The Organization of the Petroleum Exporting Countries (OPEC) is "back in the driver's seat" as the top swing producer amid slowing U.S. shale growth, Hess Corp Chief Executive Officer John Hess said on Thursday… Hess anticipates U.S. oil production will hit around 13 million barrels per day in the next few years and then plateau. U.S. production growth has been slower than anticipated at the beginning of this year due to investor pressure to focus on returns over growth, along with inflation and inventory depletion.
"A lot of companies have already hit the wall," he said, adding they were missing production and investment targets. "I think you are starting to see some cracks in the armor in that regard."
EIA slashes 2023 U.S. crude oil production increase by 21%
reuters.com
The U.S. Energy Information Administration on Tuesday cut its forecast for next year's crude output growth by 21%, days after heads of oil producers warned of persistent inflation and supply chain constraints.
The era of 'exponential' growth in US oil and gas sector is over, Halliburton chief says
thenationalnews.com
The era of “exponential” growth in the US oil and gas sector "is over" as companies focus on boosting shareholder returns, according to Jeff Miller, chief executive of US oilfield services company Halliburton.
“We'll see growing investment, but quite frankly, nothing even close to what we saw from 2008 to 2014,” said Mr Miller…
“…Companies were spending at a rate of 120 per cent of their cash flow and that can’t go on indefinitely,” said Mr Miller.