You may have heard that the Saudi stock market has fallen 7%. This is due to falling oil prices.
Which brings up the shale revolution. I have written about it recently. And I have been reading something that has opened my eyes even wider.
Read that last paragraph again. Some shale operators can make good money at $55 a barrel. At $65, they can make higher returns than they did three years ago with oil at $95. I have friends here in Dallas who are raising money for wells that can do better than break even at $40 per barrel, although they think $60 is where the new normal will settle out. Texans are nothing if not optimistic.
How are these new economies possible? Answer: they bent the cost curve downward. It has fallen fast and – more importantly – it will keep falling.
The same process that doubles the power of your smartphone every couple of years without raising its price, is also unfolding in the energy business. That’s why you see per-well production rising so fast in the Eagle Ford, Bakken, and Permian Basin fields. It’s not a result of more wells; rig counts have been falling this year. Rather, the producers are pulling more oil and gas out of the existing wells.
You might want to read the whole thing. And then look at this chart from the article.
WTI oil (Oklahoma) at the time of this writing (24 Aug 2015 0611z) is $39.16 a bbl. Brent (Europe) is $44.27. The Saudis are in trouble. As is the whole Middle East. The fall in the Saudi stock market and the current wars are just the beginning.
Comments
9 responses to “Saudi Arabia Is Fracked”
The sad thing is the Peak Oil folks seemed to always assume that the state of the art in drilling was NEVER going to change, never going to improve as far as recovery costs go – and the industry looked at them and just laughed and went on.
So Venezuela, after decades of neglect, need a spot price of $160 a barrel? That shows what decades of NOT innovating or investing in the future will do for you.
Since it looks like we’re possibly going into a Little Ice Age – I’m all for cheap oil. And Venezuela did it to themselves – I hate to say it but I’ve got little sympathy at this point.
Have you seen the Thomas Gold / abiogenic oil theory? Claims there’s a LOT more oil and gas than was thought, and it’s going to be in places that weren’t predicted by previous theories.
http://origeminorganicadopetroleo.blogspot.com/2011/01/thomas-gold-professional-papers.html
Screw the Soddies, impoverishing terrorist-supporting governments is one of the best things that could happen.
I read Gold’s The Deep Hot Bioshpere back when it first came out. People still scoff at his theories but when asked about Saturn’s moon Titan, with its lakes of methane (natural gas), they have no answer. Presumably that methane wasn’t created by the rotting of hundreds of millions of years of plant and animal remains…so how did all that methane form?
I throw up in my mouth a bit every time I hear some hippie wish for free clean energy. “Free Energy” produced from renewable resources would lead to a total collapse of the economies of some of the most over weaponized, authoritarian and theocratic nations of the world. What better way to guarantee war than to find a method to create energy from water, or cow poop, or wind. Even a 50% drop in the price of oil has put many of these nations in a economic spiral which will lead to civil and regional war.
The only way to stop total war would be for someone to find a way to create gigawatts of power from the crumbs in my couch and then give it away to the masses to keep them at home watching TV and making their own couch crumbs to power their lifestyles.
I really do wish there was a silver bullet of cheap energy. I would love to float around in my wall-e chair and sip nutrients all day. Nuclear power, cooled with sea water could meet the needs of emerging countries with both power and fresh water. Too bad the countries that need it the most are too unstable for anyone to risk investing in them.
Countries that base the vast majority of economy on one export especially one that they can monopolize, are just asking for self destruction as some point.
We’re supposed to make energy expensive to prevent war?
JLawson,
I did a post on T. Gold and abiotic oil when his book came out.
Ewiggins,
I expect that oil producing countries will be unable to afford war. They will have civil unrest to deal with.
Oil money funds terrorism world-wide. Absent billion$ from oil and it’s all just a local dispute between sunni/shite and tribal lines.
300 years ago the al Sauds were just another tribe of desert bandits. 100 years ago see Lawrence of Arabia for a romanticized version. Take the money away and they will revert to historical norms.
They get what they deserve – all the desert they can eat.
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Another disappearing comment due to the s word.
Venezuela has the most desperate need for high crude prices to support their failing economy. Ample more proof that southerncalifornism destroys everything it touches, everywhere it’s tried, every time It never fucking works, all it creates is poverty, misery and mass death. Ya’ll SJWs really want this here? zonetard? Anyone?