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MOSCOW, RUSSIA – OCTOBER 03: IHS Vice President Markit Daniel Yergin speaks during “Maintain … [+]
Anadolu Agency via Getty Images
Let’s start this update with some book recommendations. Many readers know that, along with Shale Magazine editor Kym Bolado, I co-host a weekly oil and gas radio show called In the Radio Oil Patch, which is broadcast throughout the state of Texas. In recent weeks, we’ve interviewed the authors of two new books that should be required reading for anyone interested in the oil and gas industry and the shale business in the United States.
The first author is well known to almost everyone: Daniel Yergin, the Vice Charman at IHS Markit
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We interviewed Mr. Yergin on the November 15 edition of In the Oil Patch, focusing on his latest book, titled “The new map: energy, climate and clash of nations.” You can listen to the podcast of this interview at this link. All of his books are extremely educational and intriguing books filled with vast reserves of useful information. Mr. Yergin is an extremely gifted writer who is able to present this wealth of information in a novel-like narrative that catches your interest and makes it difficult to put books aside. If you want to know where the world is going when it comes to the intersection of energy and climate, “The new card” is truly a must read.
The same is true for another new book titled “The shale controversy” by Dr Ian Dexter Palmer. We interviewed Dr. Palmer at the end of this week for a radio show later this month, so the podcast for this particular episode is not yet available. Our initial hour-long interview with Dr. Palmer was so compelling that we scheduled a follow-up interview with him next week so we could dig deeper into his book.
As you can read on his media page, Dr Palmer holds a doctorate in physics and spent 18 years as a scientist at BP, and 12 years later as a consultant. He told Kym and I that he decided to write “The Shale Controversy” now in an attempt to tell both sides of the story in a fair and scientifically accurate way. In my opinion, he achieved this goal in a balanced and comprehensive way that no one before him has been able to achieve. This is another must-read book for anyone who wants to know the truth – both positive and negative – about hydraulic fracturing and the shale trade in the United States and around the world.
Better yet, Forbes has now added Dr. Palmer to its growing line of excellent energy contributors. Thus, readers here will now benefit from its vast store of knowledge on all aspects of the subject on a regular basis.
Goldman Sachs
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Goldman further sees significant increases in the price of domestic gas sales in the United States, reiterating its expectations of a NYMEX index price this summer of $ 3.25 per MMBTU, well above its trading level. Friday $ 2.75. If Goldman is right, things look a lot brighter for domestic natural gas producers and LNG exporters in the United States.
The American shale has experienced a good recovery in recent months, but could soon face constraints due to looming shortages of fracking sand. That’s the judgment of KPLER, an international commodities intelligence firm, in a new report released this week. KPLER points out that “many sand miners have collapsed or have been under-invested due to low prices”, and concludes that the reality, combined with the recent rapid increase in the number of domestic rigs in the United States, will result in “inevitable” supply chain disruptions that will limit the potential for further upturn in supply in the shale sector.
Oil production from U.S. shale formations fell 20% in 2020, ending the year at around 7.44 million barrels of oil per day. KPLER’s belief is that shortages of fracking sand and other technical constraints will prevent a full return to previous production levels over the next 18 months, even with an oil price of $ 70 per barrel.
While the Number of Baker Hughes rigs increased again this week by 13 platforms – its eighth consecutive weekly increase – it is essential to note that the overall number of national platforms is less than half of its level of a year ago. It will take several more weeks of increases before the shale sector re-drills enough new wells to offset the sharp drops in production among those that have already been drilled, fractured and completed.
US crude oil exports maintained high levels despite reductions in domestic supply and international demand for crude. KPLER points out that “shale grade departures in the United States in 2020 increased 11.9% compared to a year ago, despite declining global demand.
Barring unforeseen government interference in the production and flow of oil out of the Permian Basin, we should expect U.S. exports of shale crudes to continue to increase through 2021 and beyond. This is certainly the expectation of the Port of Corpus Christi (Port CC) and its facility operators, who continue to expand the port’s capacity at a rapid rate.
In the last few months alone, we’ve seen the following expansions announced or completed at Port CC:
- Port CC announced the final pipeline lease and easement agreements for the Bluewater Texas project, a deepwater crude oil export terminal, in which Trafigura has formed a 50/50 joint venture with Phillips 66
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- In late December, Buckeye Partners announced that crude oil export operations had started at the second deepwater wharf at its South Texas Gateway facility, a terminal built at the mouth of the Corpus Christi Ship Channel in Ingleside, Texas. The Buckeye facility can fully load Suez Max tankers and load VLCCs to approximately half full capacity.
- And, regarding LNG exports, Cheniere Energy loaded its first cargo from the third liquefaction train at its Corpus Christi LNG plant in September.
Operators of Port CC facilities have also significantly expanded their storage operations over the past two years, and Port CC now ranks as the second largest crude oil storage facility in the country, behind Cushing, Oklahoma. .
As the American shale landscape is filled with potential pitfalls, including the likely political attack from the new Biden / Harris administration, there is reason to be optimistic as the new year dawns with prices of the rough and higher drilling levels than anyone expected in a few months. since. So much still depends on the continuity of the OPEC + deal, but shale miners are certainly able to breathe a little easier than they could later than in October.
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