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Some Stunning New Facts About Texas and its Oil Industry

Today’s Energy Update
(Because Energy Fuels Our Lives)

#GodBlessTexas. – Last week at Shale Magazine, I put up a piece detailing some “Fun Facts” about the state of the oil and gas industry in Texas. That piece began with the following statement:

“Here’s a fun fact: If Texas were an independent country, it would now stand as the 5th-largest oil-producing nation on Planet Earth, behind only the rest of the U.S., Russia, Saudi Arabia and Iraq. According to projections by the U.S. Energy Information Administration (EIA), Texas will pass Iraq in this measure of economic might later this year.”

Boy, things sure do escalate quickly in the oil industry. Here we are, barely a week later, and the truth about that little factoid has already changed again, at least if the U.S. Energy Information Administration (EIA) has its numbers right.  EIA now says that the U.S. averaged 12 million barrels of oil per day (bopd) in January, the first time it has ever reached level. The agency further projects that the Permian Basin alone will produce 4 million bopd in March, roughly 1/3rd of total U.S. production.

So, before we get to some new amazing facts about all of this, let’s do a little math.  First, roughly 85% of total Permian Basin production comes from Texas, which in March would come to about 3.4 million bopd. Next, add in EIA’s estimate that the other behemoth Texas shale play, the Eagle Ford, will produce about 1.3 million bopd, and you are at a stunning 4.7 million. Oh, and there’s also all that oil coming out of deep south Texas, east Texas and the Texas panhandle, and all of a sudden you find Texas producing in excess of 5 million bopd.

All of which means that as of today, the great State of Texas, all by itself, would now rank 4th globally in crude oil production if it were an independent country, having now blown past Iraq.  Oh, and if the EIA’s projected trend for Permian production growth holds true, Texas will in all likelihood surpass the rest of the United States in total production at some point in either late 2021 or early 2022, and become the third-largest producer in the world.

But that’s not all.

EIA’s March projection of 4 million bopd coming out of the Permian Basin alone means that single basin, were it to secede from the union, would suddenly rank as the 5th-largest oil producing nation on earth, behind Iraq as well as the other countries mentioned above. The other amazing but little known fact about the Permian is that it ranks as one of the largest natural gas plays on earth, second in the U.S. only to the mammoth Marcellus Shale play in the northeast.

How incredible is that? Look at it this way:  Just a decade ago, the Permian Basin was considered to be a “dead” oil play. Downtown Midland was basically a ghost town, and the only real oil business going on out there was a bunch of small companies buying up old, depleted oil fields and going in to rework the wells in order to squeeze a few more barrels per day out of them.

Today, just 10 year later, it is the focal point of the global oil industry, the driver of booming economies of Texas and New Mexico, the main driver of the country’s burgeoning oil and LNG exports businesses. Because industries like chemicals, plastics, fertilizers and many, many more use petroleum products and natural gas as feedstocks, the Permian is also one of the the major facilitators of our country’s manufacturing renaissance over the last few years.

Stunning. And a real blessing.

God Bless Texas, indeed.

That is all.

Follow me on Twitter at @GDBlackmon

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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The Fierce And Controversial Competition To Export Permian Crude

Tuesday Energy Update

(Because Energy Fuels Our Lives)

The booming Permian Basin has been one of the most amazing creators of competition the oil industry has seen in modern times. Every oil boom inevitably creates conflict, as individuals and businesses race to be the first to get in the various “games” that surround oilfield development. But the Permian is so vast, its available resource so gigantic, that it often seems to have created more races than NASCAR .

Examples of the races that have developed in and around the Permian in just the last few years include:

  • The race to acquire leases and proved reserves that has driven the cost of acquisition in the region to as high as $95,000 per acre;
  • The race to reserve drilling rigs and frac crews;
  • The race to hire qualified workers, which continues to grow increasingly fierce over time;
  • The race to provide frac sand;
  • The race to develop and install water recycling technologies;
  • The race to permit and build-out new pipeline capacity as a shortage developed in recent years;
  • The race among producers to reserve capacity on those new pipelines;
  • The race among refiners to finance and build new capacity to refine the light, sweet crude coming out of the Permian and other shale basins in ever-rising volumes;

As the competition to accommodate the Permian has moved ever-further downstream, it has now resulted in a growing conflict on the southern Texas Gulf Coast to be the first facility to build out new capacity to land and load the largest classes of oil tankers – so-called Very Large Crude Carriers, or VLCCs – and send them back out to sea.

Read the Rest Here

 

 

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4 Big Ways the Permian Basin Drives U.S. Energy Growth

Tuesday Energy Update

(Because Energy Fuels Our Lives)

Despite recent low crude prices and a significant drop in the DrillingInfo rig count during January, the giant Permian Basin of West Texas and Southeast New Mexico continues to expand its role as the main driver of energy growth in North America. In just the past week, we have seen the following significant events that are attributable all or in part to what has become the world’s second most-productive oil and gas resource:

A driver of upstream and midstream profits – Both ExxonMobil and Chevron beat analyst expectations with their 4th quarter earnings announcements, driven mostly by their upstream and midstream developments in the Permian. Exxon beat forecasts by almost one-third, with its full-year 2018 earnings coming in at the highest level since 2014. Driven by its Permian drilling, Chevron’s oil and natural gas production rose to an all-time high as the company produced a record 3 million barrels of oil per day (bopd) during the 4th quarter.

Read the Rest Here

 

Talking Gas Prices, Venezuela and OPEC

Yesterday I appeared on BYU Radio’s “Top of Mind” program with host Julie Rose. We had a wide-ranging 20 minute discussion about gasoline prices, America’s shale revolution, the Trump sanctions on Venezuela and the ongoing influence of OPEC over crude oil prices.

Here’s the Link

Enjoy!

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Reports Of OPEC’s Demise Have Been Greatly Exaggerated

And just like that, everybody stopped talking about the possibility of $30 oil.

Remember those gaudy days, all of two weeks ago, when the price for WTI had dropped to $42 per barrel and fears were rising that the OPEC+ countries had somehow lost all control over the market and prices would continue to fall? Yeah, those were some good times, huh?

Today, January 15, the WTI price has recovered to over $51/bbl, a rise of 25% in two weeks. That did not happen because of suddenly higher global demand, because no such thing has taken place; nor did it happen due to a dramatically lower U.S. rig count, since the DrillingInfo domestic rig counthas dropped by just 15 rigs since January 1; and it didn’t happen due to the much-publicized recent curtailments in Canadian crude production, which have thus far taken about 140,000 barrels of oil per day off of the market.

So, why did the price go right back up the last two weeks after tanking so dramatically towards the end of December? The answer has largely to do with recent actions taken by OPEC+ nations.

Read the Rest Here

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The Oil And Gas Situation: Eight Predictions For 2019

Well, that all escalated – or rather, de-escalated – quickly, huh? During the course of a six-day vacation around Christmas, the WTI price for crude dropped from $50/bbl down to $42/bbl. That takes a situation on oil prices that was already troubling for most domestic producers into the potentially-calamitous range for companies saddled with heavy debt loads and high lifting costs.

This latest collapse in crude prices comes on the heels of a longer-term drop that lasted throughout October and November. From October 2 through November 30, WTI fell from $76.41/bbl to $50.93, a decline of about 33%, as it became obvious to traders and investors that the market had become significantly over-supplied despite the re-implementation of U.S. sanctions on Iran by the Trump Administration.

This overall 45% drop in the domestic benchmark price for crude took place during the same period when producers were setting their capital drilling budgets for 2019. While one might think that reality would cause a significant curtailment of drilling activity during the first half of 2019, consider that only about a third of that price drop had come about by November 1, by which time most of these companies were finalizing those budgets. With WTI sitting at $63/bbl at that time, few were anticipating a further drop of this magnitude by the end of December.

Here’s the thing: Thousands of domestic drilling projects that are economic to drill at $63/bbl are uneconomic to drill at $42/bbl. So right now we are already beginning to see reports that some companies are going back and reconsidering some budgeting decisions that were made just a month ago. Others are likely still in wait-and-see mode as they try to assess whether the December price drop is a temporary result of panic-selling or a more long-term phenomenon related to a weakening global economy.

Given all of this, my first prediction is that we will see a gradual fall in the domestic U.S. rig count throughout the first half of 2019.

 

Read the Rest Here

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Crude And LNG Export Facilities Work To Solve Bottlenecks Before They Can Start

Several recent big items of positive news relating to exports of oil and LNG along the Texas Gulf Coast might come just in time to help allay fears of new, downstream bottlenecks for production coming out of the Permian Basin and Eagle Ford Shale plays.

The current bottleneck, of course, involves a lack of needed pipeline takeaway capacity for oil and gas coming out of the Permian Basin. But a dozen or more pipeline expansions and new-build projects currently in progress promise to quickly alleviate that situation during the course of 2019 and 2020. The vast majority of takeaway capacity in these projects will be designed to move the production to ports along the Texas and Louisiana Gulf Coast, with several of the lines picking up crude and natural gas produced in the Eagle Ford along the way.

This outlook has in recent weeks produced a new concern that, as those new pipelines get filled up with more and more volumes coming out of West and South Texas, new bottlenecks could materialize related to the capacity along the Gulf Coast to refine and export the production. Several recent developments in the Corpus Christi area hold the promise of heading the potential new bottlenecks off before the can form.

Where natural gas is concerned, Cheniere Energy this week was able to load its first shipment of LNG out of its new Corpus Christi LNG terminal . The Maria Energy tanker, which has a capacity of 174,000 cubic meters of LNG, left the terminal with a full load on December 11, the first load of LNG to ever ship out of a Texas-based facility. “Exporting the first commissioning cargo of LNG from Texas demonstrates Cheniere’s ability to deliver projects safely and ahead of schedule, including the first greenfield LNG export facility in the lower 48 states,” Cheniere chief executive Jack Fusco said.

Read the Rest Here

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Everyone Chill Out, OK?

Just a little perspective on the current situation, and then I’ll shut up for the day:
 
  • The current effort by the fake media/Democrat Party ministry of disinformation to tar President Trump as a racist and run him out of office is just a repeat of the playbook they used against Ronald Reagan in 1981-84. Same tactics, same false claims, same inflammatory protests and rhetoric. We have, in other words, seen this movie before.
  • We should all remember that the ending to that movie in 1984 was the single greatest landslide re-election of any sitting president in the history of the American Republic. The average American is much more perceptive than Democrats believe they are.
  • We also need to remember this key difference between 1984 and today – The Democrat Party’s status has radically changed:

    • The Democrat Party in 1984 was a majority national party in almost every respect outside of the Oval Office.  It controlled both houses of congress, a majority of state governorships and a majority of state legislative houses.  It was the majority party in the West, the majority party in the Rust Belt, the majority party in the Midwest, and the majority party in the Northeast.  It had real leadership in congress, and a strong bench of younger, upcoming leaders.  What it didn’t have was a strong candidate to challenge Reagan, whose popularity boomed along with the national economy, which had come roaring back in response to his program of tax cuts.
    • By contrast, The Democrat Party today is in complete and utter disarray. It has no leadership that is attractive outside one fringe group or another.  It is now nothing more than a regional party comprised of an often-conflicting collection of single-issue grievance constituencies.  Its only unifying core philosophy is one of hate:  Hate Trump, hatred of white men, hatred of the police, hatred of the military, hatred of fossil fuels and pipelines.  It has no real leadership outside of the evil George Soros and the termed-out Barack Obama and the twice-failed presidential candidate Hillary Clinton.  It has no bench of young, upcoming stars to replace its current sclerotic leaders.  It is the majority party only on the West Coast and in some of the Northeast.  It controls neither house of congress, only 4 of 9 seats on the Supreme Court, only 15 of 50 governorships, and an even smaller number of state legislatures.  It is an utterly corrupt and dying entity.
    • Even better for the Republicans, the termed-out Barack Obama, whose feckless and corrupt rule from the radical left and deployment of Alinskyite tactics against his political enemies led directly to the fall of the Democrat Party, is promising to move back onto the political stage this fall.  This can only work to the GOP’s advantage.
  • So tonight, when you turn on CNN or MSNBC (for what reasons I can’t even fathom at this point other than self-abuse)  and see a panel made up of 4 squealing liberals, 2 pontificating fake Republican Trump-haters, and a token real Republican who is there for “balance”, realize that fewer than 1 out of 3000 other Americans are joining you in that inexplicable activity.  Most of them are hopelessly lost souls, but they do not a majority make.
  • Meanwhile, the U.S. economy continues to heat up; the FBI and Justice Department appear to be turning back into real, functioning law enforcement entities again; U.S. foreign policy is working again, even at the previously worthless United Nations; the swamp creatures who have infested and corrupted the State Department, the IRS, the Interior Department, the Energy Department, the EPA and the Department of (no) Education are being run off in droves; the rapidly rising production and exports of oil, coal and liquefied natural gas are turning the U.S. into an energy powerhouse on the international stage; and there have been more than 1 million new jobs created in our country during the first half of 2017.
  • As we sit here today, all of these factors and many more mean it is very likely, given good health, that Donald Trump will be a two-term president.  So do what I’m going to do this evening:  stop worrying and be happy.

That is all.

 

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Is The U.S. Close To Achieving ‘Energy Dominance’?

 

If you hadn’t heard, the Trump Administration has declared this week to be “Energy Week”, a week during which the President and his senior officials are focusing on the theme of “U.S. Energy Dominance.” Not “energy independence” or “energy security”, both themes past presidential administrations have focused upon – “energy dominance.”

So, what does it all mean, and can the United States actually achieve it? Good questions. Here are some answers.

First, when President Trump talks about his goal of Energy Dominance, he’s referring to a plan that envisions implementing policies that encourage four major elements:

 • Taking full advantage of America’s amazing abundance of oil, natural gas and coal;

• Increasing exports of all three of those fossil fuels and their related products;

• Relying more on imports of oil from Canada, Mexico and other Western Hemisphere nations, and less on imports from the Middle East and North Africa; and

• Leveraging all of those three elements to enhance U.S. bargaining positions in its foreign policy initiatives.

Right on cue, we saw the President engage in a bit of energy-leveraging during his discussions this week with Indian Prime Minister Narendra Modi, folding India’s growing reliance on U.S. LNG imports into his request for a lessening of the rapidly growing nation’s import tariffs on U.S. goods. We should expect to see the President rely more and more on this sort of leverage as U.S. exports of oil, LNG and coal continue to rapidly grow in coming years. This, more than anything else, is what the President means when he talks about Energy Dominance.

Critics point to the reality that the U.S. currently imports about half of its daily crude oil needs, but they miss the point. This is not a discussion about energy “independence” – the President clearly understands that the U.S. will always be a net importer of crude oil.

Read The Rest Here

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