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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

 

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Why Electric Vehicles Don’t Spell the End for the Internal Combustion Engine

The Afternoon Campaign Update
(Because The Campaign Never Ends)

Answering reader mail. – A reader in Houston emailed me this morning (david.blackmon@dbdailyupdate.com) with an energy-related question that is very timely. Here follows the email and answer I provided:

Email:

David,

I really enjoyed listening to your appearance on the BYU podcast and reading this article:

7 Key Things To Know About Oil and Gas

Your last point contained this tidbit that caught my attention:

“The reality is that, despite the growing intervention into the auto market by electric vehicles, the demand for gasoline and crude oil in the U.S. continues to rise, and is projected to keep doing so into the future.”

  • How will the shift to electric vehicles impact the demand on Oil and Gas?
  • Roughly what % of global consumption is for vehicle fuel?
  • Do you think we’ll fully go to electric vehicles and how will this shift effect Houston’s economy in the near and far term?

I’ve got a chunk of my net worth wrapped up in my house [near Houston], and am wondering what a drop in global demand would do to all these O&G companies and the local housing market.

Your daily updates are my favorite read of every morning.  Press on!

Answer: [Edited and expanded slightly for clarity.]

The potential for EVs is wildly over-hyped in the media. The shift to EVs is far outpaced by the ongoing increases in demand for crude oil, not just in the U.S. but even moreso globally. That is not going to change anytime soon.

Why? Because that electricity to recharge them has to come from somewhere, and today mainly comes from power generated by coal and natural gas in the U.S. That’s another stark reality that is not going to change anytime in my lifetime, which I figure is another 25 years or so. [Every reliable projection – even those by the U.N. – project that fossil fuels will still account for the vast majority of global power generation in 2050.]

Here’s reality: The world has a choice where fossil fuels are concerned. First, we could burn more and more coal in power generation because it is not replaceable by intermittent power sources like wind and solar. Germany and Spain have clearly demonstrated this over the past decade, as they almost bankrupted their economies trying to do just that.

The alternative is to burn more and more gasoline in automobiles.  You cannot have a geometric leap in EVs without burning far more coal than we do today, and the alternative to burn more gasoline is a much cleaner environmental solution. It is also a far more affordable solution for consumers.

Thus, it is a virtual certainty that we will continue to burn more gasoline in internal combustion engines for the next half century, and probably beyond.

Houston’s going to be fine.

[Expansion]

Now, to expand on that a bit, here are a couple of other reasons why the world will continue to produce and consume increasing amounts of oil in the coming decades:

First, you have the fact that thousands of other products that ordinary people rely on every day are produced either in whole or in part from petroleum. From plastics to chemicals to polyester to fertilizers to makeup to toothpaste, even to the computer on which I am typing this, people all over the world are heavily reliant on a vast variety of products that use petroleum as a feedstock.

Second, look at this incredible graphic:

What amazing progress in just ten years! Here’s the simple truth: None of that progress would have been possible without oil and natural gas. The developing nations of the world need access to plentiful, scalable and affordable sources of energy in order to join modern society and elevate their people out of squalor. This can only be achieved through the use of fossil fuels.  Period.

So, bottom line, if you are worried about the oil and gas industry collapsing anytime soon, you need to find something else to worry about.

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 Oil And Gas Situation: 7 Key Things To Know About Oil and Gasoline

During the course of a radio appearance I made on January 29 (BYU Radio’s “Top of Mind” program hosted by Julie Rose) I was reminded of just how little most Americans really understand about oil and gas in general, and how the gasoline or diesel they use in their cars is manufactured and delivered to their local gas stations.

That’s not a criticism of ordinary Americans, because 98% of them have no real need to understand such things in the course of their lives, and our system of education does almost nothing to educate them about this particular topic. Nor is it a criticism of Ms. Rose, who herself is extremely knowledgeable, but poses questions she knows most of her listeners are wondering about.

Given all of that, I have endeavored here to put together seven key things to know about oil and gasoline that might help the average person better understand this key element in their daily lives:

  1. Where does Gasoline come from? – Gasoline is one of many products derived from crude oil at oil refineries. One good way to think of crude oil is as a complex soup with all kinds of ingredients floating around in it. The refining process basically takes the crude oil soup that comes up out of the ground through oil wells and separates all those ingredients out of it. Gasoline is like the noodles in your chicken vegetable soup.

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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Trump Puts the Lie to “Russia Collusion” With Venezuela Actions

The Afternoon Campaign Update
(Because The Campaign Never Ends)

In case you’re still thinking  this whole “Trump is Putin’s puppet” narrative has legs, well, think again. Vladimir Putin is a decidedly unhappy hombre’ today, and it all has to do with the ongoing efforts by the Trump Administration to depose his real puppet, Venezuelan socialist thug Nicolas Maduro.

Earlier today, National Security Advisor John Bolton and Treasury Secretary Steve Mnuchin announced the U.S. would place severe sanctions on Maduro’s regimen and Venezuela’s national oil company, PdVSA:

Steve Mnuchin:  “As a result of today’s action, all property and interests in property of PdVSA subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.”

At his press conference, Mnuchin said these actions basically place a quarantine on $7 billion in PdVSA assets in the U.S., and would represent $11 billion in foregone oil exports to the U.S. over the next 12 months. Mnuch said the U.S. decided to target PdVSA because it has long been used by the Maduro regime as “a vehicle for corruption.”:

“A variety of schemes have been designed to embezzle billions of dollars from PdVSA for the personal gain of corrupt Venezuelan officials and businessmen.  For example, a 2014 currency exchange scheme was designed to embezzle and launder around $600 million from PdVSA, money obtained through bribery and fraud.  By May 2015, the conspiracy had allegedly doubled in amount, to $1.2 billion embezzled from PdVSA.  Abraham Edgardo Ortega, a Venezuelan national who was PdVSA’s executive director of financial planning, pled guilty to one count of conspiracy to commit money laundering for his role in the billion-dollar international scheme to launder funds embezzled from PdVSA.”

The ongoing, aggressive efforts by the Trump Administration to depose Maduro put the lie to Democrat/media allegations that the U.S. President is some sort of “puppet” or ally to Russian President Vladimir Putin. Putin has, over the last several years, invested billions of dollars in efforts to prop up the Maduro regime, often taking ownership of Venezuela’s oil assets in return.

As Reuters reported in 2017, Putin’s Russia had by that time already made at least $17 billion in such investments, a total that has only grown in the intervening two years. Thus, any sanctions on Venezuelan oil assets strike directly at the Russian Bear.

Putin’s spokesman at the U.N. made Russia’s displeasure with the efforts to oust Maduro very clear, as Russia led the effort to deny a unanimous U.N. Security Council vote in favor of an effort by the U.S. and European Union to impose international sanctions on Maduro, and endorse opposition leader Juan Guaido.

All of which adds up to completely refute the ongoing joint efforts by the Democrat Party and our fake news media to portray President Trump as a Russian agent.  These people really are shameless.

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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Peak Oil Theory’s No Good Terrible Very Bad Week

Just when you thought continued belief in any of the various brands of “Peak Oil” theory could hardly become less sustainable, you get a week like this one. No matter whether you come at Peak Oil from the supply side or the demand side, several events this week would have had to put you in a definitively sour mood.

Starting off this “No Good Terrible Very Bad” week for the Peak Oilers, UN International Energy Agency (IEA) Executive Director Fatih Birol debunked a popular piece of the demand side of the theory.  Speaking to the World Economic Forum in Davos, Switzerland on January 22, Birol told the delegates that “To say that the electric car is the end of oil is definitely misleading.” Oh.

Birol expanded on that theme by adding emphatically that “Cars are not the driver of oil demand growth. Full stop.” Birol made things even more problematic for those who wish to dramatically accelerate the displacement of internal combustion cars with EVs via massive subsidies for environmental reasons by pointing to the fact that EVs in fact do little to reduce emissions, pointing to the fact that most of the electricity globally is still generated using coal and other fossil fuels. “Where does the electricity come from, to say that electric cars are a solution to our climate change problem? It is not,” he said.

Read the Rest Here

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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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