Ongoing US Shale Boom and the Dangerous Child

US Oil Production Per Rig Continues to Climb Due to Improved Technologies and Procedures

US Oil Production Per Rig Continues to Climb Due to Improved Technologies and Procedures

The surprising US shale boom continues to confound peak oil doomers and Russian neo-imperialists. At the same time, this energy revolution is fueling renewed manufacturing and other industrial development in the US — and fueling hope for similar renewal in other nations that possess tight rock hydrocarbon resources.

Oil production will continue to soar in the six major U.S. shale plays, with more barrels pumped per rig, according to federal projections released Monday.

Total oil production in the six regions is expected to grow to 4.43 million barrels per day in June, an increase of 75,000 barrels per day compared to May, according to the U.S. Energy Information Administration. The federal agency expects oil rigs will produce an average of 271 barrels per day each, an increase of one barrel over May. __

The nature of tight rock oil wells means that each well is limited in how much oil it can produce over its lifetime. But the number of wells that can be drilled and fracked is enormous.

The US shale plays have been a bonanza for smaller oil companies. The huge multi-nationals have been late to the game.

Smaller, independent North American oil producers own five times more land in the major U.S. shale plays than Big Oil companies like BP, Royal Dutch Shell and Exxon Mobil. Shale reservoirs from South Texas to North Dakota are dominated by names like EOG Resources, Continental Resources and Pioneer Natural Resources. The diverse array of competitors from private equity firms to independent producers has made it tougher for Big Oil to compete. __

Smaller companies are more nimble, and often have the advantage in developing new industries — as long as government interference is kept to a minimum. In an opportunity economy with low entry costs for starting new business, one expects to see this type of dynamic turnover — or creative destruction — in new technologies and industries. Opportunities for smart entrepreneurs abound in countries wise enough to allow businesses to compete without undue government taxation, regulation, and biasing of the marketplace.

Global oil prices remain below the fiscal breakeven price for Russia, Iran, Venezuela, and many other oil dictatorships. Part of the reason for this price stability is the new and growing output of oil & gas from US private land-based shale, plus Canada’s oil sands production.

“North America’s shale boom has been a huge calming factor,” Lysle Brinker, an oil analyst at IHS Energy, told Bloomberg. “Without it, we might be seeing $150 oil right now,” he added. Shale production has increased daily US crude output by about three million barrels to more than eight million since early 2011. While Canada has added more than a million barrels a day since May 2011. Petroleum imports now account for only 28 percent of US consumption, down from 60 percent in 2005. _

Dangerous Children achieve the ability to support themselves financially at least 3 different ways by the age of 18. This is much easier to do when economies are booming, and opportunity is rampant. But Dangerous Children can do the same thing even in economies depressed by government corruption and terminal policy stupidity. Dangerous Children master high value skills and trades as teens, which gives them an economic leg up even during the extended Obama recession.

In a mixed economic system such as the US, most Dangerous Children will move toward opportunities in private industry, investment, professions, and entrepreneurial fields. But a few will take advantage of opportunities inside government, for various reasons.

It is best not to make the mistake of extrapolating current trends in government and international affairs too far over the horizon. Anticipate how things could trend in different directions. Make contingency plans for such changes. Sometimes change happens very rapidly, as in present-day Ukraine, Syria, and elsewhere. Make provisions.


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3 Responses to Ongoing US Shale Boom and the Dangerous Child

  1. Matt Musson says:

    Here is a tip. Plant Guar Gum beans.

    Guar Gum is known primarily as a salad dressing stabilizers. But, it is now being
    sent down fracked wells to keep particles in suspension and keep them from plugging
    the cracks that have been fracked in the rock.

    • alfin2101 says:

      I wonder whether guar will be used in the new waterless fracked wells, which are fracked with non-aqueous solutions?

      By their nature, fracked wells are limited in size and capacity. New fracking materials and technologies are meant to maximise well production for as long as possible. The resource in the ground is huge, and it will take a lot of wells to tap it over several decades.

      Peak oil doomers act as if the limits of individual wells means that the shale boom will be over “any day now.” According to doomers such as Kurt Cobb etc., the shale boom should have been long past already, and civilisation should have already collapsed.

      Instead, production keeps growing, new resource estimates continue to expand, new technologies help to get more oil & gas out of each well. In the background, “gas to liquids” technologies continue to improve and become more scalable, promising to turn previously flared gas into valuable fuels and other high value materials.

    • Mani Palani says:

      Matt, I doubt planting more guar will help, it not because West Texas Guar declared bankruptcy and in a big legal mess, but the farmers in India adjust pretty well reducing the number of acreage sown with guar. Current pricing $1.55 to $1.60 a pound barely pays for processing. There is no doubt farmers are making slightly better than previous years, but there is a reason why guar acreage dropped 30% in India this year. The volatility in prices is a different story, and I doubt 2011/2012 spike will be repeated unless there is a combination of spurt of wells drilled and the monsoon is pretty bad in india, the odds both happening at the same time is slim. Regards

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