US Set to Zoom Past Saudi Arabia As Number One Oil Producer

[unhappycamper]

http://www.commondreams.org/news/2014/09/30/us-set-zoom-past-saudi-arabia-number-one-oil-producer



Activists in Erie, Colorado protest fracking in their community.

US Set to Zoom Past Saudi Arabia As Number One Oil Producer
Sarah Lazare, staff writer
September 30, 2014

The United States is expected to overtake Saudi Arabia as the number one liquid petroleum producing nation in the world for the first time in over two decades, thanks to America's fracking boom, Financial Times reported Monday.

According to journalists Ed Crooks and Anjli Raval, this could happen as soon as "this month or next."

The article cites information from the International Energy Agency, which shows that "US production of oil and related liquids such as ethane and propane was neck-and-neck with Saudi Arabia in June and again in August at about 11.5m barrels a day." The article argues, "With US production continuing to boom, its output is set to exceed Saudi Arabia’s this month or next for the first time since 1991."

The explosion is largely due to a "shale revolution," explains the article, referring to the controversial practice of extracting oil from shale using a process of hydraulic fracturing, or fracking.

[cantbeserious]

1. Only Temporary - The Fracking Boom Will Go Bust Soon

eom

[FBaggins]

3. So we keep hearing

So far, such predictions have been nowhere close to accurate.

[FogerRox]

6. Isn't the Rig count in the Bakken up?

While the per well production numbers are in decline, for nearly 2 years.

[FBaggins]

8. So?

Wasn't that the part of the same set of data that caused many armchair prognosticators to claim 3-4 years ago that the Bakken was peaking at what has turned out to be 1/4th of the current production levels?


For instance... let's take a look at theoildrum and what they had to say about the Bakken in 2008:

http://www.theoildrum.com/node/3868

Conclusions

1. The Bakken shale has produced about 111 million barrels of oil during the last 50+ years in Montana and North Dakota.

2. Total Bakken production is still rising, and producing at the rate of 75,000 BOPD in October 2007.

3. Because of the highly variable nature of shale reservoirs, the characteristics of the historical Bakken production, and the fact that per-well rates seem to have peaked, it seems unlikely that total Bakken production will exceed 2x to 3x current rate of 75,000 BOPD.

...snip...
9. Per-well Bakken production peaked in August 2005 at 116 barrels a day, and was down to 79 barrels a day in October 2007. If the Bakken production history in the 1990s can be used as a guide, the peaking of per-well production may portend a peak in total Bakken production.

Production from the Bakken as of July was 14 times higher than that assmed approaching peak... and has climbed rapidly during the two year period that you're looking at well production numbers declining.

[bulloney]

2. With all of this increasing production from the U.S., why are gasoline prices still well above $3?

Seems to me that if the other oil producing countries are maintaining their production, then you introduce the surge of production from the U.S., you would see a significant drop in oil prices.

[FBaggins]

4. Because oil is traded globally

Natural gas is a comparatively closed system, so the additional production in recent years caused prices to collapse even while most of the world pays much higher prices. Liquid products, OTOH, are easier to transport... so their price stays somewhat tied to global prices - even if local production increases.

Also - the new oil sources are comparatively expensive to produce. If global oil production from traditional sources were to unexpectedly skyrocket and prices were to drop to, say, $50/bbl again... production from fracking and oil sands would dry up.

[bulloney]

5. I understand that oil is traded globally. My point is that the U.S. production has increased

to where they're expected to pass Saudi Arabia in oil production. With all other production remaining relatively constant, why hasn't the increased U.S. production onto the global market resulted in any difference in prices we pay? We've continued experiencing prices that will flirt with $4/gallon, then retreat. Prices at the pump continue to surge 30-40 overnight, and then decline over a period of weeks. I'm seeing little difference in the market despite the increased U.S. production.

[FBaggins]

7. Your position seems based on assumptions that are incorrect.

Not the least of which is that prices for gasoline have fluctuated over the last few years, but on a clear downward trend.

[bulloney]

10. CLEAR downward trend?

We're just another lame excuse from the oil industry from seeing another spike in the gas prices that will put it around $4, which is what we've been seeing for several years now. Right now, prices are in the mid-$3 range.

I'll stand by my earlier comment about the introduction of the increased US production should be resulting in lower prices than what we've been seeing.

[FBaggins]

11. Yes. Crystal clear

As I said... you're relying on assumptions based on what you think has been happening. Anecdotal evidence is weak enough under normal circumstances, but it's particularly so when hard data is available.

Just take a look at actual gas prices (through gasbuddy or whatever) and look at the last three years. Yes, as always there's fluctuation... but it's a clear trend of lower highs and lower lows.

Right now, prices are in the mid-$3 range.

And they're projected to drop below $3/gal in 30 states.

http://bigstory.ap.org/article/2c0f0dde26a5468587b4976af7818573/gas-prices-falling-headed-below-3-much-us

I'll stand by my earlier comment about the introduction of the increased US production should be resulting in lower prices than what we've been seeing.

And I'll repeat that you don't understand the economics. Too many of your assumptions are faulty. Like "With all other production remaining relatively constant". That ignores the fact that a high percentage of global production available for export is controlled by a cartell that actively adjusts available output to prop up prices.

[FBaggins]

12. Under $2.60/gal on the way down to Atlanta this weekend.

The trend seems pretty clear from here.

[Champion Jack]

9. Ponzi scheme

Using their leases to borrow to make payroll to show potential investors how great it is.
Shale wells peak much sooner than the Gashole tell you