Fracking: The End Is Nigh

Discussion of the latest Peak Oil news (please also check the Website News area below)

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kenneal - lagger
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Fracking: The End Is Nigh

Post by kenneal - lagger »

According to this article anyway.

Apparently even the company bosses are trying to get their money and themselves out without rocking the boat too much and collapsing the share prices. The banks are on the same game as well. Hopefully it won't end in a taxpayer bale out and the reverberations running around the world, 2008 wise. It will probably hike the oil price up as the US starts to buy in oil to replace lost domestic production.
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Re: Fracking: The End Is Nigh

Post by PS_RalphW »

Fracking has always used the British Leyland model of economics, "whatever I lose on individual Wells I will gain by drilling more".

The companies sold shares based on continual growth of drilling to befuddle naive investors into thinking they were on the brink of massive payback.

This will result in many smaller companies defaulting on their debts and many investors losing their money. However the Wells will be sold to the big oil companies and run as stripper Wells until they become uneconomic. Fracked Wells produce the vast majority of their oil in the first 2 or 3 years, which means if they come on line when prices are high, they make money, but if prices are lower they lose it.

The banks and investors are finally realising this, so much less money is being put into fracking, and drilling will never be fast enough to overcome depletion and regain the previous record high levels of total Fracked production. However, as demand recovers after the pandemic, and Opec's reserve production is all brought back on line, prices will rise rapidly and the level of fracking will increase too. Fracked oil is expensive oil, but it is still oil.

This means that USA is once again past the peak of production, but now electric cars are going mainstream, so global peak oil is not going to be the massive economic hit we thought it would be, at least not in rich industrial countries that afford the transition to EVs. As always, it will be poor countries that take the big hits. In terms of global limits to growth it will be climate change, or a secondary effect of overpopulation, a pandemic, that finally tips human civilisation over the edge.
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