the frack thread

[PS_RalphW]

I am not sure what fraction of US shale oil production is today owned by the big six companies, but generally they were late onto the scene. A LOT of private investor money went into the independent companies with little financial reserves into building up the industry. These investments will only see returns if oil prices remain high over a significant portion of the fracked well's life - and these wells have a very high decline rate - so most of the oil they produce is in the first few years after drilling. The implication is that the companies are classic Ponzi schemes to the extent that they only keep from going broke by attracting more and more investment money - at current prices they will remain at negative cash flow.

To some extent they are the architects of their own downfall - they have drilled so fast that they flooded the market and killed the golden goose. The oil majors are big enough to weather the losses and pick up the bankrupt wells at firesale prices, so they are happy.

A lot of private investors are going to lose a lot of money. New investment will dry up for this kind of well, the subcontractors who actually do the work will find themselves out of work (again), and the production of shale oil will decline fairly quickly (due to the high decline rates) until a year or two after the next oil price shock, when (hopefully) more measured investment picks up preventing another supply glut.

[vtsnowedin]

While US gas prices remain low at $2.589/Mcf the oil WTI price has risen to $55.48/bl so drilling activity will move away from gas towards oil until the over supply of gas gets absorbed. Perhaps we will begin exporting more LNG to the EU and post brexit UK.

[raspberry-blower]

Perhaps we will begin exporting more LNG to the EU and post brexit UK.

That was the plan all the way along wasn't it?

[vtsnowedin]

Perhaps we will begin exporting more LNG to the EU and post brexit UK.

That was the plan all the way along wasn't it?

I have no inside knowledge but once the surplus developed the owners of the gas would certainly start seeking additional markets and the decline of the North Sea fields clearly pointed them in your direction. It would have been amazingly stupid of them not to explore the possibility.

[raspberry-blower]

Perhaps we will begin exporting more LNG to the EU and post brexit UK.

That was the plan all the way along wasn't it?

I have no inside knowledge but once the surplus developed the owners of the gas would certainly start seeking additional markets and the decline of the North Sea fields clearly pointed them in your direction. It would have been amazingly stupid of them not to explore the possibility.

The European market is regarded as still the biggest one - Nord stream from Russia is the major competitor. Given how badly the likes of Pence have been received in Germany recently, the Germans will be extremely reluctant to switch to importing LNG from US.

[vtsnowedin]

The Germans are businessmen. If USA LNG is cheaper then Russian gas they would buy it in a heartbeat. It will at least keep the Russians in check on the price front.

[PS_RalphW]

The Germans are also long term thinkers. The Nord Stream pipeline is a massive investment with a many decades life expectancy. US LNG is a new kid on the block because it is only in the last few years that US supply has exceeded US demand. Given the price sensitivity and fast depletion rates of fracked gas wells, that surplus supply could vanish in a few years, as would ALL US LNG exports .

[raspberry-blower]

Successful challenge to UK Government's support for fracking:

https://drillordrop.com/2019/03/06/brea ... -fracking/

[emordnilap]

There we go again, forever ‘transitioning’ by extracting more fossil fuels.

The big transition is happening.

[kenneal - lagger]

I presume that the Mobbs report is from our own Paul Months.

[kenneal - lagger]

Anti fracking campaigners win partial victory over "draconian" Ineos injunction.

[raspberry-blower]

On the recent resignation of the UK's Shale Gas Commissioner - it would appear that Ms Engels has been suffering from delusions of adequacy.

According to the Mall on Sunday, she told Mr Clark she was stepping down because


“a perfectly viable industry is being wasted because of a Government policy driven by environmental lobbying rather than science, evidence and a desire to see UK industry flourish.�

No, shale gas is NOT a "perfectly viable industry" Ms Engels - it is still not making money even though it has had a decade plus of record low interest rates. This is even before looking at the horrific environmental impacts.

Drill or Drop: UK Shale Gas Commissioner Resigns

[fuzzy]

Presumably she will follow Cedric Brown who was the highest paid public employee when gas was nationally run. He was last seen fiddling about with Ukrainian gas.

[BritDownUnder]

On the recent resignation of the UK's Shale Gas Commissioner - it would appear that Ms Engels has been suffering from delusions of adequacy.

According to the Mall on Sunday, she told Mr Clark she was stepping down because


“a perfectly viable industry is being wasted because of a Government policy driven by environmental lobbying rather than science, evidence and a desire to see UK industry flourish.�

No, shale gas is NOT a "perfectly viable industry" Ms Engels - it is still not making money even though it has had a decade plus of record low interest rates. This is even before looking at the horrific environmental impacts.

Drill or Drop: UK Shale Gas Commissioner Resigns

I suspect that that she is also stepping down because...
- she probably earned 500,000 pounds a year and the mortgage is paid off now thanks.
- she will get the rest of her contract paid because she was 'constructively dismissed'
- that gold plated pension will get paid for the rest of the life
- free business class flights for life are great

That's what would happen in Australia anyway.

Interestingly and to keep on topic on fracking and away from 'fat cats' there is supposedly a gas basin in the Northern Territory in Australia that has 400 years of gas in it (I think for Australian consumption not the world). Supposedly the NT government (which generally gives incompetence a bad name) is very keen on getting the gas.

[kenneal - lagger]

If the government insulated our homes properly we wouldn't need so much gas. Such insulation could reduce the national requirement by 30% at least on the basis that 40% of gas is used in home heating and an 80% saving is possible.