Impending Record U.S. Crude Oil Production

aside from environmental consequences, i suppose it is a good thing.

 

The rise since 2011 is onshore 'tight oil' extraction (fracking) not offshore expansions.

Well, unless I'm wrong.

 

Why would we want to compete in oil production? I thought oil was tied to the US Dollar and that Petro $
allow the US Govt to expand its capital. ( print more money) Also, one reads everywhere that fracking is
much more expensive to produce! ??? so HOW does it compete ?

 

You are never wrong, but, always diplomatic.

 

Was wrong about mercury vs. lead toxicity. Probably quite a few other things. Hope nobody is keeping score

 

Everybody is always keeping score

 

Darth Vader shadow in your avatar just got more scary.

 

But the important question is if we are still a net importer?

Fracking does cost more because of short well life. While overall production has been climbing, the production per well has been dropping. Have to keep drilling more and more to keep up production.

 

Counting? Not my strong suit! Keep on banging the drum please.

 

As I understand it Petro Dollars are supporting the US economy, and the National debt. So if another currency was to be used in oil trade it could be disastrous to the Us Dollar. What does not make any sense is why we would want to sell our fracked ( ? ) oil. To compete with our, Petro$ $ “friends” Having huge amounts of $ trading around the World is a good thing, and allows our Treasury to continue printing money. Right now that is our least desirable option, but we have no choice. Any radical change in country of moniterization could be Bad News. Paying off the National debt is probably a pipe dream.

 

In the US, it isn't our oil, but the oil companies'. We essentially give it away to them with the current leases, and we've opened up more leases. Multi-national corporations, and even national ones, aren't going to do what is best for the country.

 

All oil is not created equal. If the crude pumped out of the ground is too light for the local refineries to process it has to be sold elsewhere. The refinery then has to buy the heavier crude it can process from other countries.

Fracked crude can be light like gasoline.

 

Yes, if by we you mean the united states. US is a net exporter of coal and natural gas, but importer of oil. North America is getting closer to being neutral as canada is a net exporter of oil. IAEA expects the US to be oil neutral in 2025, but I seriously doubt their statistics and predictions. Really if the US only was a net importer of north american oil, it would remove a lot of the foreign policy and economic security problems that being a big importer of Persian gulf oil makes. In 2016, the US net imports of Persian gulf oil was down to 1.75 million barrels a day, or about 9%. That could go away soon.

As long as OPEC wants to charge a lot more than the fracked price, then as long as there is no regulation to stop it, there will be fracking. IMHO that is a good thing.

That is kind of funny. The US oil refineries have spent a lot of money to be able to refine tougher grades of crude. Other countries have not made the investment. That gives a price spread between light sweet crude and the heavier or more sour stuff. Refineries make a bigger profit on this less expensive oil. Its not that they can't refine light sweet crude, it's that its not as profitable. That is why the oil industry wants to use the cheaper lower quality stuff, and export the light sweet crude that doesn't need the investment they have made to refine.

Well we have examples like Aramco in saudi arabia and Petroleas in venezuala that are really national ones, and they do worse for the people of their countries than the consolidated corporate multi national integrated oil companies.

Key is proper regulation. It was awful in the US in the 1970s, with over production and bad price controls (sold too cheap). It is better today, but still managed poorly.

 

The drilling productivity report for tight oil and shale gas
https://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf

Note that most regions are seeing declines in the production from legacy(old) wells.

 

Well of course, we are past peak oil in the US on pre-1990 technology, which means those old wells have less oil to give unless newer technology is used to get to oil that 20+ year old technology could produce. Saudi Arabia could still use 1920s technology to get to their oil, and could sell it at $9/bbl and still make a profit. Of course if they did that they would need to be using newer technology soon, and they would crash the market price, selling their oil too cheaply, then cause a shortage with all the new demand when they ran out.

At sub-$80/bbl new technology isn't going to be developed, and that is probably a good thing. Efficiency and imports are better than pumping all the cheap stuff in the US. Still, if we think of it as a 50 year transition to alternatives for transportation, there is plenty of oil in north america for north american needs. If north america just cut back use 10% through efficiency or substitution, then the US would still be a net importer, but it would be from north america. It probably would still import from Venezuela and saudi, but it would export as much north american oil as it imported opec oil, and if supplies were cut off by opec, it could refine this oil, instead of going through a massive price spike or supply crisis.

Modern Hydraulic Fracturing (fracking) began in 1947, but the technique was started right after the civil war with water and gun powder. The 1990s added horizontal drilling, which with innovations of fluid composition and techniques greatly increased production of fields where oil was not economically viable to extract using earlier techniques. Before the oil price increases of the 1970s, the technology would be too expensive to use.

 

One big question is crude oil price with the extra production.
Currently in the $60/barrel range, but my understanding that is speculators again bumping up price.
Believe there is a chance the crude price moves significantly lower if the speculators decide their bet is wrong.

 

The report defines a new well as one that started producing the month before. Everything else is a legacy well.

While new rigs are seeing better production rates, this is mostly going to wards countering the reduced rates of legacy wells. Some of those wells are quite old, but it also counts the ones that are only 2 months old.