As of April 29th.
“The total rig count increased to 698 this week—258 rigs higher than the rig count this time in 2021 and the highest count since April 2020. Drilling has picked up substantially since the Russia invasion, adding 48 rigs over the last nine weeks.”
Do they have an obligation to do the right thing? I know what the left thinks and what the right thinks. What’s worse to the left is Trump in charge. I would think the oil companies would agree.
Oil companies are punished only when they produce, and when they don’t. The government feels entitled to tax and regulate endlessly and, in the end, to confiscate. The only prosperity a bureaucrat appreciates is tax revenue.
This is very misleading BS. The problem is Biden’s closing of the XL Pipeline project and the severe restriction on federal oil leases, both on and offshore. To those who bought into Biden’s statement that he’s freed up more leases, those leases are on “dry hole” lands where the odds of finding oil are close to zero. The other thing that Biden needs to do but hasn’t even addressed is the permitting process. Evidently, those permits can only be issued by people who are tree-huggers from the outset, so they drag their heels as much as possible. Nope, no matter how the media tries to spin this, the oil price increases sit squarely on Joe’s head.
Assuming there are FR people who do not know particulars about shale, here are a few.
1) It’s not infinite. If oil were infinite all of North Dakota would be drilled. It’s not. Only the northwest corner is the Bakken, and it’s been drilled and fracked for over 10 yrs now.
2) The day an oil well starts producing oil is the day it begins to die. In Saudi Arabia, they have wells still flowing in Ghawar that started flowing in 1960. Saudi Arabia is not shale oil. It is far superior.
3) There are two qualities of rock that matter in oil. Porosity and permeability. Porosity is the pores in rock, that fill with a mix of oil and water. Permeability is the interconnectedness of pores. Shale by its nature has horribly low permeability. If you drill a well, you get the flow from pores you drill through and from not much distance around that well, because low interconnectedness.
4) Fracking is artificial permeability. It fractures the rock, pumps proppant into the cracks to hole them open when the pump pressure above is withdrawn, and thus, flow can happen from distances considerably away from the well.
5) This has been going on for over a decade now. A shale/fracked well flows X barrels/day on day 1, and on day 365 that flow rate is down 50%. The saying is fracked wells are drilled horizontally and they die vertically. The rate of decline is profound. A typical well will last only a handful of years, in contrast to the decades from Saudi Arabia. Critical truth: The best areas are drilled/fracked first.
6) This fracking technology was pioneered by the Russians in the 1980s. It’s not rocket science. The big shale/fracking boom came from loaned printed money the Fed created starting 2009 to avoid death of civilization from the Mortgage Backed Securities disaster. Thus most shale operations lose money, but because the loans have not been foreclosed, and CEOs were paid bonus determined by production (not profit), wells were drilled frantically to overcome that vertical output decline on the graph.
Moral of the story, time has passed, the formation doesn’t have infinite oil, so don’t think failure to increase production is all that voluntary.
It takes several months from the time the price jumps through the roof before a company can increase production. Especially on BidenLandia. Also, many of the plays are getting long in the tooth and the companies are drilling the lesser “fringe” wells.
Going Galt?
A logical reason to do this would be if the fracking companies were anticipating an economic crash, so wanted to pay back their investors, figuring on getting a ton of “good will” in the process. So when the market recovers, those investors will put fracking companies back at the head of the list for their money.
“Good will” is a very powerful investment scheme. A bunch of companies that survived the Great Depression had built up quite a lot of it with their investors, who got back in the market with their scarce money with their trusted companies as soon as they could.
Biden 2008 - 2021: “Climate change is the biggest threat we face, so we are going to put the fossil fuel industry out of business. We will punish you with ESG ratings. We will make it impossible for you to raise capital. We won’t lease you federal land. We will raise your lease rates. We will block your pipelines and make you cancel them.”
Biden 2022: “Please pump more oil! PLEASE invest more in exploration and production. PLEASE!!”
Fossil Fuel Industry 2022: “Go to hell.”
“...indeed, some have let U.S. output slip”
Good to see we’re helping Russia by driving up the price of oil. Otherwise Russians would have to suffer.
Production is falling because there is no new money from the capital markets to drill. Wall Street is closed to oil companies.
Any growth has to be reinvestment from money made at the well head.
This is much slower.
Why invest when the green stalinists can shut you down tomorrow?
“””That some of the largest shale companies allowed production to slip amid the highest oil prices in years shows the extent to which the industry has adopted restraints”””
Too many folks think that the oil companies only have to open a spigot to increase oil production.
The folks at TechLive need to do some research before making these false claims.
Two years ago oil prices dropped to ten bucks a barrel and many of the drillers went bankrupt.
It takes time to regroup and start drilling again.
And drilling the well is the easy part, then comes the oil well completion process.