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US Shale Oil Revolution News

While Schlotterbeck was optimistic overall, saying that that the industry needs to tone down its production to let prices rise by 60-80% in order to become healthy,
...and simultaneously making all those other oil producing nations even more profitable.

Hahahaha! They spent so much time bragging about how they will break the backs of Russia and Iran and those "terrorism supporting nations " by pumping out their piss-grade thin oil... and now the only way out of their predicament is to gift money to their enemies. Except that those enemies have already adjusted their economies to account for extended operations with low oil prices, so they get far greater benefits than the shale oil business will ever get.

They have only three options:
  1. Keep on pumping, and end up collapsing the entire shale oil and gas industry.
  2. Cut production, and give away power to rival nations.
  3. Pray that Trumpie will start a war for them, so they can help manipulate oil prices. Being Trumpie, this means the inevitability of more bankruptcy.
In the end, they will always get fucked. As I predicted so long ago.
 
Guess I owe an apology to the Russian government for dismissing shale oil as an unworkable idea.
There's a bunch of different factors in the context of different countries, including infrastructure and cheap credit to supports mountains of debt, but a further complication is that shale oil tends to be very light, above 42°API gravity, e.g. Eagle Ford produced around 48°API. This can be compared compared to typical US refineries tooled for 31-33°API [EIA], with only a few nearing 40°API. As a result, US can't even use most of its own shale oil, which is the reason for the otherwise curious situation that US became a net oil exporter by volume while its oil imports only increased. In practice, US not both exports its light oil and also mixes it with heavy imported crudes from e.g. Canadian tar sands.

For example:
Reuters said:
[2018 Mar 5] Shale oil growth to overwhelm U.S. refiners, fuel exports: study
HOUSTON (Reuters) - Rising U.S. shale oil production will overwhelm the nation's refining capacity, with three-quarters of the additional oil produced in the United States by 2023 shipped to Europe and Asia, according to a new study by consultancy Wood Mackenzie.
...
U.S. refineries will absorb between 900,000 barrels per day (bpd) and 1 million bpd of the expected 4 million bpd of additional production to emerge from U.S. oil fields, Wood Mackenzie said in a study released on Monday.
...
Since at least 2014, ExxonMobil Corp has considered an expansion of light-crude refining capacity at a Beaumont, Texas, refinery but has yet to approve the project.
This is further complicated by the fact that most of the world actually wants heavier oil than US does (so e.g. US uses proportionally more gasoline than most other places, compared to diesel and other products). So places while like Europe can absorb some extra light oil capacity, overall they want it even heavier than US does. More recently:
Reuters said:
[2019 Apr 17] U.S. shale producers see rising ultralight crude output hitting pricing
FORT WORTH, Texas, April 17 (Reuters) - Much of the new crude coming from the top U.S. shale field is so light that it is starting to affect pricing for the region's oil, producers attending an energy conference this week said.

Permian producers generally sell their crude at WTI benchmark prices, but rising supplies of ultralight oil may require them to offer $1 to $2 a barrel discounts to refiners requiring heavier grades, some said. Newer production coming from the Permian Basin in West Texas and New Mexico has API gravity in the low 50s degrees, compared to 40 to 44 degrees for West Texas Intermediate.
...
Ultimately, they seem to be making a glut of a product that not enough places are capable of utilising. This can be somewhat alleviated, as e.g. ExxonMobil confirmed their plans for extra light oil distillation capacity in the Gulf Coast, to start production in 2022, which was initially referenced in the article above. But note that the announced 250Kbd/day light oil capacity doesn't compare well to the 4Mbd/day projections.
 
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