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U.S. Energy Secretary: Shale Could Boost Production Even at $50 Oil
Posted on 3/10/25 at 10:10 am
Posted on 3/10/25 at 10:10 am
quote:
U.S. shale producers could increase production even if oil prices fell to $50 per barrel as the sector continues to innovate and boost efficiency gains, U.S. Secretary of Energy Chris Wright told the Financial Times.
The shale industry can sustain a lower price of oil, according to Wright, a former boss at fracking firm Liberty Energy.
“New supply is going to drive prices down. Companies are going to innovate, drive their prices down and consumers and suppliers will bounce back and forth,” Wright told FT.
The energy secretary appears much more optimistic about the U.S. shale sector’s resilience than many analysts and even the U.S. oil producers themselves.
U.S. firms, especially the large public listed companies, signaled as early as President Donald Trump was elected in November that there wouldn’t be a “drill, baby, drill” boom in the shale patch despite the eased regulations under the new administration.
President Trump has promised to slash energy costs for Americans and has repeatedly called on OPEC+ and Saudi Arabia to “reduce the price of oil”. But he has also vowed a new wave of “drill, baby, drill” in the U.S. energy industry.
President Trump signed on his first day in office an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by President Biden.
While the industry applauded the pivot to helping America make greater use of its oil and gas resources, companies are not rushing to dig themselves into another production boost.
The key reason for this is that the nature of the shale business has changed as producers look to return more money to shareholders while the wave of mergers and acquisitions has led to bigger producers becoming even bigger by absorbing smaller ones. Large public companies are not inclined to sink capital in relentless drilling—they prioritize returns to investors.
“We're not going to see anybody in 'drill, baby, drill' mode," ExxonMobil Upstream President Liam Mallon said in November.
LINK
I think we'll continue to see U.S. production grow SLOWLY over this year, setting a couple more monthly records and setting a new overall year total record. However, unless we see a drive up to $80+, I'm not optimistic we'll see some huge scale ramp up.
9
Posted on 3/10/25 at 10:16 am to ragincajun03
There is no chicken at 50 ppb.
Posted on 3/10/25 at 10:20 am to ragincajun03
Well, you want oil to live above 60 but below 90. And don’t get me wrong, you’re still printing money at 90, but gas gets up over $3.50 a gallon, it starts to pinch. It hits a hundred, every product in America has to readjust its price. $78 a barrel, that’s about perfect. You know, brings enough profit to keep exploring, but it don’t sting as much at the pump.
Posted on 3/10/25 at 10:29 am to ragincajun03
Wright was in the sector. He knows his shite.
Posted on 3/10/25 at 10:39 am to Cosmo
Is that a Landman quote that you’re trying to pass as your own?
Posted on 3/10/25 at 10:45 am to udtiger
quote:
Wright was in the sector. He knows his shite.
An ESG hydraulic fracturing company.
The issue is buyers for light and extra light crude oil and extra energy cost to refine it. Refiners don't make money on gasoline sales
Posted on 3/10/25 at 10:51 am to udtiger
quote:
Wright was in the sector. He knows his shite.
He's sure as hell an upgrade over Jennifer Granholm.
Posted on 3/10/25 at 10:59 am to ragincajun03
quote:
He's sure as hell an upgrade over Jennifer Granholm.
50% of the population would be an upgrade
Posted on 3/10/25 at 11:47 am to ragincajun03
Truck nuts [OFF]
Posted on 3/10/25 at 11:55 am to ragincajun03
Truck nuts on?
Posted on 3/10/25 at 12:18 pm to WhiskerBiscuitSlayer
quote:
that a Landman quote that you’re trying to pass as your own?
I thought that quote sounded familiar
Posted on 3/10/25 at 12:57 pm to ragincajun03
$50 is pushing it. Capital will flow to other industries at that price. Anything below $60 is less than what most companies are building their capital plans around. They might do some acquisitions for when the price rebounds but I’d imagine drilling activities would drop considerably
Posted on 3/10/25 at 1:31 pm to ragincajun03
FTR, some fields were only getting paid $40 per barrel when WTI was over $80, such as parts of Eagle Ford. While the "crude" actually condensate is very light it has a lot of paraffin wax in it causing much more maintenance of the pipelines. Breakeven is roughly $34 but that is at the wellhead.
Posted on 3/10/25 at 3:02 pm to CitizenK
quote:
While the "crude" actually condensate is very light it has a lot of paraffin wax
Light is not too bad.,the bigger issue is the paraffin.
Posted on 3/10/25 at 3:23 pm to mdomingue
quote:
Light is not too bad.,the bigger issue is the paraffin.
For pipelines the paraffin wax is the issue.
For refining they lose significant throughput with light say 30% so bankruptcy. Each refinery has its own secret cocktail of crude blend they can use some light.
It takes significantly more heat for light to be initially fractionated than heavy.
As an example a refinery built for 18 API California crude loses 10% throughput capacity with 28 API Russian crude which was the case with a 55,000 BPD refinery that was moved to Houston to be refurbished before being re-erected in Romania before funding was cancelled.
Light goes for export to refineries which are not configured for heavy crude to blend with heavy crude. It is also used to blend with very heavy crude so it can move through a pipeline. When Eagle Ford was all in the news, the "crude" which is actually condensate was loaded aboard ship in Corpus, sent to LOOP, and then via pipeline (Capline then Enbridge and Kinder Morgan) to Canada so it could be used as a diluent in produced very heavy crude to enable it to be pumped through pipelines without steam heat. BP/Kinder Morgan set up a pre refinery in Houston so it could be used in local refineries. Such a pre refinery is basically a condensate splitter which removes the light ends
This post was edited on 3/10/25 at 3:28 pm
Posted on 3/10/25 at 3:38 pm to CitizenK
quote:
Light goes for export to refineries which are not configured for heavy crude to blend with heavy crude.
Right, I guess that is what I was getting at. The lights sell for a reasonable price, though not for the typical refineries that the heavier crudes go to.
quote:
When Eagle Ford was all in the news, the "crude" which is actually condensate
I did a lot of work for BHP at a few gathering facilities in the Eagle Ford Shale areas. I spent a bit of time in Cuero, Victoria, Jourdanton, and Tilden back then. Felt like they were printing money then, for sure. Most of their facilities had tank farms and truck loading docks with some minimal processing of the product similar to what you see offshore.
Posted on 3/10/25 at 3:46 pm to ragincajun03
quote:
Chris Wright
Made his fortune off of shale.
Not saying this is good, bad, or anything else, just making note.
Posted on 3/10/25 at 4:34 pm to mdomingue
quote:
I did a lot of work for BHP at a few gathering facilities in the Eagle Ford Shale areas.
Canada began producing wet tight shale natural gas with a lot of condensate. This replaced what they were getting from Eagle Ford. A friend is working with some smaller producers in Eagle Ford which has 18% paraffin WAX, not to be confused with paraffinic crude. They drop the wax out with a chemical treatment at pad sites then sell it as slack wax
I am working to supply equipment for a company building a plant to "crack" the high wax content to make if pipelinable with the first demonstration plant funded by a large Swiss based trading company. The secret sauce is a new catalyst not affected by low sulfur content and won't reduce sulfur or nitrogen from crude destined for refineries which already do that downstream.
As far as light crude you get more gasoline out of it so you make less money with it. If a refinery also makes asphalt, light crudes with little residual (asphaltene) content is death to that profit center.
Posted on 3/10/25 at 5:30 pm to CitizenK
quote:
asphaltene
We hate asphaltene on the production side
Posted on 3/10/25 at 6:25 pm to mdomingue
All crude has a percentage of asphaltene. Some refineries LOVE lots of asphaltene and why heavy and very heavy crudes became popular in the early 1980's
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