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In Reply to: RE: Here you go posted by Satie on June 20, 2017 at 21:58:35
Interesting.
Follow Ups:
Nat gas is less than half the price in industrialized countries and light US oil is selling 10% below intl' heavy crude, which is a 20% cheaper distillate and polyolefin input stock.
US WTIC always had a 10% premium,till frack oil took over.
We will end the year with a million bbl daily export and will be no. 2 LNG exporter soon.
Also interesting. I just read that OPEC had reduced production, something I hadn't been aware of either, though there still appears to be a significant surplus. The Saudis appear willing to absorb a lot to maintain market share and put financial pressure on Iran.
That is the funny bit as Saudi went to max pumping in 2015 they regained maket share and put 3/4 of US independents and a few pipeliners out of biz. US rigs went from 1k to 250 but the US production drop didn't last once they tightened quotas and spiked prices higher. Within less than 2 years we are back to a higher peak and at 10mbpd US and are on par with Saudi and Russia. Frack breakeven price fell by 1/2 from $80 @ 2010 to $40 now. Looking like a Moore's law for fracking.
That's interesting. I didn't know US production was back and I had no idea that fracking breakeven had declined. Because of new technology, or because the less efficient fields have been forced out of operation, or both?
Baaken is still $50+, Permian figures are better than the industry averages I quoted. Fracking is truly transformative for the energy market, and has deep significance in geopolitics and international monetary economics and finance.
If US and state level regulators allow rapid permitting then the rust belt can revive on cheap nat gas feedstocks for over a decade into the future using utica and marcellus shale gas.
Satie. How do you know so much about this? Do you work in the industry? In my area - there is a lot of discussion about the dangers with fracking like possible water supply issues. Not to take this thread off course even more!! :). I know nothing of it so wondered if it was a concern.
It is part of my ongoing market and economic tracking work and I occasionally trade energy and related stocks. Have a slight background in the industry.
A big part of the drop in costs is due to water recycling and distribution of fracking to side bores off the well casing that apparently frack more stone with less pressure.That reduces the environmental footprint greatly compared to wells pre 2011. Of course, shallow wells increase the risks to ground water, but most wells are far deeper than ground water.
I wish that was enough to save the rust belt. But natural gas prices have been much lower here than elsewhere for years and while it's helped the chemical industry it doesn't seem to have lowered costs enough to overcome wage and regulatory differences, as well as discriminatory tariffs, currency manipulation, and all of the other factors that have made American manufacturing uncompetitive.
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