Oil slump may deepen as US shale fights Opec to a standstill
The US Canada Goose online shale industry has failed to crack as expected. North Sea oil drillers and high cost producers off the coast of Africa are in dire straits, but America’s “flexi frackers” remain largely unruffled.
One starts to glimpse the extraordinary possibility that the US oil industry could be the last one standing in a long and bitter price war for global market share, or may at least emerge as an energy superpower with greater political staying power than Opec.
It is 10 months since the global crude market buckled, turning into a full blown rout in November when Saudi Arabia abandoned its role as the oil world’s “Federal Reserve” Canada Goose sale and opted instead to drive out competitors.
Canada Goose Jackets If the purpose was to choke the US “tight oil” industry before it becomes an existential Canada Goose Outlet threat and to choke http://www.mycanadagoosejacket.org solar power in the process it risks going badly awry, though perhaps they had no choice. “There was a strong expectation that the US system would crash. It hasn’t,” said Atul Arya, from IHS. Canada Goose Jackets
canada goose coats on sale “The freight train of North American tight oil has just kept on coming. This is a classic price discovery exercise,” said Rex Tillerson, head of Exxon Mobil, the big brother of the Western oil industry. canada goose coats on sale
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canada goose store The US “rig count” suddenly the most watched indicator in global energy has fallen from 1,608 in October to 747 last week. Yet Canada Goose Online output has to continued to rise, stabilizing only over the past five weeks. canada goose store
Canada Goose Parka Mr Tillerson said this is more or less what happened in the sister market for US shale gas. In 2009, some 1,200 rigs produced 5.5bn cubic canada goose factory sale feet (bcf) of gas per day at a market price near $8. Canada Goose Parka
canada goose coats Today the price is just $2.50. Nobody would have believed back then that the industry would continue boosting supply to 7.3 bcf, and be able to do so with just 280 canada goose uk outlet rigs. canada goose coats
“Will we see the same phenomenon in five years in tight oil? I don’t know, but this is a very resilient industry. I think people will be surprised, Mr canada goose uk shop Tillerson said, speaking at the IHS CERAWeek forum in Houston.
“We’ve really only begun to scratch the surface. Shale can keep Canada Goose Parka growing by 500,000 to 700,000 b/d easily,” said Harold Hamm, founder of Continental Resources. His company has cut costs by 20pc to 25pc over the past four months.
canada goose clearance US shale will “roll over” to some degree as producers exhaust their one year hedges and face the full shock of lower prices. But it is hazardous to bet too heavily on this assumption. canada goose clearance
canada goose black friday sale IHS said an astonishing thing is happening as frackers keep discovering cleverer ways to extract oil, and switch tactically to better wells. Costs may plummet by 45pc this year, canada goose clearance sale and by 60pc to 70pc before the end of 2016. “Break even prices are going down across the board,” said the group’s Raoul LeBlanc. canada goose black friday sale
Shale bosses have been lining up at this year’s “Energy Davos” to proclaim the fracking Gospel. “We have just drilled an 18,000 ft well in 16 days in the Permian Basis. Last year it took 30 days,” said Scott Sheffield, head of Pioneer Natural Resources.
buy canada goose jacket “We’ve cut spud to spud time to 19 days,” said Hess Corporation’s John Hess, referring to buy canada goose jacket the turnaround time between drilling. This is half the level in 2012. “We’ve driven down drilling costs by 50pc, and we can see another 30pc ahead,” he said. buy canada goose jacket
IHS said shale is so competitive that it may “take off” again early next year after troughing in the fourth quarter, adding 500,000 b/d in 2016. “It could crowd buy canada goose jacket cheap out other parts of the world. In the long run the US could get a bigger share of the pie,” said Mr LeBlanc.
Scotland’s oil industry can expect a smaller share and potential ruin, unless taxes are cut drastically, blowing apart the Conservatives’ fiscal plans. “We’re going to see massive restructuring. The North Sea is a very high cost basin,” said BP’s Bob Dudley.
Mr Dudley is resigned to a long drought for oil prices as shale refuses to yield, with Iran poised to add a further 500,000 b/d in short order if the nuclear deal goes through.
canada goose clearance sale The International Monetary Fund listed a hierarchy of losers in a report last week. The North Sea is deemed the most vulnerable but Brazil, Australia, Gabon, Nigeria and Colombia, among others, are all less competitive than the US. canada goose clearance sale
Few of the oil barons in Houston believe market chatter about a V shaped rally ahead. “Prices are not going to snap back. People are Canada Goose Jackets in denial,” said Prince Nawaf Al Sabah, head of Kuwait’s explorer, KUFPEC.
US oil inventories have risen to a record 480m barrels. The Chinese have filled their strategic petroleum reserves. The “Li Keqiang index” of Chinese GDP rail freight, electricity use and bank loans implies an industrial recession in the world’s marginal consumer of oil.
The Chinese have also taken advantage of canada goose coats on sale the price slump to cut fuel subisidies and have raised the fuel consumption tax three times in two months (by 50pc in total). This is a pattern replicated across much of the emerging world. Recovery will run smack into a new headwind.
canada goose “There is a lot canada goose store of whistling past the graveyard,” said Stephen Chazen, head of Occidental Petroleum. “We’re preparing cheap Canada Goose for $60 oil and perhaps less, and we can cover all dividends and costs in this range.” canada goose
Canada Goose sale Mr uk canada goose outlet Chazen is sitting on a colossal find in canada goose the Permian Basin in West Texas. “We paid $3.8bn and thought we were canadian goose jacket getting uk canada goose 1bn barrels. People said we paid too much. Well, we got 7bn to 8bn barrels,” he said. Canada Goose sale
buy canada goose jacket cheap There is a dawning realisation in the energy industry that US shale output might double yet again before the end of this decade, canada goose coats even if prices never come close to $100. This would demolish the assumptions behind a long string of projects in the ultra deep waters of the oceans, often below layers of salt and blind to seismic imaging. buy canada goose jacket cheap
cheap Canada Goose The cost of production for the Gulf’s Opec core is far lower than anything shale can offer, but what matters for them is the “fiscal” cost needed to balance their budgets and sustain rentier regimes Canada Goose Coats On Sale sitting on social and political powder kegs. cheap Canada Goose
canada goose deals Mr Hess said global oil producers may indeed face a deficit of $100bn a year to cover dividends and investment, but Opec faces a $500bn deficit to cover social costs and military spending. canada goose deals
The risk for the Saudis is that the fight against US shale turns into a destructive stalemate, eroding its foreign reserves and inflicting so much damage on Iraq, Algeria and Libya that its own political neighbourhood spins further out of control.
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