I guess the leftist tree hugging democrats side with Putin.
Strawmen are fun! 
Ironically Putin is sitting on like 500 BBO of recoverable reserves in the Bashenov (shale).
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NMoilboy, why isn’t shale drilled profitably anywhere overseas? Chevron is developing a shale play in Argentina but they rarely talk about it in quarterly presentations.
In the majority of the oil producing countries they haven’t gotten down to the garbage reservoirs like we have in the US.
I went to a weeklong meeting in Moscow in 2011 with Rosneft folks as a US shale outreach on the Bashenov. In discussions as to whether the shale would work, their manager said something like “we had this vertical well here that made 3million barrels unfracked from the 200m thick shale but the sub pump broke in 1985 at 200 bopd so we never went back to the well”. Hahahaha. Yeah, you might be onto something there Boris. Too easy in Western Siberia to just produce the actual reservoirs and not mess with the source rock. But there is a zillion barrels of oil in the source rock.
And its a HUGE undertaking to run 500 rigs and 150 frack crews on a treadmill to keep the shale beast running. Nobody else has that kind of scale of equipment, people, etc etc. Or the private industry. In Vaca Muerte they had to bring everything in from the US to complete a well (back in the day, 2016 or whenever). So your well random 20,000’ MD well would cost $35-40m each. I’m sure its much better now. Maybe. Wouldn’t surprise me if CVX is making a bunch of good but uneconomic wells.
Western Europe won’t allow fracking so that makes it hard there in the places where it could be viable.
Shrug. I know enough to be dangerous. And enough to tell you not to guzzle Russian energy drinks unless you want a 200 bpm heartbeat.
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Excellent synopsis NMOilboy. I’ll stick with bourbon.
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Also meant to say if it wasn’t for Armand Hammer (OXY) Russia wouldn’t have an oil industry.
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Astonishing that the USA is #1 oil producer, due to shale, considering shale formations exist world wide and U.S. operators must remit 25% royalties to land/mineral owners. American ingenuity and the wildcatter tradition must be the reason.
Chevron investor day is March 1, likely they’ll update on their Vaca Muerte shale project in Argentina … Vaca Muerte means ‘dead cow’ in Spanish.
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Continental Resources pledges $250 million to do carbon capture project in Williston Basin.
Must reading FRB Dallas annual survey. Break-even $50 and $51 for spudding wells in Delaware & Midland Basins, large E&P breakeven is $10/bbl lower than small companies. Delaware Basin breakeven responses ranged $35-$70/bbl. Best part of survey are the anonymous blunt comments by executives, they don’t have to be diplomatic & guarded as in public presentations.
Source FRB Dallas surveys … https://www.dallasfed.org/research/surveys/des/2022/2201.aspx
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This is really scary. https://www.wsj.com/articles/mugged-by-energy-reality-federal-energy-regulatory-commission-richard-glick-joe-manchin-russia-ukraine-11648155246?st=fc3l2hihr47pnx4&reflink=desktopwebshare_permalink
FERC can kill any new applications for interstate pipelines or LNG terminals, by wielding this proposed regulatory weapon, evaluating Scope 3 “downstream emissions” by end-consumers of natural gas. I wrote a comment letter to FERC during this now-open public comment period, hope you comment also.
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WSJ article about environmental coalition wanting to “review” (read make tougher) ESG guidelines to make them harder to meet. I will post my NAO column I wrote about ESG next.
Here was my column about ESG -
ESG and Me? By Wade Caldwell, President of NARO - National Email: [email protected]
If you have not been paying attention to the ESG movement, you should be. ESG stands for environmental, social and governance, and is a philosophy/movement that believes that businesses should have an obligation to take into consideration the environmental, social and governance issues in their decisions. ESG has taken many forms, from reducing carbon impact, supporting social movements, to promoting diversity in management and hiring practices. These sound like a good thing, right?
In moderation, perhaps. In extremes, no.
The countervailing philosophy to ESG is that businesses, particularly public companies, should exist to benefit their shareholders. Public companies have the pressure of meeting investor expectations to be able to attract more investors, obtain loans, finance debt, and receive good terms on credit. Some would even have the audacity to quote people like Milton Friedman that the creation of jobs, products, and wealth in society is in fact a good thing in itself. So is providing the public a stake in decision making through ESG a good thing?
The main concern with the ESG movement for mineral and royalty owners is its effects on capital flow to oil and gas development. Anti-carbon groups have latched onto ESG as a way of forcing through their ideas for carbon reduction in oil and gas development. The extremes in the ESG movement want to use their power as a way to starve oil and gas companies of capital. ESG has a big following, with Blackrock and others now wanting to restrict capital to companies which will follow ESG practices. In other words, they are using the power of where they allocate their investments to require oil and gas companies to adopt ESG practices they deem sufficient. Another effort is government mandated ESG adoption through securities regulation.
Capital is important. We just witnessed one of the great capital booms for oil and gas development that ever existed in the 2010s with the advent of the shale plays. It too went to extremes, with hedge funds hand picking a group of executives from different oil companies, handing them hundreds of millions of dollars of capital, and telling them to go start an oil company. Not surprising with anything involving excess enthusiasm, the returns were less than stellar.
So in debating the merits of ESG investing, one has to keep in mind that there has been some level of ESG in existence for decades. Companies, even public ones, were expected to comply with environmental laws and be non-discriminatory in their hiring and employment practices. In addition, just being a good employer required public companies to be respectful of their employees’ opinions, along with the opinions of the public. It is hard to retain good employees and customers if they loath what your company does.
However, saying that ESG is a step up from what existed is like inscribing “I Told You I Was Sick” on your tombstone. It seeks to force companies to get involved in social causes, even if there is ongoing debate over the existence of a problem, or of the necessity for a forced solution. Particularly with oil and gas, it seeks to force oil and gas companies to either reduce development, create alternative energy businesses, or come up with magical carbon capture technologies - all while not hurting the bottom line. If anyone thinks a major oil company can pivot to a renewable energy company with carbon capture technologies and not suffer massive disruption in their financial results – please keep holding your stock while I sell mine.
But the real problem with the ESG movement is the lack of definable standards and who gets to decide what is an acceptable policy. The policies tend to be vague and ever changing. Lack of specificity and vagueness leads to uncertainty. Uncertainty leads to investors being wary of putting their money in a specific area, i.e., oil and gas development. Yet, there are those that want to slather a layer of additional laws and regulation around of ESG on top of existing laws and regulations.
I guess one could hope that this will simply result in a flee of capital from the public markets to the private markets, where future oil and gas development will be funded by private hedge funds who choose not to adopt overzealous ESG requirements. However, if this happens, do not expect the proponents of extreme ESG proposals to be satisfied to leave those private companies alone.
Perhaps the best lever against ESG extremity is time. As the public at large, and public companies in particular, become more familiar with the many unworkable aspects of a standardless set of ESG guidelines being imposed upon them, perhaps they will push back. Perhaps they will revisit whether the existing framework of laws and regulations were mostly adequate in the first place and just needed to be tweaked. Perhaps they will come to recognize that setting legal and regulatory standards should not be in the hands of social media or street mobs, but rather in the hands of legislators who put it through the rigor of the legislative process. Of course, this assumes there is still a difference between the two.
We can only hope that time will create a turning point, a dampening, a repeal of the excesses to come. But for now, we must ride out the ESG wave and continue swimming toward the surface. Choose your operator partners carefully. Keep up to date on their financial health. Keep your investments diversified. Stay involved with organizations like NARO that educate and advocate. And when your next royalty check is better than expected, take some of it and give it to the environmental, social and governance causes you choose to support. Think of as your own personal ESG initiative.
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Prayer U. Video posted elsewhere on the site that is thought provoking.
https://www.mineralrightsforum.com/t/can-we-rely-on-wind-and-solar/65828
Forbes article with more balanced view of methane emissions. The author failed to note that SE New Mexico has a huge dairy farm industry up and down the Pecos River.
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Texas Monthly article about the new oil boom coming. Basically says we are in a commodity super cycle and will last a while.
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Article about anti-oil extremists going after bond issuers for underwriting bond issuances for oil, gas and coal companies.
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Whistler pipeline from the Permian is expanding its capacity by 25%. Will be ready next fall.
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Big news in the Permian. Colgate and Centennial are going to merge. It definitely makes sense from an acreage footprint perspective, but will also be a blow to competition for leasing.
That’s terrifying in regards to how far some people are willing to go in order to prevent reliable energy from being produced. Thanks for sharing.
Whitewater, Devon and others are planning on building a new 42" gas line from Waha to Houston. Route map in article.