Death of Shale Postponed… Again

Guest “oils well that ends well ” by David Middleton

The Red Chinese coronavirus has led to a lot of wishful thinking on the part of “journalists” over the past few months…

Shale May Not Recover From Pandemic
by Nick Cunningham | July 15, 2020

The U.S. oil industry may have already peaked, with an all-time high in production reached just a few months ago.

The U.S. shale boom was already slowing down heading into 2020. The global pandemic and macroeconomic hit will leave permanent scars, from which shale drilling will be unlikely to recover.

[…]

The Fuse

Setting aside the fact that Nick Cunningham is perhaps the most ridicule-worthy regular contributor to OilPrice.com, there was genuine concern that production would not recover from the unprecedented shut-in (~1 million bbl/d) of wells since April.

Reservoir Commentary: Potential Implications of Long-Term Shut-Ins on Reservoir
SPE Reservoir Advisory Committee (RAC) | 28 May 2020

Orientation

From a completions, production, and facilities perspective, there are significant, and potentially devastating, effects for the long-term shut-ins of wells. Everything we leave in the well and the surface facilities will be subject to corrosion, deterioration, and other chemical/mechanical effects. Perforations and the well itself may become plugged and deformed and the pumps and bottomhole assemblies may be rendered dysfunctional due to the settlement of sand and other debris/contaminants. Moreover, scale buildup and wax and asphaltene precipitation in and around the wellbore are well-known potential problems during shut-ins.

The oil and gas industry has a very long history of well surveillance, well maintenance, and well remediation—but as an induction, we have not had any circumstances on the scale of the current situation. Simply put, we may not be able to bring these wells back on line without workovers and, in some case, restimulation. Furthermore, recompletions, restimulations, chemical treatments, workovers, etc. may not be viable solutions in many cases, particularly for poorly (and very poorly) performing wells, of which there will be many. The impact on supply chains may be/will be challenging in regards to the material, expertise, and timing to complete efforts for restimulation. These facts are indisputable, and have been recently documented in a JPT article by King and Garduno (2020) and in an SPE Live interview of George King by David Gibson (2020).

The purpose of this commentary is to address the consequences of long-term well shut-ins from the reservoir-performance perspective. It is also important to emphasize that this question has more critical implications—and far more unknowns and uncertainties—for unconventional wells than those for conventional wells. Therefore, while we will comment on the impact of long-term shut-ins for conventional reservoirs, we mostly focus on unconventionals in this article. The goal of this article is to engage the technical community in an effort to capture experience and expectations, as well as to provide guidance to the industry on issues and opportunities that may arise from large-scale shut-ins of wells on multiple scales (single well to multiwell designs), in particular for unconventional reservoirs.

[…]

Society of Petroleum Engineers

In the Gulf of Mexico, conventional reservoirs are often temporarily shut-in for mechanical, weather and/or economic reasons. There has been little evidence of reservoir damage from these shut-ins and the wells often come back on at higher production rates than prior to being shut-in. This is due to stabilization of the fluid contacts and/or re-pressurization of the reservoir. But, there were little, if any, historical data on the effects of a massive shut-in of unconventional reservoirs, until now (H/T to CTM)…

A Happy Ending for Shale Shut-Ins
Stephen Rassenfoss, JPT Emerging Technology Senior Editor | 18 August 2020

Nearly all the shut-in unconventional US wells will be back in production in September, according to a report from Rystad Energy.

Based on early reports the wells are producing at about the level they were before the shut-in, plus a bit extra after operators open them up.

“Nearly all operators said they did not face any issues in bringing volumes back on line as per schedule, as they had already worked on issues such as maintaining reservoir pressure and well integrity even before they began moderating output or shutting in wells,” said Veronika Akulinitseva, vice president, North American Shale and Upstream for Rystad.

While there was talk about shut-ins reducing production, the opposite has often been the case.

“When operators shut in those wells in April–May, the downhole pressure started building, and when the wells are coming back on line now, operators are seeing short periods of increased oil productivity [and] also marginally lower gas/oil ratios in some cases,” Akulinitseva said. Based on the limited data the gains could be 10–15% for a few days up to a couple weeks.

The operator talking about the subject has been EOG, which discussed the added output it calls “flush production” during its second-quarter investor call.

[…]

Society of Petroleum Engineers

While overall production will decline this year due to the drop in drilling activity, almost all of the curtailed production is expected to be back online by September.

Figure 1. US onshore curtailed oil production. Society of Petroleum Engineers

And it appears that the shut-ins did not adversely affect production rates.

Figure 2. Decline curves unaffected by shut-ins. Society of Petroleum Engineers

And, as an added bonus, we get another smack-down of “financial observers” opining on reservoir engineering…

“They would have done better if they had not shut them in, in terms of cumulative oil production;” said John Thompson, the president of the unconventional reservoir training firm Saga Wisdom.

At the time those decisions were made, maximizing oil production was not the goal. Prices then were flirting with zero and oil demand was so low it was hard to find buyers or storage space. Since then prices recovered surprisingly fast, which has speeded the return of those shut-in wells.

What is not surprising to Thompson are the well results. Based on a petroleum engineering career spent modeling thousands of unconventional wells, many of which had been shut in, these results are in line with what he would have expected.

Despite the “hyperbole” from some financial observers, “what we are seeing here is completely representative of wells in these kinds of plays,” Thompson said.

Society of Petroleum Engineers

80 thoughts on “Death of Shale Postponed… Again

  1. Thanks, David!
    I guess I’m gonna need a bigger glass for all the leftist’s tears! Ha, ha, ha, ha, ha, ha!
    How often are Green dreams more like the Hindenburg than the Spirit of St. Louis?
    Maybe I should use the Titanic instead! Hindenburg, Titanic; Hindenburg, Titanic; still looks like a win, win to me!

    • The shale oil industry is dead because it was never alive.
      The industry, as a whole< has never made a profit.
      With oil well under $50 a barrel, the broken business model remains.
      In time the industry will be viewed as a huge waste of investment capital
      … which is already true, but not recognized by the author of this article.
      The industry has been dying for several years.
      The work from home trend will finish it off.

      Check the bankruptcy records. The creditors and stockholders are losing money so I have to assume they will not throw more money into the industry. The author of this article appears to be over optimistic (clueless) about the dire straits of the shale oil industry. He writes a lot of good articles that are here, but no one is perfect.

        • Middleton
          I summarized the industry.

          You responded with a childish character attack.

          An intelligent response would have been selected at least one sentence from my comment and attempting to refute it.

          You did not even try.

          An industry that can not make a profit is a temporary industry unless there is a government bailout.

          The production does not need to return to pre-Covid levels because employers like the cost reductions from work at home employees, so will not return to normal post Covid.

          The shaLe oil industry remains a huge waste of investors wealth that is failing, not bouncing back to the *good old days* of minimal profitabilty.

          Pick a subject you understand next time rather than cheerleading for a dying industry.

          • “The shaLe oil industry remains a huge waste of investors wealth that is failing, not bouncing back to the *good old days* of minimal profitabilty.

            Pick a subject you understand next time rather than cheerleading for a dying industry.”

            All good observes. Mr. Middleton is fighting the reality that demand for his chosen field, in the CONUS, will be on pause until he is too old to work. Maybe he forgot to sell his company’s stock when it was 4* as high.
            Maybe he bought gold or survivalist food with his 401K $. Maybe he is just hysterically blind to the obvious.

            Even taking the libertarian, Milton Friedman view, of making the various energy sources pay for all of their external costs – asset retirement, political/security risk, ES&H, AGW – leaves US fossil fuels at a disadvantage. I’m more than happy to lose the relatively tiny green start up helps, if the oil and gas producers gofer this – and put up cash in fist to fund all of their legacy asset retirement obligations.

            Sadly, oil and gas asset retirement funding will follow those of copper and coal. The 11+ figures of them will be shirked and then left for the rest of us….

      • Broken business model?

        This is what happens in a market of supply and demand.

        However, I would hate to be in “renewables” that is industry ripe for a giant reset. Throwing money at idiocracy cannot go on forever.

      • You mean the plays that have directly dropped oil from $100/bbl to $55/bbl due to their overwhelming production? The plays that comprise most of the increase of US production from 5 million bbl per day to 13 million bbl per day and have increased proven reserves in the US by 100s of billions of barrels? Lead by companies that grew immensely since the shale revolution that have seen their market caps grow by $billions? That is the industry you’re referring to, correct?

      • For an industry that has never made a profit, they are sure rolling in the dough.

        I’ve always been fascinated by outsiders who claim to know more about a business, than do the people who are actually in charge of the business.

        According to Richard, an entire industry is losing money hand over fist, and the only one who can figure this out, is Richard.

        • For an industry that has never made a profit, they are sure rolling in the dough

          wait, when did we start talking about Hollywood accounting? 😉

      • The industry has been dying for several years.

        but wait, just a few sentences earlier you said:

        The shale oil industry is dead because it was never alive.

        How can something that was never alive be dying? It seems what is dead is your ability to be consistent and thing logically. But hey, you clearly know more about an industry then everyone in that industry and everyone that deals with that industry. So please keep spewing forth your fountain of wisdom that springs from your vast knowledge and experience of the industry. I’m sure we’ll all be better for it (after all, laughter is, as they say, the best medicine – and watching know nothing blowhards spouting off about things they clearly know nothing about is always good for a chuckle or two)

        • Endicott
          The so called industry in total has not earned a profit for investors in total.

          There may be individual ompanies that are exceptions.

          That’s why there are so many bankruptcies and the trend is getting worse.

          Is it a real industry if all it does is burn up investors money?

          I would say that, unintentionally, it is more like a Ponzi scheme.

          If you think I am wrong then invest your money in the shale oil industry that author Middleton expects to bounce back soon.

          You typed a lot of words but said nothing of value about the industry. Just one character attack after another.

          • You typed a lot of words but said nothing of value about the industry.

            Hey look, you just described your own posts. ironic.

      • Mr. Greene: I think we’ve seen this movie before. There are examples of over-capping in tech, but commodities? We’ve seen alot of bankrupties and busts in the tech industry, too, so do you think Apple is dead (and dying, like the famed cat-in-a-box)?

          • Richard Greene

            Apple owes its very existence to the fossil fuel industry! Without hydrocarbons, neither Apple nor any other darling of the technology sector would even exist and they certainly wouldn’t have any products to sell since the raw materials that populate their supply chains all rely on access to cheap hydrocarbon-fuelled energy. The Apple addicts and regular consumers are only able to buy these products thanks to the wealth generated by the world’s ongoing consumption of close to 100 million BOPD of good old oil. Shale oil ensures that dominance ought to continue in a sensible world……but nobody said the world was sensible when it comes to this topic, unfortunately!

  2. You don’t maintain reservoir pressure in shale reservoirs. And the referenced article was mostly about non shale production. The inferred diss of George King caught my eye, and got me to open up the article. In addition to being a killer Tulsa runner, he has devoted his pro life for ~40 years to completion evaluation. Neither you nor I are qualified to carry his jock…

    • Which article wasn’t primarily about “shale”?

      The first one? Nick Cunningham’s babbling nonsense, specifically about “shale”?

      Or the two SPE articles, specifically about “shale”?

      Of course, you don’t “maintain reservoir pressure in shale reservoirs,” nor did I even suggest this. However, most, if not all, delta-P reservoirs will re-pressuurize, to some extent, when shut in.

      • “Which article wasn’t primarily about “shale”?”

        The George King at. al. article. I.e. the article YOU indirectly linked to, authored by one of the world’s pre-eminent completion evaluators. The article that is NOT “specifically about shale”.

        Shoulda’ done your homework Mr. Middleton…..

        • Shoulda’ done your homework Mr. Middleton…..

          Ouch! Bob’s on the warpath again!

          Still, that’s odd. I was thinking you should’ve read the article more carefully. What you call an “inferred diss” doesn’t look like a “diss” at all.

          I can only assume the “indirectly linked” article about which you’re complaining was either of these:

          https://pubs.spe.org/en/jpt/jpt-article-detail/?art=6971
          https://pubs.spe.org/en/jpt/jpt-article-detail/?art=7027

          So you would argue that when “Mr. Middleton” prefaces an article citation with “there was genuine concern that production would not recover from the unprecedented shut-in (~1 million bbl/d) of wells since April” and then cites both articles by/with George King, that’s an “inferred diss”?

        • That would be the first SPE article, specifically about shale, which pointed out that most of the industry’s experience with prolonged shut-ins had been with conventional reservoirs, before 2020. I also mentioned this in my commentary in the post.

          The second SPE article discussed the results of bringing shut-in “shale” wells back online.

          Maybe you should try reading the post before making asinine comments.

      • “Of course you don’t maintain reservoir pressures in shales”.

        Glad to hear you figure out that your GOM experience is irrelevant in this context, along with your comment “….and/or re-pressurization of the reservoir”. As a petroleum engineer, you’re probably a fair geoscientist. Which is why you don’t seem to get the fact that shale reservoirs, in toto, don’t “repressurize” from natural sources (like an overlying ocean”) or from man made pressure maintenance techniques….

        • Is reading beyond your grasp?

          “When operators shut in those wells in April–May, the downhole pressure started building, and when the wells are coming back on line now, operators are seeing short periods of increased oil productivity.. .

          • “When operators shut in those wells in April–May, the downhole pressure started building,”

            Not true in shale fields, for the reservoir in toto. Yes, at the shale face. Yes, after a longer shut in, you will get a temporary, higher rate burst. EUR’s are not changed. In YOUR reservoirs, there are often external pressure maintenance mechanisms. Completely different. As I said, as a petroleum engineer, you’re an ok geoscientist.

            Bigger pic, this post has nada to do with the real problems of the shale production biz. What was the point of it?

          • The EUR’s will likely be a little lower… Which was also addressed in the post and SPE articles you clearly didn’t read.

            This is from the largest operator of “shale” fields, EOG:

            “When operators shut in those wells in April–May, the downhole pressure started building…”

            When fluids flow into the borehole, the pressure in the vicinity of the well, decreases. This even happens, to varying extents, in water-drive reservoirs. When a well is shut-in, the pressure builds back up. The reservoir re-pressurizes. With water-drive reservoirs, the re-pressurization isn’t as significant. With water-drive reservoirs, a prolonged shut-in period can lead to a temporary drop in water cut and higher production rate when the well is brought back on. This is due to the fact that production tends to cone water. A shut-in allows the fluid contact to flatten back out.

          • This is from the May 28 SPE article:

            Long-term shut-ins of conventional reservoirs for years, and sometimes for decades, have occurred under extraordinary circumstances—such as war or civil unrest (e.g., Iraq’s invasion of Kuwait in 1990, Arab Spring Uprisings in early 2010s, and unrest in Nigeria from 2003 to 2007). In these cases, damages to the production facilities were catastrophic as the facilities had not been properly maintained, or as in the case of wars, the facilities and wells were destroyed. Other circumstances might be the deprioritization of an asset compared to a more prolific new discovery (this is more the case for national oil companies (NOCs); examples can be found in Mexico, Kuwait, and Saudi Arabia). However, from a reservoir standpoint, there were also benefits of long-term shut-ins, in particular, due to repressurization of the field and stabilization of the fluid contacts (Dujardin et al. 2011).

          • Bigger pic, this post has nada to do with the real problems of the shale production biz. What was the point of it?

            Finally! At first I thought you were just starting to bigoilbabble, but now you’ve redeemed yourself by pointing out how the subject of the article isn’t that which you’d rather it be.

            Brilliant, thanks!

          • Yep. From the quoted passage from the first SPE article:

            The oil and gas industry has a very long history of well surveillance, well maintenance, and well remediation—but as an induction, we have not had any circumstances on the scale of the current situation. Simply put, we may not be able to bring these wells back on line without workovers and, in some case, restimulation. Furthermore, recompletions, restimulations, chemical treatments, workovers, etc. may not be viable solutions in many cases, particularly for poorly (and very poorly) performing wells, of which there will be many.

            The concern was that it would be difficult to bring the wells back online without spending a lot of money on “recompletions, restimulations, chemical treatments, workovers, etc,” and that many of these wells would be P&A’ed and/or orphaned.

        • The individual pore and pore throat pressures around the borehole decrease as a well is produced. If a well is shut-in, the reservoir has time to “repressurize” the near borehole as fluids refill depleted occlusions. If you didn’t already understand this, can I get a list of your P&A wells please.

          • ” If a well is shut-in, the reservoir has time to “repressurize” the near borehole as fluids refill depleted occlusions.”

            Yes, that’s why I said so. What are qualitatively different are reservoirs with external pressure support. Aquifer, ocean, man made fillup, etc. I.e., most current reservoirs with significant, interconnected porosity/permability, of the sort Mr. Middleton is referring to in his choice of links (whether he knows it or not). They can go uneconomic from water production, with almost no drop from virgin pressure. This is, by far, the most common form of “depletion” world wide.

            The whole post centers around about the 133rd most important (and faux) reason for the end of the shale biz for at least a decade. NO idea why Mr. Midleton went there…

    • Whether or not companies go bust, the fact remains the oil is down there and at a suitable price using today’s technology it can be extracted. When the oil glut is finished oil prices will again rise, and companies will once again be fracking every possible oil shale they can find.

      This oil is a promise for the future – there will be plenty of fossil fuels for the next 40 or more years right here in the good old U.S.A. As for oil found all over the world, it likely will last much longer. Way past the “End of the World” the greenies predicted for 2032 (2031?, I lose track as they keep making more doom and gloom predictions that NEVER play out.)

      • The health of most companies involved with fracking, or fracking divisions of divetsified companies, has been bad news for investors for many years.

        Covid hurt an already weak industry.
        Airline traffic is still down 70 percent after five months and behaviors will not change quickly.

        There are huge office buildings in the Detroit suburbs with very few cars in the parking lots. People are working from home and business owners and managers now realize they don’t need everyone driving to work every day.

        Government oil companies around the world love seeing the shale oil industry suffer.

        I get no pleasure from reporting that investors’ money is being burned and few companies will make a profit. A few months ago I examined the industry for stock investing and found nothing of interest.

        The product they sell has a lot of competition around the world and the demand for oil has had what I believe is a long term change.

        The shale oil is still there and production can ramp up again … but how long can production like the good old days last while losing money on every barrel … unless banks and investors throw in new money … to be burned?

    • I spent a year on a search/evaluation team for Mergers/Acquisitions for the Minerals Department of CONOCO. Our leader was an MBA from Uncle Miltie Friedman, and we were a mixed geology/engineer/metallurgist team. We repeatedly encountered natural resource companies that were mis-managed or mis-guided and sliding toward bankruptcy, and guess what, a commodity price down-turn pushed these companies over the edge. Their assets? Picked over by vultures, thank you very much. William can’t Teach me anything, but I see interesting things from David.

    • It’s not “old” production. The average shut-in period for the wells brought back online has been 23 days.

      • LOL. Okay “previously producing but recently shut in production” is back online.

        Any word on what their plans are to resume drilling?

        • I think you’ll need to see sustained prices rise above $50/bbl to see much new drilling activity in the “shale” plays.

  3. I guess predicting the end of oil makes an activist feel better. It isn’t real, and it isn’t happening, but it’s kind of like a child squeezing their Teddy Bear to feel comforted.

    The key “control knob” on oil is profit. Period. When prices go up, production will follow.

    If the price goes high enough, new sources of “unconventional oil” will be tapped. We have only used a small part of what is down there.

    • If the price goes high enough.

      Apparently, the demand for oil is quite inelastic.

      At the time those decisions were made, maximizing oil production was not the goal. Prices then were flirting with zero and oil demand was so low it was hard to find buyers or storage space. Since then prices recovered surprisingly fast, which has speeded the return of those shut-in wells.

      People need to travel a certain amount and, given the current fleet, that means they need a certain amount of gasoline.

      Before the Arab oil shocks, Americans drove what the Germans called something like strassecruisers (street yachts). Then they started driving tiny compact cars. Now they’re back to driving Ford F-150s that weigh every bit as much as a 1960 Buick if not more.

      What’s inelastic is the need to travel. Over a few years, the demand for gasoline could change a lot if everybody started driving hybrids.

      Notwithstanding the above, people are willing to pay an obscene amount for gasoline. It could happen again.

        • Obscene and surprising. I thought the UK sold its petrol (gasoline to those of us in the US) by the litre for £s not by the gallon for $s 😉

        • Seriously, though, if you are going to convert your prices to US prices, you should also convert the unit of measure to the US unit of measure.

          According to https://www.globalpetrolprices.com/United-Kingdom/gasoline_prices/
          you $7 a gallon figure (actually slightly below that at $6.84 average) is a UK gallon. But a UK gallon isn’t the same as a US gallon. using US gallons to go with the US dollar figure, the price per gallon is $5.69, over a dollar less per gallon.

          Which is still pretty darn obscene considering I just recently filled my tank at slightly less than $2 per gallon and my state is on the upper end for gas taxes here in the US. Even the states with most expensive gas in the country clock in at slightly more than $3 a gallon (Hawaii $3.23 and California $3.22 for “regular grade” gasoline, all the rest are below $3 for regular grade).

          As we’re talking differences between US and UK. Don’t confuse our Octane ratings for yours either. The UK octane rates are the RON ratings whereas US & Canada octane rating is an average of the RON and MON octane ratings called AKI. The US has 3 grades of gasoline: regular (87 AKI = 91-92 RON) Mid-grade (89-90 AKI = 94-95 RON) and Premium (92-93 AKI = 97-98 RON). Mid-grade is usually about 10-20 cents more than Regular. Premium is usually about 20-40 cents more than Regular. As UK petrol starts at 95 RON, you should probably look to the Mid-grade or Premium prices when comparing to the US.

          • When I was a kid, all the way up to a few years ago, the difference in price between grades was always 10 cents a gallon. No matter which station or what the current price was, the difference was 10 cents a gallon.

            Recently I’ve notice that the difference is often 20 to 25 cents. When did that change?

          • Yes, about 10 cents was what it typically was for as far back as I can recall. Mid-grade would wobble a bit (might be 8, 9 or 11 cents more than regular) but the spread between the three usually worked out to be 20 cents total. Now a days, as you note, its not so orderly. Not sure when things changed. I’ll blame the gas taxes. You can never go wrong blaming the tax man 🙂

      • Apparently, the demand for oil is quite inelastic

        As MarkW points, out short term that’s true, long term, as you own example shows, not so much. As gasoline prices rise, people start looking for vehicles that cost less to drive (hence the switch from “street yachts” to little “econ box” cars in the months/years following the Arab oil shocks) resulting it less demand even though miles driven remains basically the same (some slight cut to miles driven is possible, depending on ones driving habits. for example combining what would have been multiple trips to several stores instead so as to reduce miles driven) because the new vehicle can go further for the same amount as gas as the old one did. And as gasoline prices level off and drop, people start looking at other factors when selecting their next vehicle (hence the swing back to big, heavy, gas guzzling vehicles). The switch from gas guzzlers to gas sippers or vice/versa doesn’t happen over night, but it does happen was prices swing far enough and steadily enough in one direction or the other.

        people are willing to pay an obscene amount for gasoline

        Only for as long and as much as they have to (IE only until they can alter how much gasoline they need to pay for).

      • With the large number of people who will be working from home now and in the future the number of miles traveled daily for commuting will go down, I think by quite a bit. That means demand for gas will drop. I don’t think you have factored that into your “inelastic” calculation.

    • No one is predicting the end of oil. Just reporting on the sad financial health of shale oil companies and divisions … who won’t see higher prices if they ramp up production in September as the author expects.

  4. David
    My quick take on Fig. 2 is that the decline is slower after the hiatus than it was before.

    • Clyde, Mr. Middeton is correct, but both of you need to steer clear of squinty decline curve analysis. This faux glimmer of hope for our shale fields is a total strawman w.r.t. the underlying economic problems with them. Shut in problems were NEVER considered a big deal by most of us. Rather, frac hits, decreasing EUR’s from over drilling, service rates that have Halliburton eating their seed corn, inadequate aqueous haz waste disposal capacity, and a decade or more of lower CAPEX and OPEX/boe production from the mideast and FSU, which will result in prices that will doom these fields into the ’30’s, are the current death knells for this hot house flower of a technology.

      Our best bets are to shut these fields in (they will be fine when opened up years later), allow the operators to delay their drilling obligations, spend infrastructure $ to either retrain the workers and/or pay them to start the asset retirements the biz has stuck us with for over a century (Joe Biden’s really, really, good idea).

      • Joe Biden says they can be retrained as computer programmers 😉

        Now was that the ole Joe’s idea or was it dementia Joe‘s?

        • “For an industry that has never made a profit, they are sure rolling in the dough.”

          They’re communizing tens of billions of debt onto the rest of us, via BK’s, and write downs. Both producers and servicers. But I’ll bite. Feel free to expand on and or link to documentation of all this “rolling in dough”….

          • They’ve just been piling on debt, for 70 years, and you are the only person who’s managed to notice.

            If you’re being paid to act this dumb, your employer is definitely getting his money’s worth.

          • “They’ve just been piling on debt, for 70 years, and you are the only person who’s managed to notice.”

            The shale folks? More like 15 years, and plenty noticed. Yes, plenty of patsy’s though, who are now getting skinned slowly. Along with the rest of us who will end up paying the 10-11 figure asset retirement costs that the business will shirk.

      • You speak like you’re a central planner. Maybe you have some subpar wells that need to be SI for years, but I’m sure Pioneer et al. have their own production managers that are keeping a close eye on when their individual leases are back in the green to operate.

        • “You speak like you’re a central planner.”

          What in the world am I “planning”. I’m just committing the unvarnished truth on the chale production biz.

          “Maybe you have some subpar wells that need to be SI for years, but I’m sure Pioneer et al. have their own production managers that are keeping a close eye on when their individual leases are back in the green to operate.”

          I have no wells anymore. Look at past 21st century oil prices. I got out at near the peak. I agree on Pioneer. They have great tech expertise. That’s why they are doing nada beyond producing out what they have already paid for. Trading $, by eating up their PDP…

          • Pioneer hasn’t generated free cash flow since at least 2014…

            https://www.marketwatch.com/investing/stock/pxd/financials/cash-flow

            EOG has generated free cash flow every year since 2017…

            https://www.marketwatch.com/investing/stock/eog/financials/cash-flow

            EOG is the largest, most successful “shale” player in the business (Chevron is a much bigger company, but EOG is pretty well all “shale”).

            Almost no one will generate free cash flow this year and everyone has slashed CapEx. However, EOG generated free cash flow in Q2 and may do so for the full year, while increasing oil production.

            EOG employees rose to the challenge, not only achieving the incredible reduction targets we set but beating them. Compared to our aggressive plan and guidance for the second quarter, we produced 7% more oil, spent a whopping 26% less capital and our cash operating costs, which includes LOE, transportation and gathering and processing were 10% lower. With the rapid reduction in capital and operating costs, the company generated nearly $200 million of free cash flow, while oil prices averaged less than $28 a barrel. Our second-quarter results are a testament to the return-focused culture of EOG employees and our ability to pivot quickly in response to the unprecedented level of market volatility and industry conditions.

            Last quarter, we laid out seven strategic focus points for the remainder of 2020. Here’s a quick progress report. Our first strategic point is only to invest capital if it generates a premium rate of return. Premium return is defined as a 30% or higher direct after-tax rate of return using a price deck of $40 flat oil.

            In this downturn, we have raised the return bar even higher by using $30 oil instead of $40 to calculate our 30% rate of return. Our second focus point this year is to exercise operational flexibility to quickly reduce costs. With capital 26% below target and cash operating cost 10% below target, our second-quarter results demonstrate our ability to move quickly in a volatile environment. Our third focus point is to accelerate our technical innovation across the company.

            https://www.fool.com/earnings/call-transcripts/2020/08/07/eog-resources-eog-q2-2020-earnings-call-transcript.aspx

            I wouldn’t be citing Pioneer as a company to “go to school on.”

          • “I wouldn’t be citing Pioneer as a company to “go to school on.””

            I agree. That’s why I didn’t. My only mention of Pioneer was in response to another poster who apparently had me confused with a 3d poster. All I said was that, with drastically cut CAPEX, are smart enough to quit digging in deeper….

          • Which EOG is not doing. While they cut CapEx, they also managed to increase production and maintain free cash flow. For that matter, they have reduced long-term debt every year since at least 2015. “Shale” is pretty well all that EOG has done in more than a decade. If “shale” was the problem, EOG couldn’t do what they have done and are doing.

        • “Biden has an idea about anything?”

          Since he has explicitly espoused an infrastructure project to plug out old oil and gas wells (which we are stuck doing in any case), then yes….

          • We’re already doing that and it’s largely being funded by the industry.

            The exact number is not known: some 3.7 million wells have been drilled in the U.S. since 1859,6 and their history is not always well documented. Older wells, especially those drilled before the 1950s, are particularly likely to have been improperly abandoned and poorly documented.

            […]

            Orphaned wells are often abandoned without any plugging or cleanup, but even plugged wells may leak, especially those plugged in the past, when plugging procedures were less rigorous and used less durable materials.

            https://www.americangeosciences.org/geoscience-currents/abandoned-wells

            In the case of Texas, the cost of P&A’ing these wells is about 0.1% of the annual taxes and royalties paid by the operators.

            From 1984 to 2008, the Railroad Commission of Texas (RRC, the state’s regulatory agency for oil and gas) plugged almost 35,000 orphaned wells, including offshore wells, at a cost of over $163 million.17 In fiscal year 2017, the RRC plugged 918 orphaned wells at a cost of over $11.6 million.18 As of December 2017, there were roughly 10,000 known orphaned wells in Texas that required plugging; the RRC aims to plug 1,500 of these in fiscal year 2018.19

            https://www.americangeosciences.org/geoscience-currents/abandoned-wells

            From 1984-2008, Texas spent $163 million P&A’ing “orphaned wells”… In 2008, alone, oil & gas operators in Texas paid $8.55 billion in state & local taxes (mostly state) and royalty payments to the State of Texas. In 2017, the state spent $11.6 million on P&A’ing “orphaned wells”, while generating over $11 billion in tax and royalty revenue.

            https://www.txoga.org/texas-oil-and-natural-gas-industry-paid-more-than-14-billion-in-taxes-and-royalties-in-2018-up-27-from-2017/

            The lion’s share of Texas oil & gas tax revenue comes from the Permian Basin… Which is dominated by “shale.”

  5. ”The Democratic National Committee this week quietly dropped language calling for an end to fossil fuel subsidies and tax breaks from its party platform”

    Well, somebody out there is getting their checks, even if we aren’t.

  6. Neo:
    I just finished skimming the Dems 2020 Platform [wish list]: They did state their intention to ban any new
    fossil fuel leases on government land, and ramp up regulation of methane. And “conserve” 30% of land & waters of the USA by 2030.

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