oil
Yesterday in Houston, Saudi Aramco CEO Amin Nasser “said there was an assumption that the world could transition to cleaner fuels 'virtually overnight', but that this was 'deeply flawed.' 'I understand that publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some.'”
Warning against too quick a transition is a recent industry talking point, no doubt contrived by big money consultants. Not that anyone believes it, they just don't want any transition. Nasser provides a little oil humor with, a “significant role beyond the transition,” which would in fact mean the transition didn't happen at all.
Much more interesting:
“Jeff Miller, chief executive of the oilfield services group Halliburton, told delegates that there had been 'significant under-investment' in the sector over the past seven years, which he pinned both on climate pressure and lack of capital availability driven by the industry’s poor returns.”
Not so much a problem from the former “climate pressure,” than that latter oldest concern of capital, which is not a return on investment but a return of investment. From Ecuador jungle, to the oceans, to the sands of Arabia, to the Permian Basin, there is no cheap oil left.
Halliburton's Miller added, “Global upstream investment(exploring and drilling) had fallen 50 per cent below historical norms, he said, with investment in west Africa down as much as 75 per cent.” There is no more cheap oil, anywhere.
Reuters did a recent good piece on the shape of the US Shale Revolution, which never made many investors a dime, impairing over $300 billion in its short history. There's been talk of profit this year, but that's because they cut drilling way down with less than a third of active drills than at the production height a few years back. In addition, in last year and a half they've been completing a large number of previously drilled but uncompleted wells(ducs). Thus, the books of this last year don't have all the costs. So, what's new?
Shale wells' production falls off quickly, 70% in the first year, so you gotta keep drilling. US oil production remains down over 20% from its 2019 heights. Seems Obama and Trump will be the only two Shale Presidents. Despite the great political divide talk, oil consumption is one of those big issues uniting Americans.
A too quick transition from oil, gas, and coal in America? Not hardly, though ever increasing oil prices will help.
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