US Shale Companies Break Bread with OPEC Dictators at CERAWeek
U.S. energy officials from some of the largest U.S. shale drillers had a private dinner last night with the tyrants and dictators of OPEC at CERAWeek in Houston. The annual confab between our shale drillers and OPEC is something of a tradition now (this is the fifth year it has taken place). Not much is known about the discussions at the meeting since it was private. However, Devon Energy CEO Rick Muncrief summarized the main takeaway as a general concern there is very little extra capacity in world oil markets right now.
Continue reading
Did you happen to catch President Biden’s State of the Union show? We didn’t. We couldn’t hack watching a doddering old fool spout nonsense for more than an hour. But we did catch the highlights from the speech. One highlight, in particular, was really funny. Biden was bashing Big Oil for “record profits” (he’s such a fool), and then, much to the horror of his handlers, Biden went off script and said that “We’re going to need oil for at least another decade.” The entire chamber erupted in laughter at such an asinine statement, which caught the old fool off guard, so he quickly added, “…and beyond that.”
We’ve heard the peak oil theory peddled countless times since we began publishing Marcellus Drilling News in January 2009. Every single time predictions that the world (or the U.S.) has reached its limit and will now begin using less oil have been astoundingly wrong. Yet every few months, you’ll read another “expert” or guru announce this it…we’ve finally reached peak oil. Have we? NO. Not even close. When will we? We’ve got an answer.
Here’s a sobering (and startling) prediction: Within the next year, crude oil will likely hit $200 a barrel, translating to $10 a gallon at the pump. It will result in protests and demonstrations across the country and around the world. That’s the prediction of veteran financier and hedge fund manager Salem Abraham, who founded Abraham Trading Company over 30 years ago. Abraham says the so-called Inflation Reduction Act (IRA) coupled with a chronic underinvesting in fossil energy companies is why the price of oil is about to go haywire.
Even with huge profits the likes of which haven’t been seen since, well, maybe forever–fossil energy companies in the U.S. are still having a tough time attracting private investment money. According to the Wall Street Journal, private equity raised $2.98 billion across seven oil and gas funds in the first half of the year. That is 40% lower than the amount raised in 12 oil and gas funds for the first half of 2021–when prices for oil and gas were half what they are now. But over in Europe, private equity investment in oil and gas is picking up!
Enverus, a leading global energy data analytics and SaaS technology company, earlier this week released Macro Forecaster, a new report that assesses the continued impact of COVID-19, the Ukraine war, and the weakening global economy on near-term oil and gas balances. Enverus predicts the price of oil will be somewhere in the range of $80s or $90s per barrel by the end of this year. The company also predicts natural gas will slump to about $4.50/MMBtu by next summer.
U.S. Senator Joe Manchin, Democrat from West Virginia, did the country (and his own party) a huge favor when he pushed the temporary pause button on committing trillions of dollars of new inflationary spending on Big Green programs called the Biden Build Back Better bill (see 
You know we’re not big fans of the American Petroleum Institute (API), an organization run by Big Oil companies (like Exxon and Chevron) that actively works against the best interests of smaller independent shale energy producers. API supports an oil and gas-killing carbon tax, as just one example of its fossil fuel heresy. Yet the API has suddenly grown a spine and is attacking President Biden’s pathetic begging trip to Saudi Arabia to ask OPEC to increase oil production. API even released a new video inviting Biden to visit American energy sites following his failed Middle East visit to learn how American energy companies can solve the problem of high gasoline prices.
More than half of the refining capacity in the U.S. is located on the Gulf Coast, where more gasoline and distillate fuel is produced than used. On the other hand, the U.S. East Coast has very little refining capacity but is often the location where the most gasoline is consumed. Consequently, the East Coast receives fuel from other regions, predominantly the Gulf Coast, and imports fuel from other countries. It seems to us that there is a big opportunity to build new refineries along the East Coast.
Next month President Biden is heading to the Middle East and is scheduled to meet with Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS)–the man who allegedly ordered the murder of Saudi Jamal Khashoggi, a reporter for the Washington Post. Biden previously called MBS a “pariah” following the Khashoggi episode. Why is Biden now meeting with him? To beg for more oil production. A group of 27 energy associations, including the American Petroleum Institute (API) and the Marcellus Shale Coalition, sent a letter to Biden inviting him to tour American energy infrastructure before he boards the plane to meet with MBS.
We’ve tackled the issue of why there isn’t more oil and natural gas drilling happening in the Marcellus/Utica and beyond even with prices for both commodities through the proverbial roof. Not that many years ago prices were a fraction of what they are now and yet the drilling industry would not, could not stop drilling new wells, flooding the market with product and crashing prices. Now, it’s the reverse! It seems nothing will incentivize drillers to drill any new wells beyond enough to keep production steady. Why? An article in the Wall Street Journal seeks to answer the question, definitively.
It’s been about 3½ years since Encino Energy in partnership with the Canada Pension Plan Investment Board closed on buying Chesapeake Energy’s Ohio Utica assets for $2 billion (see