Nick Cook, Editor
Issue #363 | March 9, 2022
The crisis in the Ukraine continues to highlight the need for U.S. shale to increase production (even Elon Musk called for an immediate increase in U.S. shale production!). Unfortunately, constraints about which we were already aware (sand, trucking, labor) still present massive challenges. Over the years, U.S. shale producers have surprised everyone with their innovations, investment, and resourcefulness, but I’m not sure what can be done to overcome the current limitations. That said, if anyone can figure it out it is this group. The world needs it and, for once, the U.S. oil & gas industry can play the hero AND be recognized for it. Let’s see what can be done.
And now, the news…
“There decades when nothing happens; and there are weeks when decades happen.” – Vladimir Ilyich
President Joe Biden’s ban on Russian oil imports puts new pressure on U.S. drillers to help fill a supply shortfall that has sent crude prices to the highest levels since 2008.
U.S. shale producers are unlikely to replace banned Russian oil imports due to a shortage of sand, equipment and labor and a dwindling backlog of wells waiting to be completed, energy executives and analysts said on Tuesday.
Even Elon Musk has called for an immediate increase in U.S. oil production.
The deal between the companies, which had filed for Chapter 11 bankruptcy in 2020 following a crash in energy prices due to the pandemic, comes amid record high crude prices.
Output in the U.S. shale patch is “re-booming” this year, with research and data analysis firm Lium LLC forecasting production will surge by more than 1 million barrels a day.
We continue to hear market anecdotes signaling further tightening in frac sand availability leading to continued price momentum for suppliers.
Bottom line: A powerful mainstream narrative shift encompassing public opinion, policy, and capital markets is underway with positive implications for U.S. oil and gas production, producers, and service providers…
Exxon Mobil CEO Darren Woods says crude oil and energy exports from the Permian Basin and other parts of U.S. shale will help stabilize markets and strengthen global energy security.
Among the challenges are the age of the wells, labor shortages and securing raw materials.
America’s shale industry is looking to ramp up production, but it is facing two major hurdles that could curb its trajectory.
The assets include real estate of 1,100 acres, a fully functional and staffed mine and processing plant capable of 2 million tpy of sand, fixed storage, rail transload with unit-train capability (i.e. loading/unloading 100 railcar shipments), mobile equipment and active supply chain contracts.
Tight sand is becoming a major factor in the pressure pumping market. Here are 6 ways this is playing out:
Although the mainstream press will focus on the massive spot oil price spike (shock and awe of $130/bbl post Biden’s Russian oil embargo today), it’s important to keep in mind the context of the 12-month strip and futures curves when extrapolating the oil price move’s impact on oilfield activity.
“Activity levels are showing continued strength and we are seeing higher sales prices and operating margins in 2022.”
As you can see in our weekly rig count data below, this was a very quiet week for the U.S. rig count (land oil count down a couple, land gas count up a couple) – in STARK contrast to the macro which is ablaze with chaos.
Russian invasion of Ukraine is contributing to oil prices surpassing $100 per barrel for first time since 2011.
Recently, Muadinoon sought to improve the quality of its products through further washing and cleaning of the mined sand.
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