Shale Revolution Changes Everything

cartoon oilOpec was on the verge of claiming victory over its North American rivals last night after its strategy of squeezing out the shale industry by flooding the markets with oil appeared to be vindicated. The oil producers’ cartel said that falling prices would force lower production from its rivals by the end of this year, with American and Canadian producers particularly affected. –Marcus Leroux, The Times, 19 January 2016

When oil prices tick up, thousands of profit-seeking investors make individual decisions to turn each shale factory’s switch to “on.” That’s how the U.S. so rapidly achieved, from 2009 to 2015, the record-breaking rise in production of four million barrels a day. Shale 2.0, when it comes, will be even better. The technology is advancing at a speed usually associated with Silicon Valley. Just as a new Internet ecosystem rose from the ashes of the dot-com crash, Shale 2.0 will emerge—and for the same structural reasons. –Mark P Mills, The Wall Street Journal, 19 January 2016

Even as the U.S. rig count has retreated like Napoleon from Russia, shale remains the key to understanding the global oil landscape. Consider that despite all of the turmoil in key oil-producing regions, namely the Middle East, oil prices have not spiked. Nothing — not Russian intervention in Syria, not ISIS attacks on Libyan oil infrastructure, not the torching of the Saudi Embassy in Tehran — has been able to stop the oil price collapse. What is going on here? Does turmoil in the Middle East suddenly no longer matter? The American shale oil model has changed the world oil marketplace for the foreseeable future. Shale producers’ ability to quickly throttle down or ramp up upstream investment spending, drilling and production, as oil prices change, is viewed as an effective shock absorber against any potential oil price spikes. Mark J Perry, Investor’s Business Daily, 15 January 2016

The full measure of the shale oil model’s impact will be tested when the current crude glut clears and geopolitical risk returns, which is a near certainty. As oil prices eventually rise, will production from America’s shale oil fields rise in tandem and absorb the shock? The next president is likely to find out, and the answer will almost certainly be “yes.” And maybe that president will do something President Obama has never done — acknowledge the game-changing shale revolution as the most extraordinary energy success story in U.S. history. Mark J Perry, Investor’s Business Daily, 15 January 2016

The British government is set to remove another obstacle to the exploration for shale gas deposits in the UK. Fracking firms will no longer need planning permission to drill exploratory boreholes and set underground explosive (sic) charges. The government says the same safety rules for oil and gas exploration will apply – and the use of explosives will be limited to avoid nuisance. —BBC News, 12 January 2016

U.K. ambitions to build small modular nuclear plants may be realized as soon as 2025, according to Fluor Corp.’s NuScale unit, which is seeking to be a pioneer in the market. NuScale plans to submit its 50-megawatt reactor design for approval by U.S. nuclear authorities towards the end of 2016. That would leave it well-placed to seek the U.K. equivalent, called Generic Design Assessment, in 2017, Tom Mundy, executive vice president for program development at the U.S. company, said in an interview in London. “Assuming the GDA is submitted and takes four years, we’d be looking at approval in 2021,” Mundy said. “There’s then a 36-month construction time, so it’s plausible to expect that if all things line up, we could have a U.K. plant built by 2025.” –Alex Morales, Bloomberg, 18 January 2016

Britain’s renewable energy industry is about to “fall off a cliff” just at the point it would come into its own, analysis for The Independent reveals. The dour forecast comes as the industry celebrated a record-breaking year in 2015, with billions of pounds poured into solar and wind energy and more homes powered by nature than ever before. But experts have warned this is all about to grind to a halt as the Government abandons its commitment to green energy and instead invests in fracking and nuclear power. After 2020, the new renewables infrastructure will collapse to almost nothing because of a lack of investment and the blossoming industry could wither, the figures suggest.  –Tom Bawden, The Independent, 18 January 2016

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    Amber

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    When the British government stops using the tax payer piggy bank and added debt to prop
    up bird blender and solar panel companies let’s hope more people won’t have to chose between food and fuel .

    It is doubtful Britain could be as incompetent as other countries who have propped up failed renewable companies only to see them flame out even with subsidies in the form of grants ,loan guarantees, and tax credits . A lot to late for many who have paid the price with their lives due to stupid policies .

    If the stock market keeps dropping the “blossoming ” renewable industry will fall on it’s own sword with a little help from investors who already see the writing on the wall .

    In any event most of the insiders have already made their money long before now . Pension plans holding onto these dogs need new management if they want to continue to hand bail a Titanic .

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