Insight and inspiration in turbulent times.
Today, the shale boom of the 2010’s is officially bust, battered not only by the ’s outsized failure to control COVID-19 outbreaks and an oil price war in which foreign producers proved their ability to steer oil prices, but also a wave of multi-billion dollar write-downs by oil giants
Is it misleading to laugh at your company’s investors if you know the estimates you are giving them are inflated, but because you own the stock that benefits from those estimates, you do it anyway? Is that fraud? Perhaps that depends on if you get you get ethics lessons from Andrew Fastow and Jim Hackett.
I believe we will see a fairly rapid decline in the production of shale oil and gas in the U.S. as a large number of fracking companies go bankrupt. I don’t see investors again being taken in by the promises of industry corporate executives, especially when the best drilling acreage is long gone. That is not a message I expect to hear on NPR.
Oil prices collapsed Monday amid falling energy demand and the global response to the novel coronavirus outbreak, as the number of confirmed COVID-19 cases worldwide reached over 113,000. On Friday, talks disintegrated inside the so-called OPEC+ alliance, which includes Organization of Petroleum Exporting Countries (OPEC) as well as non-OPEC members like Russia.
In mid-January, Adam Waterous, who operates the private equity firm Waterous Energy Fund, made a prediction about the crown jewel of the U.S. shale oil industry, the Permian shale play that straddles Texas and New Mexico.
“We think we are at or near peak Permian,” Waterous told Bloomberg. “The North American oil market has been grossly overcapitalized, which is not sustainable.”
After years of patience as the fracking and tar sands industries continued to pile up losses, investors are understandably tired of losing money.
A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) and the Sightline Institute detail the “alarming volumes of red ink” within the shale industry.
Most people probably aren’t familiar with the acronym ZIRP. It stands for zero interest rate policy and is the policy that unintentionally created the American fracking bubble — just one of its many consequences. And while most people may not know much (if anything) about ZIRP or the Federal Reserve (Fed), it is likely that they are aware of the impact this policy has on their own lives.
Given an analysis of play fundamentals based on current drilling data, there is no credible basis for the highly to extremely optimistic forecasts offered by the EIA. Actual production is likely to be far less. Assuming the EIA forecasts are accurate in a long-term energy plan is likely to end very badly.
Richard Heinberg joins Sustainable Nation to discuss:
The current state of energy and its contributions to the climate crisis
The shale gas and tight oil bubble
Community resiliency
The transition to a fossil fuel free future
Recommendations and advice for sustainability leaders
The frequency of Internet searches for the term “peak oil” has waned dramatically in recent years; now even the number of articles announcing the “death” of peak oil has dwindled, so universal is the assumption that the concept is completely debunked. Why bother beating a dead horse? With supreme irony, it could be within the next few years when the maximum-ever rate of world oil production is actually achieved, to be followed by terminal decline.
As my regular readers know, I’ve been talking for quite a while now here about the speculative bubble that’s built up around the fracking phenomenon, and the catastrophic bust that’s guaranteed to follow so vast and delusional a boom.
