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17 December 2013

I hadn’t thought of this, but after rushing through the energy bill (and the requisite constitutional changes … including ratification by two-thirds of the state legislatures in a record 84 hours). it’s becoming clear that there isn’t any crying need for more North American oil

An influx of Mexican oil would contribute to a glut that is expected to lower the price of Brent crude, the benchmark for more than half the world’s crude that has averaged $108.62 a barrel this year, to as low as $88 a barrel in 2017, based on estimates from analysts in a Bloomberg survey. Five of the seven analysts who provided 2017 forecasts said prices would be lower than this year.

The revolution in shale drilling that boosted U.S. oil output to a 25-year high this month will allow North America to join the ranks of the world’s crude-exporting continents by 2040, Exxon said in its annual global energy forecast on Dec. 12. Europe and the Asia-Pacific region will be the sole crude import markets by that date, the Irving, Texas-based energy producer said.

As with gold in the 16th century which benefited neither the native people nor, in the long run, the Spaniards, the “discovery” of all this “new” oil is not going to make the exploiters rich, but rather all of us poorer.

3 Comments leave one →
  1. 18 December 2013 10:25 am

    I don’t know if you watched the news last in in Mexico but the map showing the states that had passed the oil reform was far more than the minimum needed. In fact, it looked like the usual suspects did not pass the idea. Tabasco ( what a surprise Lopez Obrador) and Oaxaca and Chiapas, two states that besides refusing to allow education to children are also the two most poverty stricken states in the Republic.

    • 18 December 2013 5:50 pm

      What do you mean they “refuse to allow education to children”‘ That people disapprove of a new theory of educational administration is not refusing education. The states ratifying the amendment (and not all state legislatures brought it up for a vote) were those with PRI and PAN majorities.

  2. NORM permalink
    18 December 2013 12:19 pm

    The current numbers from Ohio’s oil&gas fields are an eye opener: Total gas&oil production from the new shale fields are about 20% of the state’s total production. There are 60 new shale wells producing with about twice that capped waiting on pipeline hookups. The state has over 60,000 oil&gas wells in production, 20% of the production is coming from 60 wells. There are over 500 wells that have cleared the permit process, the oil&gas companies have leased enough land for 6 or 7 thousand wells. My folks got a lease check for around $50,000 to lease their 15 acre plot of land. BP bought the lease, the terms dictate that they must drill within five years or lose their rights to drill. Most of the new leases are of that nature. The current rate of royalties is 18% of the net, one of the local wells that has a pipeline hooked up to it, is paying $17,000 per acre of lease. There are better wells in the southern part of the state, land is leasing for 8-10 thousand an acre in some areas.
    The directional drilling is the difference. In my days in the local oil fields, we drilled down 5000 feet and fracked the bottom of the well. Today, they drill down 7000 feet , go sideways for a mile and frack 50 times along the sideways part of the bore; makes an Ohio well into a Texas well…
    The kicker is that the shale gas is full of naturally occurring hydrocarbons that we have had to produce in refineries from coal and oil in the past, the kind of things they make plastic and paint out of, LP gas, solvents, the generally refined type things that are expensive to refine. The shale gas here in Ohio requires a special separator plant that costs about a billion dollars to build but the old way took one that cost as much as 5 billion dollars.
    The next ten years will be interesting.
    I’m enjoying your reporting of the new rules in Mexico concerning oil ownership and production. Keep it coming.

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