Is anyone else looking over their shoulder and worrying about this:
With the macro trends of electric vehicles (ultimately powered by nat gas and coal plants, but not oil), shared vehicles a la Uber, the push for renewables, for oil the very wide disparity in lifting costs and breakevens, and so forth, might much of the oil in our mineral interests be stranded in the end? That it’s a game of musical chairs and, though seemingly the hottest play on Earth at one time, the economics of the Eagle Ford might leave many of us without a chair when the music stops? That is, with oil still in the shale but no end-use interest in it due to the economics and competing technologies and social trends.
Oil prices for the last 100+ years have been unpredictable, up and down, and even within the last eight years have swung from $100/bbl to $40/bbl, now near the low end of that range. In the past, one could with much assurance be confident that demand would always be there and that prices would recover because of global economic growth. But now, there are some macro trends that to me superimpose a negative slope to the random ups and downs of pricing so that, even with the inevitable upward geopolitical spikes in price, the Eagle Ford may not be economical at all at some point. Just look at how fast E&P companies turned their attention to the Permian. And the Saudis have nothing else but oil and very low production costs.
I’m practicing crystal ball-gazing without a license, as I do petroleum engineering. Does anyone else have any thoughts? I’d be eager to learn others’ thinking.
Eagle Ford is predominantly a single bench play although there are some areas where there are two or three benches (i.e. Upper EF and AC). Permian is multiple benches with anywhere from 3 to 6+ depending where you are in the Midland and Delaware Basins.
EF trend will have most of the productive area HBP since initial drilling is in the deepest bench - so no vertical Pugh clauses causing deeper targets to be released back to landowner. I single EF well on a unit will produce 20-30 years and hold everything before new drilling is needed to maintain the lease.
But with all that being said, the trends toward non oil usage and renewables as well as gas (LNG) will have a major impact on oil usage and prices. But not in our lifetimes (but I bet my grandchildren see some interesting things!).
I have to wonder how the OPEC countries and non OPEC big oil producers are looking at the future with respect to this issue. Saudi et al has tons of oil - but what if market for it dissipates? Oman (non OPEC) is pushing gas development and other industry. Qatar dropped out of OPEC to focus on its massive LNG potential (they are much better situation globally to market their gas than those LNG sources in the USA).
There will be some interesting times - and these will be the source of good discussions!
May be time to have some "Forums" up in the Hill County sitting up on a ridge and drinking wine as we contemplate the future of O&G industry and other things!
I like the Hill Country Forum idea, Mark...maybe we can make that happen during Longhorn football season next Fall!
Could become a special and regular event!
LONGHORN football??!! NFW. How about the Owls?
I think the greatest crime ever in college football (other than the gang rapes, of course) was the dissolution of the Southwest Conference. I don't even know who anybody plays any more. Big 12? Big 10? Big 8? Too damn confusing.
Give me the Southwest Conference any day.
The Southwest Conference was great. As a kid on n Saturdays during football season, I would be out in my front yard, wearing my James Saxton Longhorn uniform throwing passes to myself while listening to Kern Tips broadcasting the Southwest Conference Game of the Week on the Humble Oil & Refining Network. Good times!
Then SMU happened. Players being paid, with governor Bill Clements right in the middle of the pay for play scandal. A sad ending to a great conference.
Agree that today's football landscape as to who is playing who is hard to follow as well as non sensical. Old rivalries not being played.
Regardless of who you root for, A&M vs UT was a classic for many reason!
And Rice every once in a while knocking off one of the big boys was always a blast!
My alma mater (Miami) was an independent back in my playing days - so going all over the country to find games. Now they have bounced around different conferences for the past 10 years.
The almighty $$$$$$$$ controls everything!
Ha ha. I like the idea of vino and discussion.
Alan and Mark,
Yes, the Aggie-Longhorn game every year ON Thanksgiving Day was a classic. I'll bet you $5.00 that it is the only one concerning which a Broadway play and movie ("The Best Little Whorehouse in Texas") has ever been or will ever be written.