Instead of declaring a victory in seizing market share back from their common rivals in the form of US shale, the main protagonists in Moscow and Riyadh are more likely to cause long-lasting damage to petrodollar economies already under pressure from demand destruction caused by climate change action and the onslaught on the global financial system from the coronavirus pandemic.:
"U.S. production grew 2.1% in April to 12.16 million barrels a day. Booming shale production from places like the Permian basin of West Texas have enabled U.S. oil output to overtake Saudi Arabia and Russia."
"Crude output from the Permian is expected to jump 50% by 2025, according to BloombergNEF. ESAI Energy forecasts crude and condensate from the Bakken, another prolific play, will surpass record output into next year."
"The US holds more oil reserves than Saudi Arabia and Russia, the first time it has surpassed those held by the world’s biggest exporting nations, according to a new study.
"Rystad Energy estimates recoverable oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264bn barrels. The figure surpasses Saudi Arabia’s 212bn and Russia’s 256bn in reserves.
"The analysis of 60,000 fields worldwide, conducted over a three-year period by the Oslo-based group, shows total global oil reserves at 2.1tn barrels. This is 70 times the current production rate of about 30bn barrels of crude oil a year, Rystad Energy said on Monday."
"The current drop in oil prices cannot be explained only in terms of market factors. To a great extent, the pricing of oil is an instrument of political pressure on oil-reliable economies."
"The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.
"U.S. oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday [June 10, 2015]. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.
"The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.
"'We are truly witnessing a changing of the guard of global energy suppliers,” BP Chief Economist Spencer Dale said in a presentation. “The implications of the shale revolution for the U.S. are profound.'
"Saudi Arabia says its strategy of squeezing high-cost rivals such as US shale producers is succeeding ..."
"... The kingdom’s production rose to a record high of 10.3m barrels a day in April and there is no sign that it plans to reverse its policy ..."
"... 'There is no doubt about it, the price fall of the last several months has deterred investors away from expensive oil including US shale, deep offshore and heavy oils,' a Saudi official told the Financial Times in Riyadh, giving a rare insight into the kingdom's thinking on oil strategy."
"The International Energy Agency, the world's leading energy forecaster, on Wednesday released data backing up the Saudi position. The agency said that with the number of rigs running in the US plunging by 60 per cent in response to lower oil prices, US shale oil production had 'buckled' in April, 'bringing a multiyear winning streak to an apparent close'."
"Saudi officials later explained that the policy was designed to put pressure on producers that require a higher oil price to be economic such as US shale drillers and companies operating in Brazil’s offshore fields. These they believed would be the first to collapse in a survival of the fittest as prices plunged."
"Expectations are already rising that the market could soon start to tighten by midyear. The IEA said on Wednesday that was one of the reasons for the recent rally in the oil price: having crashed from $115 a barrel last June to almost $45 in January, Brent, the international crude benchmark, is now back up at around $68."
"Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want -- and are achieving -- further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG."
"Crude fell 48 percent last year and has declined 35 percent since OPEC affirmed its output target on Nov. 27. That decision, while squeezing revenues for OPEC members in 2015, aims at preserving their market share for years to come."
"U.S. crude production totaled 9.13 million barrels a day last week [January 8, 2015]"
"The price decline will cost all 12 OPEC members a total of $257 billion in lost revenue this year, according to the EIA."
"OPEC won’t reverse course even if oil prices fall as low as $20 a barrel or non-OPEC countries offer to help with production cuts, Saudi Arabian Oil Minister Ali Al-Naimi said in an interview with the Middle East Economic Survey on Dec. 21."
"The global oversupply is 2 million barrels a day, or 6.7 percent of OPEC output, Qatar estimates."
" In 1986, Saudi Arabia opened its taps and sparked a four-month, 67 percent plunge that left oil just above $10 a barrel. The U.S. industry collapsed, triggering almost a quarter-century of production declines, and the Saudis regained their leading role in the world’s oil market."
"Rigs targeting oil in the U.S. declined for the sixth time in seven weeks, by 17 to 1,482 last week, Baker Hughes Inc. said on its website on Jan. 5. There will be a serious decline in U.S. shale oil investment in 2015, Fatih Birol, chief economist of the International Energy Agency in Paris, said on Dec. 22."
"... A Saudi prince [Prince Alwaleed, owner of international investment firm Kingdom Holding] has warned that his oil-reliant nation is under threat because of fracking technology being developed elsewhere around the world.
"... His warning comes as rising shale energy supplies in the United States cut global demand for Saudi oil.
"In an open letter to his country's oil minister Ali al Naimi and other government heads ... Prince Alwaleed said demand for oil from Organisation of the Petroleum Exporting Countries (Opec) member states was "in continuous decline".
"... He added that the world's biggest crude oil exporter should implement "swift measures" to diversify its economy.
"... his warning reflects growing concern in private among many Saudis about the long-term impact of shale technology.
"... Prince Alwaleed told Mr Naimi in his open letter ... that ... "Our country is facing a threat with the continuation of its near-complete reliance on oil ..."
"... The prince said Saudi Arabia should move ahead with plans for nuclear and solar energy production to cut local consumption of oil.
"The shale oil threat means Saudi Arabia will not be able to raise its production capacity to 15 million barrels of oil per day (mbpd), Prince Alwaleed argued.
"Current capacity is about 12.5mbpd ...
"... In a report earlier this month, Opec forecast demand for its oil in 2014 would average 29.61mbpd, down 250,000bpd from 2013. It cited rising non-Opec supply, especially from the US."
"Over the next five years, the US will account for a third of new oil supplies, according to the International Energy Agency (IEA).
"The US will change from the world's leading importer of oil to a net exporter.
"... The IEA said it expected the US to overtake Russia as the world's biggest gas producer by 2015 and to become "all but self-sufficient" in its energy needs by about 2035.
"... The rise in US production means the world's reliance on oil from ... Opec (the Organization of the Petroleum Exporting Countries), would end soon, according to the report.
"... The sharp rise in US oil production is largely thanks to shale oil, a product many have hailed as the saviour of the US energy market.
"... But critics of shale oil point to environmental concerns such as high water use and possible water contamination, the release of methane and, to a lesser extent, earth tremors caused by drilling."
Lord Browne, the former boss of BP and a current director of fracking firm Cuadrilla says in the BBC article "Shale will free US from oil imports, says ex-BP boss" that fracking carries real risks and that, "stronger government regulation to prevent any bad practice" is needed.
Lord Browne said: "Shale gas has a very bad reputation, as a result of the weak players cutting corners ... Regulation tightening would be welcome."
"We are moving away from a world dominated by a few energy mega-suppliers, such as Russia, Saudi Arabia, and Venezuela, and toward one in which most countries have some domestic resources to meet their energy needs and can import the balance from suppliers in their own neighborhood."
"The revolution in unconventional energy production results from technologies that make drilling and extraction from underground shale formations increasingly easy and cheap."
"... the United States is using innovative energy technologies ever more frequently to extract shale oil, tight oil, and methane from coal beds. Accordingly, the share of U.S. oil consumption that is imported from abroad has fallen sharply, from about 60 percent in 2005 to less than 45 percent this year. It will likely continue to decrease until the country, or at least North America, is energy self-sufficient."
"... unconventional energy technology has not only arrived -- it is here to stay. As new lines are drawn on the energy map of the world, many of the oldest and most stable geopolitical truths will be turned on their heads."
SUMMARY:
"... U.S. production to rise 7 per cent this year to nearly 11 million barrels a day
"... Analysts [claim] that ... America will ... overtake Russia and Saudi Arabia ... in another decade
"... Production is expected to rise by 7 per cent to ... an average of 10.9 million barrels a day this year [2012]
"... Energy Department officials say [production] will average 11.4 million next year [2013]
"... current Saudi output [is] 11.6 million [barrels a day]
"... [US output] could reach 11.4 million barrels a day in 2013 - rivalling Saudi oil output
"... fourth straight year of [US] crude increases and the biggest single-year gain since 1951
"... Citibank forecasts it could reach 13 million to 15 million barrels per day by 2020
"... [US consumption is] around 18.7 million barrels per day
"... imports could fall by half by the end of the decade
"... Increased drilling is driving economic growth in states such as North Dakota, Oklahoma, Wyoming, Montana and Texas
"... The oil and gas drilling boom, which already supports 1.7 million jobs, is expected to lead to the creation of 1.3 million jobs across the U.S. economy by the end of the decade.
"... The most prolific of the new shale formations are in North Dakota and Texas. Activity is also rising in Oklahoma, Colorado, Ohio and other states.
"... Production from shale formations is expected to grow from 1.6 million barrels per day this year to 4.2 million barrels per day by 2020.
"... these new formations will yield more oil by 2020 than major oil suppliers such as Iran and Canada produce today.
Earth & Moon from Galileo spacecraft as it was leaving Earth space. Photo: NASA; All mission costs paid for by the American taxpayer.
Earth & Moon from Mercury as imaged by the robotic spacecraft Messenger. Photo: NASA; All mission costs paid for by the American taxpayer.
Earth from Saturn as imaged by the robotic Cassini spacecraft. "Far in the distance, visible on the image left just above the bright main rings, is the almost ignorable pale blue dot of Earth." See the full image here. Photo by CICLOPS, JPL, ESA, NASA. Majority of mission costs paid for by the American taxpayer.
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