Shale revolution! The US oil industry ushered in a completely unexpected second spring

Abstract Trump has finally fulfilled an important campaign promise – withdrawing from the Iranian nuclear deal. However, the distance from the real re-sanction of Iran is still a grace period of 90-180 days. Over the past year or so, the 72-year-old Trump battled the land, smashed the European Union, and smashed the North, and Canada...

Trump has finally fulfilled an important campaign promise - withdrawing from the Iranian nuclear deal. However, the distance from the real re-sanction of Iran is still a grace period of 90-180 days.

Over the past year or so, the 72-year-old Trump has fought against the European Union, the European Union, the North, the United States, the United States, the United States, and Australia. Tearing Iran, tearing North Korea, tearing Cuba, tearing Qatar, and smashing Syria. In the British, French, German and Russian, the Prosecutor’s Lawyers’ Democratic Party, the United Nations World Cup, and the domestic and foreign fights, in order to launch warnings against 193 countries in Israel, is really a fighting force.

Except for the battlefield, the author said yesterday that behind the United States' efforts to unilaterally provoke new sanctions, it is worthwhile to have a big abacus of Trump and a great interest in the United States.

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Before Trump announced, Brent oil prices were already at $75, while WTI was at $70, up by about half from last September's $50, and rising to the highest level in nearly four years.

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The main reasons for the rise in oil prices are that the three major economies of the United States, China and Europe have recovered and prospered, leading to strong demand. Second, OPEC and Russia and other major oil-producing countries have insisted on reducing production and tightening supply. Third, the geopolitical pattern in the Middle East has fluctuated. The potential risks posed by the situation in major oil producing countries in Latin America.

[2018, the sudden increase in the production of oil

In 2017, the main theme of the international oil market was the reduction of production by Russia and OPEC, “destocking, de-capacity”.

After a few years of price wars, Russia and Saudi Arabia, which are deeply involved in the Middle East disputes, including Iran, are unbearable and are more willing to adopt strategies to reduce supply and raise oil prices. The initial spoiler of the market, the US shale oil, was also delayed due to serious losses.

The Saudi King and Putin finally finally shook hands at the end of 2016. Russia, Mexico, Oman and Azerbaijan and other 10 non-OPEC and 14 OPEC countries reached a "reconciliation" and joined the reduced production camp.

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According to the agreement, OPEC's overall production reduction target is 1.2 million barrels per day, and non-OPEC production reduction countries have reduced production by 600,000 barrels per day. In fact, they have reached 1.8 million and 700,000 barrels respectively, a total of 2.5 million barrels, accounting for 2.5% of the world's nearly 100 million barrels of capacity.

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The parties began a serious policy of limiting production and insuring prices, and finally pulled the oil price back from $40 to $70. But as soon as 2018 entered, the main theme was the sudden increase in production in the United States.

Since the beginning of 2018, after the annual rectification of major refineries in the United States, US crude oil production has increased by 700,000 barrels from 1.89 million barrels per day to 10.59 million barrels per day in three months. The United States surpassed Saudi Arabia and Russia to become the world's largest oil producer.

This is also the highest record set in 1970, the peak of the traditional oil and gas in the United States nearly half a century ago.

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[US shale oil opens the second cycle]

What is the reason? The rise in US crude oil production is naturally mainly due to emerging shale oil.

The four core shale oil and gas in North America are the Permian and Eagle Ford in the southwestern part of Texas and southeastern New Mexico, and the Bakken area in the western part of North Dakota. Virginia and the Marcellus Basin in Pennsylvania.

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Among them, Marcellus is mainly shale gas, and the Texas and Bakken regions are mainly shale oil. Texas oil production history has been around for nearly a hundred years, with a well-developed oil and gas pipeline network and infrastructure, where shale oil development costs below $40 a barrel.

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However, in the inland North Bakken area of ​​North Dakota, the original lack of transportation pipelines, most of the crude oil can only take the railway, this backward transportation method has greatly increased the final cost of the already high shale oil. The development cost is close to $50, which is not counting the shipping costs. In the past few years, the new mining was almost stagnant.

Accelerating the construction of the Dakota pipeline is the second presidential executive order signed by Trump on the 4th day after taking office, which shows its importance.

But in June last year, the Dakota pipeline, which lasted three years, was finally built. The pipeline has a total investment of about 3.8 billion US dollars and a total length of about 1880 kilometers. It extends from the Bakken area to the southeast to southern Illinois and accesses the US oil backbone network.

After the pipeline was commissioned, the shale gas in the Bakken area also had a cheap delivery channel, coupled with the recovery of oil prices, which stimulated a new round of oil and gas development in the region and the United States. The production of traditional offshore crude oil along with Texas and the Gulf of Mexico also reached a record high.

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In the United States, the production of wells is collected, and because of the rapid decay of shale oil and gas, it is necessary to continuously drill a large number of wells.

In March 2018 alone, 1,197 wells were put into operation in the United States in a single month, which was more than twice the number of production wells in the United States in the same period in March 2016. In the previous two years, the shale oil, which was hit hard by the lowest oil price of more than 30 US dollars, was started in the second round.

Basically, it will not take long before the US production will exceed the 11 million barrels per day of new customs, and it may soon break through to 12 million barrels per day.

[A feast of the American oil industry after half a century? 】

This scene was completely unimaginable ten years ago.

Since 2008, US crude oil production has increased from an average of 5 million barrels per day to nearly 9 million barrels, and has jumped to 10.5 million and 11 million barrels, returning to and exceeding the peak level of half a century ago. Because of the shale revolution, the US oil industry ushered in a completely unexpected second spring.

Advances in horizontal drilling, hydraulic fracturing and seismic imaging techniques that have been explored for decades have led to the production of shale oil that was previously unexploitable, helping the United States become the world's new leader in oil production.

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It is worth noting that hydraulic fracturing shale oil and gas exploration technology has been improving, continuously improving efficiency and reducing costs.

The modern oil industry was born in the United States more than 100 years ago, creating the legend of Rockefeller; 50 years ago, the Middle East oil mining, the world oil center moved from the United States to the Middle East, wrote the myth of the rich in the Middle East.

Nowadays, the rise of unconventional oil and gas, the rise of North American shale oil and gas, and the focus of world oil supply may move back to North America from the Middle East. As for what "the United States is extremely dependent on Middle East oil", it is a time of ruin.

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