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Originally Posted by DoOrDoNot
I'm not saying you don't get oil from fracking, oil is found in a lot of wells but its mostly natural gas in the wells that are being fractured. It's certainly not an 'infinite supply of oil' and fracking has not given new access to it. Fracking has been around for a long time.
Everything I know about fracking, which certainly isn't expert level, leads me to disagree with the above. Fracking is producing large volumes of oil, and the finds aren't finished. For example:
Large-scale fracking comes to the Arctic in a new Alaska oil boom
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Over the past year oil companies have discovered volumes on Alaska’s North Slope totaling as much as five billion barrels or more of recoverable oil. This is a 14 percent increase in U.S. proven reserves, based on recent estimates, which is no small thing.
One discovery, “Horseshoe,” made this year by the Spanish company Repsol in partnership with Denver-based Armstrong Oil and Gas, is the largest new U.S. find in more than 30 years. It is estimated at 1.2 billion barrels, and comes just after a find by ConocoPhillips in January, called “Willow,” evaluated at 300 million barrels.
Both of these are dwarfed by “Tulimaniq,” a spectacular discovery drilled by Dallas-based Caelus Energy in the shallow state waters of Smith Bay, about 120 miles northwest of Prudhoe Bay, in October 2016. Caelus has confirmed a total accumulation of as much as 10 billion barrels of light, mobile oil, with 3-4 billion barrels possibly recoverable at current prices of about US$50 per barrel.
Those numbers add a million barrels a day at $50 for 10 years. And they're not the last find. There are large now capped wells all across the US just waiting to come back online for a minor price rise.
$60 may or not be likely but your view of the abundance of oil from fracking seems off. For all intents and purposes, the amount of oil it can add on top of global volumes for well over a decade makes it essentially an infinite supply, as far as prices are concerned. And one that can come online quickly, more and more, at $50, $60, $70.
The above is a not-trivial amount of oil to add to global markets, and whether it also produces a bunch of natural gas seems irrelevant. That graph above can continue and grow for 10+ years, probably 20+ if you include advancing technology.
Then add in the vast shale sands, which can be had for around $60.
I agree we'll eventually drift to the cost of production, which is likely around $60, all things considered, but the cost of production isn't high, and it's by no means a certain thing given the pessimism that the above will create, and technological advancement.
It is also a bet on no global recession happening.
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Oil companies have ways of being nimble in hard times, such as selling assets, adjusting production levels and seeking mergers. Now rapid innovations in drilling, seismic imaging and data processing enable well-run companies to cut costs in multiple areas. Some firms can make money today at prices as low as $35 to $40 per barrel or even lower. This includes drilling offshore and fracking onshore.
The link above is an interesting read. Betting against US technological capability seems frankly a stupid thing to do. They have managed to halve the cost of fracking in some areas in 2 years, from $56 to $28.
Last edited by ToothSayer; 07-01-2017 at 06:04 AM.