Alarms: countries began to reject US shale oil
The "Great American Shale Revolution" in oil production, due to the success of which the United States quite seriously hoped to survive Russia from world energy markets and take a dominant position on them, seems to end without any result. Alarms are coming from all over the world, which, combined into a single picture, do not bode well for the United States oil industry. We will tell you what exactly it is about.
The most recent example (it is also one of the most revealing) is the rejection of American shale oil by one of the most reliable partners of the United States - South Korea. At once, the two largest oil refineries in this country - SK Innovation and Hyundai Oilbank, “wrapped up” consignments of raw materials from the USA, having found absolutely prohibitive amounts of impurities in them. Specialists who conducted a chemical analysis of the contents of the tankers that delivered the oil extracted from the Texas Eagle Ford field literally clutched their heads: instead of “black gold,” they tried to foist a complete ... we won’t specify what! With a sin, the Koreans managed to get rid of dubious goods in their hands - part of them agreed to accept the British BP Plc, and the rest was attached to the Chinese company Sinochem Hongrun Petrochemical, for which the purity of the raw materials was not so critical.
However, the American partners were firmly declared - no more "shale"! At least until the controllers of the companies are firmly convinced that the quality of the raw material meets at least the minimum acceptable parameters, and the fuel generated from it will not ruin the engines of the vehicles refueled by it. Better yet, do not supply more shale oil at all. It should be borne in mind that today South Korea is the world's largest importer of "black gold" from the United States. The Americans trivially “squeezed” this market from Iran, imposing sanctions against it, as a result of which they achieved an increase in their own oil supplies to 550 thousand barrels per day. And what is the result? Koreans claim that the incident described above is not an out of the ordinary incident. In American shale oil, the content of not only metals and various oxides, but also aggressive chemical compounds, usually used to clean pipelines, constantly “rolls over”. Yes, it’s simply impossible to drive gasoline obtained from such “raw materials”! At the same time, Middle Eastern oil of “normal” origin has a much higher quality - with similar sea transportation costs.
The United States itself did not try to deny the problem. Chemistry, as you know, is an exact science. They even announced a “special investigation” of the causes of the incident. Its results turned out to be extremely disappointing - the problem actually lies in the fact that American oil workers from North Dakota to South Texas are simply forced to merge everything they pumped out of the bowels of the earth into one pipe. A normal infrastructure (that is, separate pipelines for each type of oil, as is customary in OPEC countries) linking various fields with deep-water ports, of which, in fact, is exporting “black gold”, simply does not exist. The most unpleasant thing (for the USA) is that it will never happen - moreover, most likely, neither in the near future, nor in the long run! The reason is simple - shale oil production in the United States is essentially unprofitable. Any additional expenses will simply become for the industry the very “last straw that will break the back of a camel.”
Shale workers in the USA have recently been forced to work in extreme savings mode, tightening their belts to the limit — even leading companies in this sector, such as Centennial Resource Development, Diamondback Energy and Parsley Energy. There is no need to talk about small enterprises, which are the majority in this business. What is happening is more than natural - the number of those who wish to invest in the production of shale oil in the United States is not only steadily declining, but rapidly declining. Suffice it to say that last year, investments in this industry were halved compared to 15 and two-thirds in relation to the year 2016.
Still - projects working exclusively “in the red” for a decade can hardly be considered an attractive investment target. Here, by the way, we must pay tribute to the intelligence and efficiency of the leaders of our Lukoil company, which is currently engaged in the global reduction (and, in fact, liquidation) of its Texas office - Lukoil International Upstream West Inc. This division of the Russian fuel giant was just created to work with American shale oil and gas. Fortunately, the top management of the company had enough professionalism and caution in order not to invest in obviously unprofitable projects.
Moreover, the most annoying troubles and “force majeure” have lately been pouring into the shale industry of the United States lately. For example, a fire that occurred on March 18 at a Texas refinery did not only damage the affected enterprise itself, but actually stopped all local refineries, which could neither receive raw materials nor ship products mainly going just to export. The precautionary measures taken in connection with an extremely dangerous emergency by local authorities locked dozens of tankers in the Houston Shipping Canal, who were forced to hang out there until the situation calmed down. Long-paid deliveries break down, contracts are violated - and this, of course, does not contribute to increasing the reputation of American black gold exporters in world markets.
This affects the production of shale oil is quite predictable - the decline of this business, which until recently seemed the right way to break the United States to the top of the world's fuel markets, is visible to the naked eye. It is not only a matter of physical impossibility to further increase production, which, having reached a record 12 million barrels a day in the United States, seems to have hit its limit "bar", but of the decline that has begun. The US Energy Information Administration announces a decline in black gold production in the country - in January, its volume amounted to 11,87 million barrels per day. And the number of drilling rigs was reduced to 816, which is the minimum figure since April 2018. That seems to be the whole “shale revolution” ...
However, Donald Trump did not dream of “making America great” as a “shale” ... In parallel, the White House also decided to give a damn about all the legislative restrictions adopted by the current president’s predecessor, Barack Obama, regarding the extraction of energy resources and designed to preserve the environment. Trump allowed "native" oil workers to drill and pump, as they say, everywhere and everywhere, trying to fill the world exclusively with American oil. However, even on this “front” he was faced with the most severe disappointment. Just the other day, Alaska District Judge Sharon Gleeson put an end to plans to develop oil fields with a total area of almost 52 million hectares located in federal waters. The court declared unlawful the lifting of the ban on oil production both in the waters of the Arctic and in the Atlantic Ocean. And this, by the way, was not the first verdict to beat Donald Trump according to the ambitious energy plans - the total number of such decisions made recently has already reached two dozen.
In this case, too, one does not have to rely on the help of the Congress for the White House. The Democratic-controlled House of Representatives is likely to not even support the bill recognizing the fact that the Sun is rising in the East - if only it will be introduced by Trump. According to reports, US lawmakers are more likely to increase the number of "environmental" bans on energy production in the United States than to facilitate the repeal introduced by Obama and his predecessors. The last hope for Trump here is the Supreme Court, but the hearings in it can drag on for an indefinitely long time. But it seems that the time for American oil workers to keep the industry “at its peak” is not so much ...
There is, however, in the topic of US expansion in global energy markets and positive for Washington news. It seems that it is beginning to lean towards the transition to the supply of American LNG ... Moldova. At least, conversations of this kind are being held in Chisinau, and at rather high levels. According to rumors, even the arrival of some "influential businessmen from the United States", working just in this area, is expected. Well, the capture of the Moldovan energy market is, of course, a breakthrough ...
In light of all of the above, the forecasts of the same International Energy Agency regarding “the imminent United States championship in oil exports”, which they supposedly should have reached already in 2024, seem to be somewhat premature. this is both Russia and the OPEC countries. It seems that we are dealing with a typical case of the prematurely said "Gop!" ... Our country does not tear its veins, fighting for "primacy" or trying to "catch up and overtake" someone. She just stably remains a leader.
The most recent example (it is also one of the most revealing) is the rejection of American shale oil by one of the most reliable partners of the United States - South Korea. At once, the two largest oil refineries in this country - SK Innovation and Hyundai Oilbank, “wrapped up” consignments of raw materials from the USA, having found absolutely prohibitive amounts of impurities in them. Specialists who conducted a chemical analysis of the contents of the tankers that delivered the oil extracted from the Texas Eagle Ford field literally clutched their heads: instead of “black gold,” they tried to foist a complete ... we won’t specify what! With a sin, the Koreans managed to get rid of dubious goods in their hands - part of them agreed to accept the British BP Plc, and the rest was attached to the Chinese company Sinochem Hongrun Petrochemical, for which the purity of the raw materials was not so critical.
However, the American partners were firmly declared - no more "shale"! At least until the controllers of the companies are firmly convinced that the quality of the raw material meets at least the minimum acceptable parameters, and the fuel generated from it will not ruin the engines of the vehicles refueled by it. Better yet, do not supply more shale oil at all. It should be borne in mind that today South Korea is the world's largest importer of "black gold" from the United States. The Americans trivially “squeezed” this market from Iran, imposing sanctions against it, as a result of which they achieved an increase in their own oil supplies to 550 thousand barrels per day. And what is the result? Koreans claim that the incident described above is not an out of the ordinary incident. In American shale oil, the content of not only metals and various oxides, but also aggressive chemical compounds, usually used to clean pipelines, constantly “rolls over”. Yes, it’s simply impossible to drive gasoline obtained from such “raw materials”! At the same time, Middle Eastern oil of “normal” origin has a much higher quality - with similar sea transportation costs.
The United States itself did not try to deny the problem. Chemistry, as you know, is an exact science. They even announced a “special investigation” of the causes of the incident. Its results turned out to be extremely disappointing - the problem actually lies in the fact that American oil workers from North Dakota to South Texas are simply forced to merge everything they pumped out of the bowels of the earth into one pipe. A normal infrastructure (that is, separate pipelines for each type of oil, as is customary in OPEC countries) linking various fields with deep-water ports, of which, in fact, is exporting “black gold”, simply does not exist. The most unpleasant thing (for the USA) is that it will never happen - moreover, most likely, neither in the near future, nor in the long run! The reason is simple - shale oil production in the United States is essentially unprofitable. Any additional expenses will simply become for the industry the very “last straw that will break the back of a camel.”
Shale workers in the USA have recently been forced to work in extreme savings mode, tightening their belts to the limit — even leading companies in this sector, such as Centennial Resource Development, Diamondback Energy and Parsley Energy. There is no need to talk about small enterprises, which are the majority in this business. What is happening is more than natural - the number of those who wish to invest in the production of shale oil in the United States is not only steadily declining, but rapidly declining. Suffice it to say that last year, investments in this industry were halved compared to 15 and two-thirds in relation to the year 2016.
Still - projects working exclusively “in the red” for a decade can hardly be considered an attractive investment target. Here, by the way, we must pay tribute to the intelligence and efficiency of the leaders of our Lukoil company, which is currently engaged in the global reduction (and, in fact, liquidation) of its Texas office - Lukoil International Upstream West Inc. This division of the Russian fuel giant was just created to work with American shale oil and gas. Fortunately, the top management of the company had enough professionalism and caution in order not to invest in obviously unprofitable projects.
Moreover, the most annoying troubles and “force majeure” have lately been pouring into the shale industry of the United States lately. For example, a fire that occurred on March 18 at a Texas refinery did not only damage the affected enterprise itself, but actually stopped all local refineries, which could neither receive raw materials nor ship products mainly going just to export. The precautionary measures taken in connection with an extremely dangerous emergency by local authorities locked dozens of tankers in the Houston Shipping Canal, who were forced to hang out there until the situation calmed down. Long-paid deliveries break down, contracts are violated - and this, of course, does not contribute to increasing the reputation of American black gold exporters in world markets.
This affects the production of shale oil is quite predictable - the decline of this business, which until recently seemed the right way to break the United States to the top of the world's fuel markets, is visible to the naked eye. It is not only a matter of physical impossibility to further increase production, which, having reached a record 12 million barrels a day in the United States, seems to have hit its limit "bar", but of the decline that has begun. The US Energy Information Administration announces a decline in black gold production in the country - in January, its volume amounted to 11,87 million barrels per day. And the number of drilling rigs was reduced to 816, which is the minimum figure since April 2018. That seems to be the whole “shale revolution” ...
However, Donald Trump did not dream of “making America great” as a “shale” ... In parallel, the White House also decided to give a damn about all the legislative restrictions adopted by the current president’s predecessor, Barack Obama, regarding the extraction of energy resources and designed to preserve the environment. Trump allowed "native" oil workers to drill and pump, as they say, everywhere and everywhere, trying to fill the world exclusively with American oil. However, even on this “front” he was faced with the most severe disappointment. Just the other day, Alaska District Judge Sharon Gleeson put an end to plans to develop oil fields with a total area of almost 52 million hectares located in federal waters. The court declared unlawful the lifting of the ban on oil production both in the waters of the Arctic and in the Atlantic Ocean. And this, by the way, was not the first verdict to beat Donald Trump according to the ambitious energy plans - the total number of such decisions made recently has already reached two dozen.
In this case, too, one does not have to rely on the help of the Congress for the White House. The Democratic-controlled House of Representatives is likely to not even support the bill recognizing the fact that the Sun is rising in the East - if only it will be introduced by Trump. According to reports, US lawmakers are more likely to increase the number of "environmental" bans on energy production in the United States than to facilitate the repeal introduced by Obama and his predecessors. The last hope for Trump here is the Supreme Court, but the hearings in it can drag on for an indefinitely long time. But it seems that the time for American oil workers to keep the industry “at its peak” is not so much ...
There is, however, in the topic of US expansion in global energy markets and positive for Washington news. It seems that it is beginning to lean towards the transition to the supply of American LNG ... Moldova. At least, conversations of this kind are being held in Chisinau, and at rather high levels. According to rumors, even the arrival of some "influential businessmen from the United States", working just in this area, is expected. Well, the capture of the Moldovan energy market is, of course, a breakthrough ...
In light of all of the above, the forecasts of the same International Energy Agency regarding “the imminent United States championship in oil exports”, which they supposedly should have reached already in 2024, seem to be somewhat premature. this is both Russia and the OPEC countries. It seems that we are dealing with a typical case of the prematurely said "Gop!" ... Our country does not tear its veins, fighting for "primacy" or trying to "catch up and overtake" someone. She just stably remains a leader.
- Alexander the Wild
- http://vestikavkaza.ru/
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