A second shale revolution, which scared us all last year, ends in the same way as the first – nothing. Zilch.However, it is quite predictable. Because no real justification for the horror stories “right now the United States as you begin to get a bunch of cheap oil and gas and will bring down the world market” originally was not.
Attempts to reduce the cost of production has led to multiple decrease of the quality of oil and gas.
Shale oil 2.0 contains a lot of sulphur impurities which corrode as the pipes and expensive equipment at the refinery. As a result, many companies have even refused her purchases.
Attempts to sell the normal oil from strategic reserves of the United States, and in its place to drive sulphurous shale, of course, helped the industry to survive another few months, but about half of the oil reserves of the United States is now the most spoiled sour crude.
Shale gas situation is also not much better.
Total since the beginning of the year in the oil and gas industry in the US went bankrupt, a total of 26 companies (and several more in the process of bankruptcy), including such large, as Bristow Group, Halcon Resources Corp., Jones Energy, PHI, Rex Energy and Sanchez Energy Corp.
For comparison, last year went bankrupt twice smaller companies (and themselves bankrupt company was less).
Preparations for filing for bankruptcy one of the leading service providers in the area of drilling, oilfield services Weatherford International.
But the most telling example is the situation with the second-largest shale oil and gas companies in the U.S. “Chesapeake Energy”. Who said the net loss in the amount of one hundred one million dollars.
In addition, in a letter to the Commission on securities and exchange Commission the company’s management declared that if, before the end of the year the price of oil and gas will not grow, “Chesapeake Energy” will start the bankruptcy procedure. Current capitalization of the company stands at 1.3 billion dollars, which is forty times less than in 2008, at the first peak of the shale boom.
Now the company’s debts exceed $ 9 billion, which is seven times more than its market capitalization.
It’s time to listen to the tales about “second shale revolution”.
While U.S. officials struggled to refuse to recognize the futility of shale oil and gas production. The other day they stated that specifically (planned) will cut production of oil and gas. “Because the industry suffers from oversupply”, and not what you think.
However, for the modern American authorities this behavior is typical. So, at yesterday’s meeting of the budget Committee of Congress, fed Chairman Jerome Powell habitually sang that “the economy is doing well, but the growth is lame and the trade fell.”
But even he had to admit that
the Federal budget “on an unsupported level”;
– high debt inhibits private investment, reduces productivity and overall economic growth;
they print dollars in three shifts, but this is not a sign of instability (well, you get the idea).
But that’s a topic for another article…Alexander Rogers