article: "SHALE BUST HAS BEGUN WITH A FURY"

Hopefully the natural gas will be our saving grace....

http://www.theburningplatform.com/2014/12/03/shale-bust-has-begun-w...

In the last few days I’ve noticed a plethora of news stories from the usual suspects in the corporate mainstream media about how shale oil producers can still make a profit with oil selling for $66 a barrel. All of a sudden their breakeven costs are supposedly $40 per barrel or lower. That’s funny, because every legitimate estimate prior to this year was that oil needed to stay above $80 per barrel just so they could breakeven. When you see the new propaganda, you realize the entire shale miracle is nothing more than a Wall Street hyped debt financed Ponzi scheme. The Wall Street shysters are sending out their mouthpieces to lie, obfuscate, and mislead the public into thinking this fraud is still legitimate. The MSM pundits don’t even question the lies because their living depends upon perpetuating the lies.

The truth is revealed by the actions of the participants in the shale boom. The companies whose existence depends upon generating profits and cash flow will always take actions that will be in their own self interest. No company purposely takes actions to lose more money. All of the happy talk was just revealed to be false. 

New shale oil wells are expensive to begin and are 90% depleted after 2 years. Those are facts. Permits for new wells absolutely COLLAPSED in November. A 40% decline in one month is an epic collapse. If the Wall Street shysters were telling the truth and breakeven costs are really $40 per barrel, why would drillers stop drilling new wells when oil prices are $66? They wouldn’t. 

The shale oil boom is only sustainable at $100 a barrel oil. The Arabs know it. The big oil companies know it. The drillers know it. And the Wall Street shysters know it. The peak in U.S. oil production has arrived again, until prices go back up to $100 a barrel.

Facts don’t cease to be facts because they are ignored. Reality really is a bitch.

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Replies to This Discussion

Permalink Reply by Billy Park Whyde on December 7, 2014 at 8:54pm

Frank do you recall it was Carter that hit the landowner with a production. Excise tax callinging it a windfall fall profit tax?

Permalink Reply by cj wyalusing on December 8, 2014 at 3:00pm

Joe there stories get to be more and more as the price nose dives don't you think ?

Permalink Reply by Joseph-Ohio on December 8, 2014 at 3:31pm
Seems to be plenty of tales being told and plenty of time being spent telling them.

I think time would be better spent developing necessary infrastructure and wells as opposed to spending it politicing / haggling for advantage.

All only IMHO.
Permalink Reply by Nancy Mosley on December 5, 2014 at 4:53am

from George: "Maybe some time and thought to the formation of mineral rights owners into an organization that represents the interests of the owners in order to influence and mitigate the politics and unfair and sometimes illegal behavior that affect the rights and money of mineral rights interest.  Politicians and gas and oil companies have lobbyists that represent their intererst and the landowners and mineral rights owners are left to fend for themselves?    "

The National Association of Royalty Owners is what you have in mind.

National Association of Royalty Owners

Permalink Reply by Joseph-Ohio on December 5, 2014 at 4:59am
Nancy, a major problem is that Land / Mineral Rights Owners aren't all also Royalty Owners.
Permalink Reply by Nancy Mosley on December 5, 2014 at 5:05am

Not always. I think the organization represents mineral rights owners also. You could write to them for clarification. They definitely have a lobbying effort.

Permalink Reply by Joseph-Ohio on December 5, 2014 at 5:10am
Thanks Nancy.

I'll look into it

Anyone else out there have a handle on this ?

Thanks in advance.

J-O
Permalink Reply by frank speaker on December 5, 2014 at 1:18pm
We need to start thinking about establishing a fund in common for an arbitration suit. My calculation is that for every dollar paid in gas royalties, we are being cheated out of three dollars in NGL royalties (based on an NGL price of $60/bbl and a 15% shrinkage.)
From what I see of NARO, they are promoting industry goals such as protecting the oil depletion allowance but have little regard for landowners being cheated out of their royalty rights by the industry
Permalink Reply by Bill Bergseid on December 7, 2014 at 3:23pm

Frank-I think NGLs are bringing about half of the $60/bbl. you quote.  NGLs include several different "anes" whose price among them varies considerably.  But their price is a group is below that of oil.

Permalink Reply by Bill Bergseid on December 7, 2014 at 3:09pm

There is such an organization:  National Association of Royalty Owners (NARO).  It's been around for quite awhile.  It was heavily involved in developing the division order form used by NADOA (national association of division order analysts).  They recently formed a PAC to lobby on behalf of royalty owners. Check our naro-us.org

Permalink Reply by Dexter Green on December 5, 2014 at 3:45am

The Burning Platform is basically the energy version of Zero Hedge.  Proceed with caution.

Permalink Reply by Erik V. on December 5, 2014 at 6:41am

Supply and demand have caused the recent busts in the oil/gas industry and OPEC is the usual culprit.  Lower prices caused the boom in the late 70's to bust and again in the 80's and 90's, but not on the same scale.  I have sold oil and gas from my wells and have seen $12 a barrel and $1.80 and mcf and I have also seen $140 a barrel and over $10 and mcf.  Remember the old saying if you can't stand the heat get out of the kitchen?  This latest boom will decline, and maybe bust in the near future, but it will be back just like it always has.  I wouldn't rely heavily on industry gearing up for natural gas as an energy source and abandoning coal or other  alternatives.  As we are seeing, and have seen, natural gas prices fluctuate as does supply which will be viewed  as a risk for those industries who are considering switching fuel sources.  To make matters a bit worse for the oil/gas industry the first prototype nuclear fusion plan is already in the works, which may make fossil fuels obsolete.  Hopefully not in our lifetime, but it is coming.  What this country needs is an energy policy which dictates and governs the price of fossil fuels and the importation/exportation of these fuels.  Only this kind of policy will assure a reliable supply at a cost that consumers and drillers can live with. 

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