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Saudis worry over North American shale oil surge
financialpost.com ^ | 14-21-11 | Yadullah Hussain

Posted on 01/11/2012 10:05:38 AM PST by bayouranger

While the green movement naively harbours hopes it will be able to shut down unconventional oil and gas development, in Saudi Arabia they are already contemplating a time when North American fossil fuel will replace their oil.

Looking past the din of protesters, state-owned oil giant Saudi Aramco is resigned to the fact that its influence will wane because of the massive unconventional fossil-fuel development underway in North America. As such, Saudi Arabia has no plans to raise its production output to 15 million barrels per day from 12 million, said Khalid Al-Falih, the powerful chief executive of Aramco.

“There is a new emphasis in the industry on unconventional liquids, and shale gas technologies are also being applied to shale oil,” Al-Falih, president and CEO of Saudi Aramco, warned a domestic audience in a speech in Riyadh Monday.

“Some are even talking about an era of ‘energy independence’ for the Americas, based on the immense conventional and unconventional hydrocarbon resources located there. While that might be stretching the point, it is clear that the abundance of resources and the more ‘balanced’ geographical distribution of unconventionals have reduced the much-hyped concerns over ‘energy security’, which once served as the undercurrent driving energy policies and dominated the global energy debate.”

Aramco is the powerful state entity that manages the Kingdom’s nine-million-barrel-plus oil output. Saudi Arabia has long dominated oil markets by leveraging its spare oil capacity and, as the OPEC kingpin, striking a delicate balance between the interests of oil consumers and the exporter group.

But the oil chief’s remarks reveal Saudi fears that the market dynamics are changing and its dominance over energy markets is under threat by new unconventional finds.

OPEC estimated in a recent report that global reserves of tight oil could be as high as 300 billion barrels, above Saudi Arabia’s conventional reserves of 260-billion barrels, which are currrently seen as the second-largest in the world after Venezuela.

Global output of non-conventional oil is set to rise 3.4 million bpd by 2015, still dominated by oil sands, to 5.8 million bpd by 2025 and to 8.4 million bpd by 2035 when tight oil would be playing a much bigger role. By 2035, the United States and Canada will still be dominating unconventional oil production with 6.6 million bpd, the group forecasts.

Last year, even as the world consumed nearly 30 billion barrels of oil, not only was the industry able to replace this production but global petroleum reserves actually increased by nearly seven billion barrels, as companies increasingly turned toward higher risk areas, Al-Falih noted.

Clearly, the Kingdom is preparing for new market realities as the discussion on energy has changed from scarcity to abundance, particularly due to the new finds that can be produced ‘feasibly and economically.’

In the past, Saudi Arabia, along with its OPEC allies, could drive prices down by opening the taps to ensure unconventional fossil fuels remained firmly buried in the ground. But most analysts now expect oil prices to remain high, at least over the medium term, thanks to tight supplies and continued demand from emerging markets. That’s great news for Canadian oil sands developers, which need prices around US$60 to US$70 per barrel, to make their business models economically feasible.

Saudi Arabia’s own break-even oil price has also risen sharply in the past few years, making it less likely to pursue a strategy of lower prices. The Institute of International Finance estimates that Saudi Arabia’s break-even price has shot up US$20 over the past year to US$88, in part due to a generous spending package of US$130-billion announced this year to keep domestic unrest at bay.

The Saudis now find themselves between a shale rock and a hard place: While high crude prices mean the Saudis can maintain their excessive domestic subsidies for citizens, in the long run that means the world is developing new sources, making it less dependent on Saudi oil.

Although the Saudis have vigorously fought the Ethical Oil ads, which paint them in a negative light, they already know their oil is less welcome in the Americas — Saudi oil made up a mere 9.3% of U.S. oil imports last year, down from 11.2% five years ago, according to the U.S. Department of Energy.

But while Saudis would be cheering on the green groups with ‘No KXL’ signs, they don’t hold out much hope for renewable energies either. Calling them ‘green bubbles,’ Al-Falih says governments should stop focusing on unproven and expensive energy mix, as there is frankly no appetite for massive investments in expensive, ill-thought-out energy policies and pet projects.

“The confluence of four new realities — increasing supplies of oil and gas, the failure of alternatives to gain traction, the inability of economies to foot the bill for expensive energy agendas, and shifting environmental priorities — have turned the terms of the global energy dialogue upside down. Therefore, we must recast our discussion in light of actual conditions rather than wishful thinking,” the pragmatic chief said.

Somebody should explain this wishful thinking to the green movement.


TOPICS: Culture/Society; Foreign Affairs; Front Page News; Government; War on Terror
KEYWORDS: 911; bhoislamism; drillheredrillnow; energy; energyjihad; envirofascism; filthykoranimals; gasprices; islam; obama; oil; oilsands; opec; saudioil; saudis
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I think it's safe to say that there were 3000 Americans that would have voted for ethical oil.

1 posted on 01/11/2012 10:05:44 AM PST by bayouranger
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To: bayouranger

As long as Obama is in office they have nothing to worry about.


2 posted on 01/11/2012 10:08:02 AM PST by Obadiah (If U don't believe you can win, then there is no point in getting out of bed at the end of the day.)
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To: bayouranger

Where do environmental organizations in the US get their money? I can’t believe it’s just naive college students.


3 posted on 01/11/2012 10:10:10 AM PST by rhombus
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To: bayouranger
The Obama EPA will move heaven and earth to keep the US dsependent and force development of wind and solar. I think fraking will be prohibited and oil, gas and coal prices will be forced much higher to restrict usage.
4 posted on 01/11/2012 10:10:10 AM PST by Truth29
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To: bayouranger
The strange irony of this whole thing is ObaMao could send gas prices plummeting and possibly start the economy on a road to recovery that would ensure his own reelection by simply resuming the issuance of drilling permits in the Gulf and getting out of the way of the Keystone XL pipeline.

Yet he won't do it because he values his marriage to ideology more than his marriage to power.

5 posted on 01/11/2012 10:14:10 AM PST by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: bayouranger

**** the saudis.

LLS


6 posted on 01/11/2012 10:17:50 AM PST by LibLieSlayer ( MOOchelle obama is PISSED OFF that people say that she is an angry woman!)
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To: bayouranger

If they are “worried” instead of “deeply offended” then I’d say we are making progress, on multiple fronts.


7 posted on 01/11/2012 10:18:53 AM PST by Attention Surplus Disorder (The only economic certainty: When it all blows up, Krugman will say we didn't spend enough.)
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To: bayouranger

When the day of oil independence comes to America, the Saudis will need to duck and cover. They are responsible for much Islamic radicalism and terrorism.


8 posted on 01/11/2012 10:21:55 AM PST by pallis
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To: bayouranger

What a surprise! Apparently the camel humpers don’t believe in the Peak Oil horse crap either.


9 posted on 01/11/2012 10:22:36 AM PST by meatloaf
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To: bayouranger

No need to worry. Barry has “got your back”.


10 posted on 01/11/2012 10:22:45 AM PST by FlingWingFlyer ("Climate Change" my a.... All weather is local.)
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To: rhombus

With zero direct evidence I GUARANTEE the Saudis and OPEC fund the “environmental” movement.

You don’t really believe we have no offshore oil because of one stupid oil spill in the 1960’s?


11 posted on 01/11/2012 10:22:55 AM PST by Williams (Honey Badger Don't Care)
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To: LibLieSlayer

“Americans worry about Saudi terrorist-breeding surge”

There; we all have worries.


12 posted on 01/11/2012 10:28:44 AM PST by kearnyirish2
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To: pallis; All
When the day of oil independence comes to America, the Saudis will need to duck and cover. They are responsible for much Islamic radicalism and terrorism.

Imagine this, this is Clancy-ish...

They fall and it gets ugly.

Rather than let the insane insurgents get their high tech assets they fly their F16's and F15's to "a friendly" nation... Israel !!!!

13 posted on 01/11/2012 10:29:15 AM PST by taildragger (( Palin / Mulally 2012 ))
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To: Vigilanteman

What we really need to do is start converting autos to run on natural gas. If demand has dropped so much that we’re now exporting gasoline and oil, think what that would do to oil imports. That’s the fastest way to impact oil prices. We’ve got the natural gas NOW with much more coming. When oil drops below $80/bbl and stays there, as a dividend you’ll see the mullahs in Iran tossed out with the garbage. Terrorists will no longer be able to count on Islamic sugar daddies to bank roll their operations either. It’s a win win worldwide.


14 posted on 01/11/2012 10:29:19 AM PST by meatloaf
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To: FlingWingFlyer; All

So does the Tides Foundation along with 44 organizations that campaign against Canadian oil. The top recipient was Corporate Ethics International which runs RETHINK ALBERTA, a campaign to pressure the Alberta government by depicting Alberta in a negative light.

In 2010 alone, the Sierra Club was paid $420,000, Environmental Defense Canada Inc. was paid $250,000 and Greenpeace Canada was paid $200,000 for participation in the “Tar Sands Campaign,” according to 2010 tax returns for Tides USA.

As reported in The Financial Post, in 2009 the U.S. Tides Foundation and Tides Canada funded a total of 36 organizations that campaign against the development of the Alberta oilsands. Of these, 26 organizations were funded by the Tides USA. The total granted to these organizations by Tides USA was $3.6 Million for 2009, according to U.S. tax returns.

In 2009, Tides Canada Foundation paid at least $7 million to 20 organizations that campaign against Canadian oil, according to analysis of Tides Canada’s U.S. tax returns. In 2009, fully half of Tides Canada’s grants went towards projects on a small but very strategic part of the Canadian coastline: the north coast of B.C., right smack where oil tankers export bound for Asia would need to travel.
[...]
Detailed breakdown of Tides Foundation anti-oil contributions here.
http://fairquestions.typepad.com/rethink_campaigns/tides-tar-sands-campaign-2009-2010.html


15 posted on 01/11/2012 10:39:44 AM PST by bayouranger (The 1st victim of islam is the person who practices the lie.)
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To: meatloaf

Peak Oil is pure horse shiite! (As is the myth of “Climate Change”).

I’ve been saying this for over 25 years: The USA has more untapped oil than the rest of the world combined. To wit, I wrote a college term paper on the “Green River Oil Shale Deposit” in 1985. This particular shale deposit extends from the Rocky Mountains to the Appalachins, and contains more oil than the entire planet has consumed in the past 100 years. It’s a monstrous oil field trapped in shale.

The only reasons we haven’t tapped into it yet is:

1.) Environmental nazis have too much political influence and thus make it damn near impossible for oil companies to obtain permits and licenses for drilling;
2.) The Arabs keep the price of their oil cheap enough to discourage US oil companies from investing in domestic production.

(EPA regulations and gubmint red-tape, courtesy of Environmental Nazism, make domestic oil production too damn expensive and not worth the headache or financial risk.)

It’s not a matter of “if” the USA can be energy independent, it’s of a matter of “when”. We gots about a trillion barrels of oil sitting beneath our feet. We just gots to go get it.


16 posted on 01/11/2012 10:40:56 AM PST by Ernie Kaputnik ((It's a mad, mad, mad world.))
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To: bayouranger

Thanks.


17 posted on 01/11/2012 10:42:44 AM PST by FlingWingFlyer ("Climate Change" my a.... All weather is local.)
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To: Williams
With zero direct evidence...

This is the frustrating part.

18 posted on 01/11/2012 10:44:07 AM PST by rhombus
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To: bayouranger
The strange irony of this whole thing is ObaMao could send gas prices plummeting and possibly start the economy on a road to recovery that would ensure his own reelection by simply resuming the issuance of drilling permits in the Gulf and getting out of the way of the Keystone XL pipeline.

Yet he won't do it because he values his marriage to ideology more than his marriage to power.

19 posted on 01/11/2012 10:45:15 AM PST by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: bayouranger
The strange irony of this whole thing is ObaMao could send gas prices plummeting and possibly start the economy on a road to recovery that would ensure his own reelection by simply resuming the issuance of drilling permits in the Gulf and getting out of the way of the Keystone XL pipeline.

Yet he won't do it because he values his marriage to ideology more than his marriage to power.

20 posted on 01/11/2012 10:45:42 AM PST by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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Comment #21 Removed by Moderator

To: bayouranger
The question is NOT whether Saudi oil money gets back to those elected officials in DC, the question is how fungible their oil money is to those elected officials in DC.
22 posted on 01/11/2012 10:47:28 AM PST by drypowder
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To: bayouranger
LPG Direct Injection....

It stays a liquid until it is the cylinder. Change of state from a liquid to gas, drop in temperature. So you can dial up the Turbo-boost or Compression Ratio. I think their are 3 Euro Conversion firms already for Direct Injection...

So many win wins with this fuel in this configuration.


23 posted on 01/11/2012 10:47:36 AM PST by taildragger (( Palin / Mulally 2012 ))
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To: rhombus

ignorant,well-meaning soccer moms and rich Hollyweirdos,too.


24 posted on 01/11/2012 10:47:54 AM PST by WOBBLY BOB (Congress: Looting the future to bribe the present.)
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To: bayouranger
"...and I promise to stop all new drilling in the US and I
promise to slow down shale oil production, so help me Allah"


25 posted on 01/11/2012 10:49:25 AM PST by Iron Munro ("Don't pick a fight with an old man. If he is too old to fight he'll just kill you." John Steinbeck)
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To: thackney

Energy/Oil Ping


26 posted on 01/11/2012 10:52:29 AM PST by EdReform (Oath Keepers - Guardians of the Republic - Honor your oath - Join us: www.oathkeepers.org)
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To: meatloaf

good idea.

start with government fleet vehicles and if it’s successful there, expand from there.

I , for one, don’t want to be mandated to convert my vehicle.


27 posted on 01/11/2012 10:59:58 AM PST by WOBBLY BOB (Congress: Looting the future to bribe the present.)
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To: meatloaf
What we really need to do is start converting autos to run on natural gas.

You're exactly right. I lived in Japan in the late 1990's when they started doing exactly that with buses and taxicabs. It is a little expensive up front, but ever since the Japanese pay less for a liter of gasoline than most of their European counterparts. They produce maybe 2% of their crude oil needs domestically, roughly 1/10th of what they are able to do in Europe.

All it takes is a political will to do so. We could start by funding the U.S. Postal Service fleet into natural gas conversion, then let them sell their NG fueling supplies to the public. Employ some of the surplus postal workers as NG station attendants, then spin off the NG retail facilities and privatize. That's the quickest way I see to get bipartisan support.

You could start by turning some of the surplus post offices slated for closure into NG refueling stations. Initially, they would serve only postal vehicles, then public transportation and finally the public.

28 posted on 01/11/2012 11:03:16 AM PST by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: pallis

Much? Wahhabism and Salafism are terrorist philosophies.


29 posted on 01/11/2012 11:11:11 AM PST by 1010RD (First, Do No Harm)
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To: Vigilanteman
ever since the Japanese pay less for a liter of gasoline than most of their European counterparts

They don't pay much different any more.

http://www.iea.org/stats/surveys/mps.pdf
(Price per litre, November 2011)

Japan: 143 Yen ~ 1.47 Euro

France: 1.488
Germany: 1.505
Italy: 1.588
Spain: 1.299
UK: 1.338
Japan pays less percentage as tax. But in today's high prices for the base product, they are around the same as Europe.

30 posted on 01/11/2012 11:33:49 AM PST by thackney (life is fragile, handle with prayer)
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To: EdReform


31 posted on 01/11/2012 11:36:44 AM PST by thackney (life is fragile, handle with prayer)
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To: Vigilanteman

An LNG refueling station takes up a bit more space than the vacuums at car washes. For home use you can buy a unit that hangs on a wall.


32 posted on 01/11/2012 11:36:47 AM PST by meatloaf
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To: meatloaf

You mean CNG, not LNG.

CNG needs just a compressor.

LNG requires a refrigeration unit to drop the temperature down to -260°F and a system to keep it there while it sets in the tank or continuously use/vent it.


33 posted on 01/11/2012 11:40:28 AM PST by thackney (life is fragile, handle with prayer)
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To: bayouranger

The Saudis are Worried,

GOOD!


34 posted on 01/11/2012 11:40:39 AM PST by GraceG
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To: Vigilanteman

Fleet service, like buses, UPS and garbage trucks have been using Natural Gas for a while. Not everywhere, but it continuous to grow.

http://www.afdc.energy.gov/afdc/progs/fleet_exp_fuel.php/NG


35 posted on 01/11/2012 11:42:57 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Will Texas ever see the levels of the 80s again?


36 posted on 01/11/2012 11:52:49 AM PST by 1010RD (First, Do No Harm)
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To: kearnyirish2

Yes... we certainly do.

LLS


37 posted on 01/11/2012 11:53:05 AM PST by LibLieSlayer ( MOOchelle obama is PISSED OFF that people say that she is an angry woman!)
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To: bayouranger

Good... Let ‘em worry!


38 posted on 01/11/2012 11:59:21 AM PST by folkquest (Nothing is fool-proof because fools are so ingenious!)
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To: rhombus

I figure they get a lot of indirect funding from states and entities with a vested interest in keeping the US from doing anything adversarial to their interests, such as oil exploration.


39 posted on 01/11/2012 11:59:47 AM PST by WoofDog123
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To: drypowder

Sleeping with the devil
~Robert Baer


40 posted on 01/11/2012 12:05:45 PM PST by bayouranger (The 1st victim of islam is the person who practices the lie.)
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To: 1010RD
Will Texas ever see the levels of the 80s again?

Measured in Dollars, we are already past that point.

Measured in Barrels, who knows, maybe, maybe not.

Measured in unemployed following the boom, I sure hope not.

41 posted on 01/11/2012 12:07:45 PM PST by thackney (life is fragile, handle with prayer)
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To: Ernie Kaputnik

Est.’s on the Green River are off the charts, but geographiclly it sits in Co, Wy, Ut. on the western side of the Rockies.


42 posted on 01/11/2012 12:08:24 PM PST by Recon Dad (Gas & Petroleum Junkie)
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To: bayouranger

They know that when they cannot sell their oil anymore, they will have to go back to living off camel dung.


43 posted on 01/11/2012 12:15:12 PM PST by cartan
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To: thackney; 1010RD

I had a conversation a couple of months ago with the principal of an engineering firm that does lots of work in the Haynesville Shale in NW Louisiana. His crew also doing some work in Pennsylvania in the Marcellus Shale. I asked him about the tree huggers, etc. and how much of a problem they really were.

His comment was that once the royalty checks began to flow to landowners and local governments, that the racket from the enviros tended to abate.


44 posted on 01/11/2012 12:17:31 PM PST by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: thackney
They just announced that the North Dakota Bakken shale has reached 510 MBD production. Pretty amazing. Pipeline dynamics are also beginning to change. For the first time Marcella gas is replacing western and Canadian gas and serving the northeastern markets. An interesting read from Oil and Gas Investments Bulletin can be found here:

A New Trend that Could Affect Natural Gas Pipeline Stocks

The continental pipeline system will still be necessary for US energy security and price stability, but the local shale plays will be having a much more dramatic impact on NG prices. I doubt traditional gas plays will be competitive in the long run. I am also watching the western Utica plays closely. These are promising very lucrative oil production.
45 posted on 01/11/2012 12:21:54 PM PST by PA Engineer (Time to beat the swords of government tyranny into the plowshares of freedom.)
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To: thackney

Yep! Thanks for correction.


46 posted on 01/11/2012 12:21:54 PM PST by meatloaf
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To: thackney

Yep! Thanks for correction.


47 posted on 01/11/2012 12:22:40 PM PST by meatloaf
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To: thackney

Thanks. What’s holding back barrel production in TX?


48 posted on 01/11/2012 12:38:20 PM PST by 1010RD (First, Do No Harm)
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To: abb

Capitalism is the only thing to silence the muggers.


49 posted on 01/11/2012 12:42:25 PM PST by 1010RD (First, Do No Harm)
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To: 1010RD

I don’t think anything is really holding back production in Texas. But you are talking about a rather big hill to climb compared to where we were in the 1980’s.

Remember the shale production in the Bakken has several years head start on the shale in Texas’ Eagle Ford and Permian Basin.

But it is not for lack of drilling. Lots of rigs working here now.

http://files.shareholder.com/downloads/BHI/1621641500x0x532188/CB796FB2-6E26-4FC9-B138-750BBDC1D4E9/na_charts_010612.pdf

Nearly half of all drilling rigs operating in the United States are drilling in Texas 927 out of 2,007 at last count.

http://files.shareholder.com/downloads/BHI/1621641500x0x532187/59824824-AE4A-44F4-A754-BC249C3DF23E/Rigs_by_State_010612.pdf


50 posted on 01/11/2012 12:58:20 PM PST by thackney (life is fragile, handle with prayer)
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