Death Watch in the Oil Patch

 Pumpjack-1024x768  gc2smOff the keyboard of Thomas Lewis

Follow us on Twitter @doomstead666

Friend us on Facebook

 

Pumpjack-1024x768

Oil pumpjacks starting to suck oil instead of money. (You and I know, of course, that grasshopper pumps are not used in fracking, but have become a universal symbol for the oil bidness in the Mainstream Media, so there you go. And here you are.).

Published on The Daily Impact on October 28, 2015


In the same sense that brave individuals are said to “fight” stage four cancer, the American oil industry has spent a harrowing year fighting reality. Since oil prices tanked last summer, the industry has drawn down its strategic reserves of whitewash, pig lipstick, shinola and embalming fluid to keep things looking good even as they were decomposing. They did a pretty good job, but then they’ve had a lot of practice.Their theory, apparently; when you’re kicking the can down the road, a myth is as good as a mile. Consider a brief compendium of the lies, damned lies and statistics the oil guys have sold the country in the past few years.

Myth Sold: The Oil “Revolution.”  Hydraulic fracturing was a technological breakthrough that was going to make America number one in world oil production again, restore American energy independence and guarantee American hegemony for (pretty much) ever.    

Fact: Fracking is an extremely expensive and environmentally destructive way to wring the last few drops of  oil out of source rock. While it temporarily increased US oil production, it never equalled our peak production of 1970, and while it temporarily decreased our oil imports (which are now on their way back up), it never threatened our status as the world’s largest importer of oil.

Myth Sold: Technology Will Save Us. When oil prices cratered, the frackers reassured their investors, lenders and us that they could handle it. They had improved the fracking technology so much they could continue to make a profit producing $50-a-barrel oil.

Fact: The much-hyped changes were just so much tinkering, and profits remained illusory. Virtually every company involved in the fracking patch had negative cash flows from the beginning. Operating profits from the wells were wiped out by the costs of replacing the wells every three or four years, because of their hideous depletion rates. Conventional wells produce for 20 years, five time longer than fracked well.

Myth Sold: Efficiency Will Save Us. Like the old line about balancing the federal budget by eliminating waste and fraud, this sounds reasonable but never happens. The frackers concentrated on the “sweet spots,” the small areas of their holdings with the best returns, and they started placing four drilling rigs, instead of one, on each pad.

Fact: Thus their production actually increased for a few months after the price crash. But, well productivity is flatlining now and with the rig count down by about half, new wells are not being brought on line and production has started to fall sharply.

Myth Sold: Hedging Will Save Us. For the first year or so of depressed prices, frackers benefited from hedges — contracts to sell their product at last year’s prevailing prices. The theory was, prices would be back up before the hedges ran out.

Fact: The hedges have run out. The people who used to take the other side of the hedges are not answering frackers’ phone calls. Maybe because their phones have been disconnected.

Myth Sold: Junk Bonds Will Save Us. And so they did, for a while. Infusions of cash — from, among others, vultures hoping to acquire cheap oil company assets and ride the resurgence to a new, new oil revolution — in the form of junk bonds, leveraged loans, sub-prime loans, covenant-lite loans, etc., kept the bubble inflated.

Fact: What resurgence? Banks and other lenders, reluctant to recognize the mounting losses, continued to pretend that the oil companies whose assets’ worth had been cut in half were still solvent. Nothing wrong here! Why do you ask?

New Fact: Right now, the banks are conducting a mandatory review of the worth of the assets pledged against their fracking loans, that is, the value of the oil the companies still have to extract. This spring, the banks assessed the oil at last year’s prices, and with fingers tightly crossed rolled over the loans.

It was a stretch then; can they do it again, eke out a few more months of myths? On the one hand, maybe so, denial is not just a river in Egypt. On the other hand, good as they have been, the sellers of the myths appear to be sold out.  


Thomas Lewis is a nationally recognized and reviewed author of six books, a broadcaster, public speaker and advocate of sustainable living. He also is Editor of The Daily Impact website, and former artist-in-residence at Frostburg State University. He has written several books about collapse issues, including Brace for Impact and Tribulation. Learn more about them here.

Knarf plays the Doomer Blues

https://image.freepik.com/free-icon/musical-notes-symbols_318-29778.jpg

Support the Diner
Search the Diner
Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D
Archives
Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

Quote from: Eddie on Today at 07:56:54 AMYou were asking ME if I understood....You started it by asking Knarf if he understood.RE

Quote from: Surly1 on Today at 06:27:57 AMIf America Stopped Destroying the World, the ...

Dude, you weren't arguing the topic. You were asking ME if I understood....which is pretty insulting, coming from you. I've heard all your arguments, more than once.You want to argue the topic? Sure, lets argue.Neither one of us is dumb. But you thin...

Diner Twitter feed

Knarf’s Knewz

Quote from: AJ on Today at 11:26:34 AMThought I wo [...]

Fed up with social restrictions and political repr [...]

Thought I would post this blog post by Jem Bendell [...]

Quote from: Surly1 on January 16, 2019, 05:00:09 P [...]

Quote from: knarf on January 16, 2019, 10:12:15 AM [...]

Diner Newz Feeds
  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

I see now he copyrights everything  and doesn [...]

QuoteThe Great War for EurasiaThis Collins article [...]

Quote from: EddieThe old tired lie about the US pr [...]

It'll be tried. It might be that or die, and [...]

Quote from: Surly1 on Today at 06:27:57 AMIf Ameri [...]

Thanks for sharing this find. I don't know ab [...]

December 31, 2018I wish I could say that 2019 will [...]

[img]http://dl.glitter-graphics.com/pub/720/720246 [...]

Quote from: AJ on Today at 11:26:34 AMThought I wo [...]

Fed up with social restrictions and political repr [...]

Thought I would post this blog post by Jem Bendell [...]

Quote from: Surly1 on January 16, 2019, 05:00:09 P [...]

Quote from: knarf on January 16, 2019, 10:12:15 AM [...]

Well well fellow gold bugs.Our community picks up [...]

Quote from: Golden Oxen on January 15, 2019, 01:14 [...]

Quote from: Golden Oxen on January 13, 2019, 02:58 [...]

 The four thousand year bull market continues.   R [...]

Quote from: AJ on January 14, 2019, 03:11:09 PMTha [...]

Print on Card Stock or better still Glossy Photo P [...]

Quote from: Golden Oxen on January 09, 2019, 05:12 [...]

Quote from: Golden Oxen on January 09, 2019, 05:12 [...]

Quote from: Eddie on January 09, 2019, 05:13:53 AM [...]

Oh please. Is there an eye-roll emoticon? [...]

Alternate Perspectives
  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

The Essence of Control Is Its Concealment By Cognitive Dissonance   For thousands of years “control” [...]

There Will Be Blood…and Many More Lies By Cognitive Dissonance   I suppose if we randomly stopped pe [...]

A Few Screws Loose By Cognitive Dissonance     Twice a year, usually in the spring and fall, I haul [...]

The Honor Box By Cognitive Dissonance   It is commonly said the fish rots from the head down, meanin [...]

Animal Spirits and Over Extended Markets By Cognitive Dissonance     Animal spirits is the term John [...]

Event Update For 2019-01-15http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-01-14http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-01-13http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-01-12http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-01-11http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

Daily Doom Photo

man-watching-tv

Sustainability
  • Peak Surfer
  • SUN
  • Transition Voice

I think I just stopped being a feminist"From where the sun now stands I will tribe no more forever."Clemson’s Justyn Ross makes a [...]

Becoming Plastic"We can just equip these new monkeys with some silicon AI and have done with the slow and rando [...]

Retrospectacles"Evolution dropped a dual-hemi into the drivetrain of a fecund nomad, injected Nitro and walked [...]

The Fabrics of Society"Yoga pants are destroying the Earth"Reet AusWe know to avoid plastics because they are ma [...]

Decapitalism by Yellow Vest"And so this is the anger of the mass of people, saying we’re not going to be put off, we’re no [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

To fight climate change, you need to get the world off of fossil fuels. And to do that, you need to [...]

Americans are good on the "thoughts and prayers" thing. Also not so bad about digging in f [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Lefty Greenies have some laudable ideas. Why is it then that they don't bother to really build [...]

Top Commentariats
  • Our Finite World
  • Economic Undertow

Nope, they've just run out of money. This is one of the most expensive countries in the world t [...]

Great stuff, thanks. Exhibit7, this depicts obviously too fast ride down the elevator shaft to be me [...]

The building on a lot is demolished, leaving an empty lot. Where does a "side lot" come in [...]

Imports of LNG from the US are a pipe dream. Natural gas producers need higher prices to be profitab [...]

What we have to fear is collapse, with low oil and other commodity prices. It doesn't look like [...]

Survey now with 600 Respondents, 212 from r/collapse, 136 from Cassandra's Legacy, 99 from TBP, [...]

Yeah, like a government shutdown and endless fear mongering about a border wall. A wall that is a pe [...]

Collapse Something or Other… now UP on the Global Economic Intersection! http://econintersect.com/pa [...]

Collapse Something or Other... now UP on the Doomstead Diner! http://www.doomsteaddiner.net/blog/201 [...]

The link on your site should be: https://freeonlinesurveys.com/s/J6NdIr25#!/0 [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction
Useful Links
Technical Journals

In The Gambia, climate change has affected, and continues to affect, the agriculture sector. Thus, t [...]

According to modern concepts, the main natural sources of dust in the atmosphere are dust storms and [...]

The study of climate, in such a diverse climatic region as the Caucasus, is necessary in order to ev [...]

Rigorous peer-review is the corner-stone of high-quality academic publishing [...]

Follow on our http://www.doomsteaddiner.net/forum/