The last decade's surge was built on cheap money, prime acreage, and OPEC's price umbrella. None of which exist today. Permian producers now need $65-$96/barrel for breakeven, but prices are projected to fall to $59 by 2026.
Investors are done bankrolling growth. After $300 billion in losses, Wall Street wants dividends, and reckless drilling is a gamble they do not want to take.
Declining rig counts, and a looming supply cliff is in the future and the Texas ROZ will not ride in as the oil cavalry at the last minute.
The Texas ROZ supposedly holds another 100 billion barrels. But let's get real. Residual oil zones (ROZ) form due to various geologic conditions and are located below the oil/water contact of main pay zones. A ROZ is not shale. It is a depleted conventional reservoir, requiring far more expensive extraction techniques. CO2 flooding must be used.
The Texas ROZ oil needs $80-$100+/barrel to be viable. Prices that high are not good times. Even if the Texas ROZ holds vast reserves, ramp-up will take decades in an environment where the economy can't do better than limp along.
Ten years ago we had fresh shale plays, eager investors, and $100+ oil. Now we have depleted sweet spots, no easy capital, and volatile prices. The next 10 years are not going to be years of growth. They'll be a desperate scramble to run in place. Then geology is going to win. Shale wells decline 70-90% in three years, and the Permian's best rock is already squeezed out.
Saudi Arabia's spare capacity can crash prices anytime, strangling shale.
The energy transition is a feel good fantasy, and all you have to do is look under the spinning globe on the main page to see the proof that it is a fantasy. More fossil fuel was burned in 2023 than ever before. EVs, efficiency, and climate policies are propaganda plays without teeth. I track CO2 and it rising faster than it ever has.
Cheap oil built modern civilization. When it's gone, everything gets impossibly expensive. Financial collapse will come before total biosphere or supply collapse. The shale sector is a debt house of cards, and it only needs one idiot to make it fall. And when it falls it'll take pensions, banks, and jobs, everything, down with it. And America has plenty of idiots to make it happen.
The U.S. shale miracle was a flash in the pan, not an energy revolution. The next 10 years won't be a repeat of that miracle. It will be a reckoning with stupidity. Renewables don't replace fossils. Renewables actually increase total energy use.
We have no energy transition. We only have energy addition. Our system is increasing fossil fuel use while layering renewables on top. We have Jevons Paradox in action. Jevons Paradox can be dealt with. But it will take a dictatorship of the proletariat to make that happen. American capitalism has no ability to deal with Jevons Paradox. None at all. A system without any ability to regulate itself, and a system in which exploitation is a cornerstone ushers in doom.
Year to year change in CO2 concentration in the air is now at 0.85% per year. See the green table in the upper right corner on the main page which you can also get to by clicking the globe.
https://chasingthesquirrel.com/
That is half again what it was when I started tracking the annual increase.