Texas frack­ers drove global power shift; numbers here show how

The Korea Times - - ENVIRONMEN­T -

We don’t hold it against any­one who is more than a lit­tle re­luc­tant to spend free time pour­ing through the oil and gas data gush­ing out of West Texas, but that data does con­tain de­tails that are rel­e­vant to daily life and crit­i­cal to know as we re­vise poli­cies on taxes, in­no­va­tion and, of course, en­ergy.

Take, for ex­am­ple, a re­cent re­port pro­duced by the Fed­eral Re­serve Bank of Dal­las. It con­tains dozens of charts and myr­iad numbers, but it also con­tains ba­sic facts that show how the frack­ing rev­o­lu­tion drove a power shift in oil, and why we now live in a world where some­thing close to half of Saudi Ara­bia’s oil pro­duc­tion can go off-line and not spike gaso­line prices in the United States.

Two charts cre­ated by the Dal­las Fed tell the story. One cap­tures Texas crude oil pro­duc­tion. The chart shows that in 2010 the state pro­duced less than 1.5 mil­lion bar­rels per day, while to­day it is pro­duc­ing nearly 5 mil­lion bar­rels a day.

The sec­ond chart con­tains de­tails about the num­ber of “drilled but un­com­pleted wells.” As of July, there were 8,108 such wells in the United States, and 3,999 of those wells are in the Per­mian Basin. Com­pare that to 2014, when the coun­try had a lit­tle more than 4,000 drilled-but-un­com­pleted wells, with fewer than 1,000 in the Per­mian.

The rea­son this is sig­nif­i­cant is that these are wells that can, rel­a­tively quickly, be brought on­line. Like in­ven­tory sit­ting in a far­away ware­house, ready to be as­sem­bled and shipped to con­sumers, this reser­voir of un­com­pleted wells serves as a calm­ing force on Amer­i­can oil prices.

Be­fore the frack­ing rev­o­lu­tion, the U.S. didn’t have much oil in­ven­tory wait­ing in un­com­pleted wells. If the world sud­denly needed more oil, be­cause of an eco­nomic boom or war or po­lit­i­cal shenani­gans, Saudi Ara­bia came to the res­cue.

The King­dom, known as the swing pro­ducer, mon­i­tored oil de­mand and prices, and turned the spig­ots up and down to calm volatil­ity.

Now, in a world with frack­ing tech­nol­ogy, U.S. pro­duc­ers can ramp up pro­duc­tion — and com­plete those wells — when oil prices rise, or slow down when prices fall. Power has moved from the tra­di­tional Mid­dle East swing pro­ducer to the new U.S. mar­ginal pro­duc­ers who re­act to the in­ter­na­tional oil mar­ket.

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