Shale Oil and South Texas

Here is a couple things to think about.
Eagle Ford shale runs from Texas on down to Monterey Mexico. Mexico today is now an importer of our refine gasoline and natural gas which mostly comes from Texas.  A 50K barrel refinery is being built on the south coast of Texas to feed Mexico thirst for gasoline.  The oil for the new refinery will be from Eagle Ford and West Texas. There are multiple natural gas pipeline now going into Mexico from Texas to feed the steel and cement industries mainly around Monterey, Mexico.   We in the USA have private mineral rights on our properties. Mexico nationalized their mineral rights and oil business back in 1938. As good capitalists on this side of the border we have optimize our mineral wealth where we are now a net exporter of oil.  Mexico on the other hand due to their corrupt government and bloated Pemex do not have the financial or technical resources to develop new oil fields and certainly not in drilling in shale formations. The production of Mexico’s current wells drop 10% a year.  Pemex supplies 30 percent of their income to the Mexico budget and the percentage is getting less each year.   I love capitalism.
The second  point is OPEC, even though it now only controls 40% of the market still has much influence on the price of oil. Over the last two years since the fall of oil prices OPEC has tried to curtail their output. The lower the production output the higher the prices the barrel of oil will go in theory.   Some of the OPEC member countries continue to cheat on their quotas and still we have seen the price of oil go from the 30 dollar range  back up to around 50 dollar range. Due to American ingenuity, the wildcat drillers now can make a profit at 50 dollars a barrel unlike 5 years ago the oil wildcaters needs to sell oil at 100 dollars a barrel to make a profit.  Most other oil producing countries that are not in OPEC produce as much oil as they can to maximize their return of investments and this is certainly the case in the USA. So we should thank OPEC for their oligopoly practices. Saudia Arabia is the largest producer in the OPEC organization and they are now pushing the other OPEC producer to further curtail their production so to push the price of oil to 60 dollars a barrel.  Aramco oil company which is owned by Saudia Arabia wants to go public in 2018. The initial price of a share of stock in Aramco will be set higher if the price of oil is at 60 dollars a barrel rather than current prices of 50 dollars a barrel. So Saudia Arabia will be putting much pressure on the other member OPEC countries to curtail their production.  I now love OPEC
The third thing to think about is that shale oil have now has made USA an exporter of oil and it is one of the key industries that has greatly helped the economy. Our grandparents keep giving back to us and to the nation.  I love the Piper brothers.

 

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