Industry pushes back on Drill, Baby, Drill - Consumers will be disappointed with energy price promises
Wildcatter Harold Hamm Says Shale Needs $80 Oil for Costly Fields
(Bloomberg) -- Harold Hamm, the billionaire wildcatter and a major donor to President Donald Trump, has challenged a claim from the new US energy secretary that domestic oil companies could increase production even at prices as low as $50 a barrel.
Hamm’s words represent one the first signs of public push-back from the US shale industry against the Trump administration’s energy policy. Hamm, 79, was one of the president’s biggest financial backers in last year’s election.
Many in the sector have welcomed the new administration’s policy of cutting regulations and boosting domestic oil and gas production. But that support sits uneasily alongside Trump’s statements calling for significantly lower energy prices.
Energy Secretary Chris Wright told the Financial Times this week that while new supply will push down prices, oil companies will learn to innovate and bounce back.
Speaking Thursday, Hamm, 79, the co-founder and chairman of closely held shale driller Continental Resources, warned that US drillers need $80-a-barrel oil to be able to cover costs at some wells.
“There are a lot of fields that are getting to the point that’s real tough to keep that cost of supply down,” he said in a Bloomberg Television interview. “When you get down to that $50 oil that you talked about, then you’re below the point where you’re going to ‘drill, baby, drill.’”
West Texas Intermediate crude currently trades at around $67, having fallen from $80 in January amid concerns about weak Chinese demand and more supply from OPEC+.
Shale operators are slowing production growth after years of drilling up their best locations. At this week’s CERAWeek by S&P Global energy conference in Houston, executives for some of the largest US shale companies forecast US oil production will peak in the next three to five years.
Scott Sheffield, who expects US output to peak at about 14 million barrels a day, said in a Bloomberg Television interview this week that the oil price needed for publicly traded drillers to cover costs and turn a modest profit is in the range of $50 to $55 a barrel.
“That includes paying your dividend,” Sheffield said. “Nobody’s going to cut the dividend. It’s a no-no.”
Hamm said he has yet to speak with Wright, the former chief of frack-provider Liberty Energy Inc., about the costs that shale operators face and the oil prices they need to thrive.
“He and I are good friends and understand each other quite well,” Hamm said. “I look forward to that conversation.”
Hamm added that Trump’s import tariffs are a concern because of the steel pipe needed to line oil wells.
“That’s another thing that can add a great deal of cost to what we do,” he said. It’s helpful that there are some steelmakers in the US, Hamm said, “but they can’t supply it all.”
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Replies to This Discussion
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Permalink Reply by daddy bill
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According to USA-EIA Alaska's proved natural gas reserves is about 100 trillion cubic ranking it third among the states. Alaska's natural gas withdrawals totaled nearly 3'5 trillion cubic feet in 2023. The pipeline proposed would run from the north slope to the coast.
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Permalink Reply by Rock Man
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I am assuming that 3'5 = 3.5? If so, around 10 BCF of gas per day
How would this impact the present Tx / Ok / La gas prices with this additional volume?
Ripple effect (one of my favorite "discussion" topics) in play big time
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You are right that is 3.5 trillion.
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Permalink Reply by Skip Peel - Mineral Consultant
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In wondering if Alaska had sufficient production to fully support LNG export, that was associated with whether Canadian production and pipeline connections would be needed. So, I'm not wondering about reserves so much as I am interested in current production volumes and pipeline connections. 10 Bcf/d seems short of the supply volume required.
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10 bcf per day is what they are producing now, as it is all they have a market for, not what they could produce with the planned large pipeline to the north slope reserves. I have not heard of Canada being involved in the Alaska LNG plans. Canada wants to build a pipeline west from their gas reserves to their coast and produce LNG.
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Permalink Reply by Skip Peel - Mineral Consultant
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Thanks. The pipeline will of course be required but so will the additional production. Any idea to the recoverable percentage of the Alaskan reserves? The current operators?
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Permalink Reply by Skip Peel - Mineral Consultant
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Oil Rises on Larger Than Expected Crude Draw
By Julianne Geiger - Mar 25, 2025, 3:49 PM CDT
The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 4.6 million barrels for the week ending March 21. Analysts had expected a dip of 2.5 million barrels.
So far this year, crude oil inventories have climbed more than 16 million barrels, according to Oilprice calculations of API data.
Earlier this week, the Department of Energy (DoE) reported that crude oil inventories in the Strategic Petroleum Reserve (SPR) climbed 0.2 million barrels again to 396.1 million barrels in the week ending March 21. Inventory levels in the SPR are hundreds of millions shy of the levels in inventory prior to the SPR withdrawal that took place under the Biden Administration.
At 4:12 pm ET, Brent crude was trading up $0.15 (+0.21%) on the day at $73.15—a nearly $2.50 per barrel gain from this time last week. The U.S. benchmark WTI was trading up on the day as well, by $0.06 (+0.09%) at $69.17—a $1.60 per barrel increase from last week’s level.
Gasoline inventories fell in the week ending March 21, by 3.3 million barrels, after falling by 1.708 million barrels in the week prior. As of last week, gasoline inventories are now 2% above the five-year average for this time of year, according to the latest EIA data.
Distillate inventories also fell this week, shedding 1.3 million barrels in the latest week. In the week prior, distillate inventories slipped 2.146 million barrels. Distillate inventories were already about 6% below the five-year average as of the week ending March 14, the latest EIA data shows.
By Julianne Geiger for Oilprice.com
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Permalink Reply by Skip Peel - Mineral Consultant
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Texas oil production over 2 Billion barrels for the first time ever
ODESSA, Texas (KOSA) - The Railroad Commission has finalized production reports submitted by oil and gas operators for the year of 2024 and found that production surpassed volumes from 2023, and set new production records.
- Oil production was 2,003,844,281 barrels, the first time it surpassed the two billion threshold
- Natural gas production was 62 trillion cubic feet
Taxes from oil and gas production is used in the state budget for public education, the Rainy Day Fund and transportation.
Each commissioner commended the Texas oil and gas industry in a statement.
“These latest records further demonstrate Texas’s position as a global leader in oil and gas production,” said RRC Chairman Christi Craddick. “This also proves that with sensible regulations backed by science and data, it is possible to achieve unmatched economic prosperity while at the same time upholding the mission to safeguard our communities and natural resources.”
“Texas oil and gas powers the state, nation and the world both with energy and economics,” said RRC Commissioner Wayne Christian. “The Texas ‘Economic Miracle’ happens because of oil and gas, which brings in hundreds of billions of dollars that has financially enriched the Lone Star State’s education, infrastructure, health care and more. Energy independence is key to a secure and prosperous nation, and Texas’ production is vital to making that a reality. With President Donald Trump, America now has a federal government that will encourage U.S. oil and gas production, which will lead to more energy, cheaper costs and a stronger nation.”
“Yet another year of record-breaking energy production reinforces what Texans have long known - that Texas energy fuels our nation’s economy and those of our friends and allies across the globe,” said RRC Commissioner Jim Wright. “While Texas energy is utilized worldwide, it is our state and our citizens who truly benefit through the high paying jobs and severance tax revenue that these record setting production figures represent.”
For a breakdown of the past five years of production as tallied by the Railroad Commission click here.
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Permalink Reply by Rock Man
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Interesting and impressive press release as to these numbers.
I wonder how much of this production (both O&G) is tied to high decline, "shale" reservoirs?
And how much new drilling is needed to make up for the steep declines associated with these types of horizontal wells.
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Permalink Reply by Skip Peel - Mineral Consultant
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Good question. I would expect that production volumes from conventional oil and gas wells have been in decline similar to those here in Louisiana. At the current rate of yearly decline, Louisiana oil will reach something close to zero by the next decade. Note, I'm talking state oil, not federal deep water GOM oil. I expect shale accounts for the bulk of 2024 production volumes and that production declines fairly swiftly when drilling slows.
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