Saudi prince: The American shale boom is kinda’ bad news for OPEC countries

posted at 5:01 pm on July 30, 2013 by Erika Johnsen

For the United States, the shale oil-and-gas boom — thanks largely to the practice of hydraulic fracturing and destined to only gain momentum in the coming years (and even more so if we manage to vote in an administration with more favorable domestic energy policies, hem hem) — has been a much-needed and welcome bright spot in an economy that’s otherwise been struggling to add jobs and wealth and is now in its fifth year of so-called “recovery.”

For certain OPEC nations? Not so much. Via the WSJ:

Saudi billionaire Prince Alwaleed bin Talal has warned that the kingdom’s oil-dependent economy is increasingly vulnerable to rising U.S. energy production, breaking ranks with oil officials in Riyadh who have played down its impact.

In an open letter dated May 13 addressed to Saudi Oil Minister Ali al-Naimi and several other ministers, a link to which was published Sunday on Prince Alwaleed’s Twitter account, he warned that the boom in U.S. shale oil and gas will reduce demand for crude from members of the Organization of the Petroleum Exporting Countries. …

Not long after the prince issued his warning, a report from OPEC published Monday showed the group’s oil export revenue hit a record high of $1.26 trillion in 2012. However, forecasts from the group raise questions over whether that level of earnings can be sustained amid the competition from shale oil.

Saudi Arabia, the world’s biggest oil exporter, is now pumping at less than its production capacity because consumers are limiting their oil imports, Prince Alwaleed said in the letter. This means the kingdom is “facing a threat with the continuation of its near-complete reliance on oil, especially as 92% of the budget for this year depends on oil,” said the prince.

OPEC officials have largely been acting pretty confident about the future impact of America’s growing shale boom on their economies and profits so far, and indeed, the United States’ newfound supplies are only going to add to an already global market with many moving parts and buyers and sellers from all over the world. The added competition and the probably sizeable dropoff in demand from the United States, however, will definitely cut into their regular market share — and considering the huge fiscal dependence on oil to keep things running to which they’re accustomed, they might want to consider coming up with some kind of Plan B.


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Saudi prince: America’s shale boom is kinda’ bad news for OPEC countries

Good thing America’s president is doing everything he can to stop it. /

Resist We Much on July 30, 2013 at 5:08 PM

What’s this guy worried about? 0bama’s got his back.

CurtZHP on July 30, 2013 at 5:09 PM

Translation: we will not be able to fly in as many high-priced hookers from Europe, and won’t have as much money to give to al Qaeda.

Wethal on July 30, 2013 at 5:12 PM

Saudi prince: America’s shale boom is kinda’ bad news for OPEC countries

Sorry big guy, but it’s not limited to America.

DFCtomm on July 30, 2013 at 5:12 PM

The Saudis have in fact been diversifying for years now with mega refineries & petrochemical plants. They also have a thriving steel and aluminum industry.

Look, they can make money at $6 per barrel, while tight shale plays would all go bankrupt at that price within hours or days.

Kermit on July 30, 2013 at 5:13 PM

Translation: we will not be able to fly in as many high-priced hookers from Europe, and won’t have as much money to give to al Qaeda.

Wethal on July 30, 2013 at 5:12 PM

Drain them dry and toss them into the dust bin of history. They were nothing before oil, and they’ll be nothing once it’s gone, if we’re smart.

DFCtomm on July 30, 2013 at 5:14 PM

Anyone with half a brain knows this.
Obama is doing everything he can
to prop up the Saudis, like Bush did
before him.
Time to shut the door on OPEC.
Obama won’t be king for ever and
neither will the King of Saudi.
Let It Burn.

redguy on July 30, 2013 at 5:14 PM

I would say they have a fracking problem.

kingsjester on July 30, 2013 at 5:14 PM

obama could make America independent, bring jobs and prosperity and make himself smell like rosewater, when he should always smell like platinum-sprayed horseturds.

Alas, he’ll make his brothers richer instead of letting them eat their sand and drink their oil.

Schadenfreude on July 30, 2013 at 5:17 PM

Look, they can make money at $6 per barrel, while tight shale plays would all go bankrupt at that price within hours or days.

Kermit on July 30, 2013 at 5:13 PM

Yes, their oil is good quality and cheap to get out. Our shale technology can’t compete with that yet, and may never be able to. However, we only need to limit the wealth they extract from us while we extract the oil from them.

DFCtomm on July 30, 2013 at 5:19 PM

T

he Saudis have in fact been diversifying for years now with mega refineries & petrochemical plants. They also have a thriving steel and aluminum industry.

Look, they can make money at $6 per barrel, while tight shale plays would all go bankrupt at that price within hours or days.

Kermit on July 30, 2013 at 5:13 PM

Hey, Frog Boy. I’m not buying what you’re selling.
The Royal Family knows they are next in line to be over thrown if all the generous benefits they have been paying their subjects have to be cut. A bomb at a refinery here, a cut pipeline there, and they Royals will be flying out to Switzerland ASAP. Why? Because no ex-pat workers would be willing to stay in that hell hole of a country while it is burning down.

Agent of the Cross on July 30, 2013 at 5:19 PM

The Saudis have nothing to worry about. For decades, politicians have been saying we need to decrease our dependence of foreign oil. Now we have the chance, but they’re not just sitting on their hands, they’re actively fighting it.

Liam on July 30, 2013 at 5:20 PM

kingsjester on July 30, 2013 at 5:14 PM

b b b but peak oil!!1!!

DanMan on July 30, 2013 at 5:21 PM

Saudi money is probably behind the anti-fracking fanatics. If nothing else, liberals will take money from the highest bidder. Having no scruples can be financially rewarding for a leftist.

darwin on July 30, 2013 at 5:22 PM

So you wonder how much of this anti-Fracking PR is paid for by the Saudi Arabian government???

albill on July 30, 2013 at 5:22 PM

OT but funny

Sydney Leathers: Anthony Weiner ‘Too Busy Jacking Off’ To Be Mayor

faraway on July 30, 2013 at 5:23 PM

/speaking of fracking

faraway on July 30, 2013 at 5:24 PM

Don’t worry too much, prince, Obama’s on your side.

VorDaj on July 30, 2013 at 5:27 PM

The Saudis have in fact been diversifying for years now with mega refineries & petrochemical plants. They also have a thriving steel and aluminum industry.

Look, they can make money at $6 per barrel, while tight shale plays would all go bankrupt at that price within hours or days.

Kermit on July 30, 2013 at 5:13 PM

Which is why 92% of the Saudi budget is financed by oil.

Steve Eggleston on July 30, 2013 at 5:28 PM

Yes, their oil is good quality and cheap to get out. Our shale technology can’t compete with that yet, and may never be able to. However, we only need to limit the wealth they extract from us while we extract the oil from them.

DFCtomm on July 30, 2013 at 5:19 PM

Get Teh SCOAMT and the EPA out of the way and shale becomes profitable in the $50/bbl range.

Steve Eggleston on July 30, 2013 at 5:29 PM

The phrase “pound sand” comes to mind. . .

But Obama’s got your back, and Putin is funding anti fracking propaganda too.

Wander on July 30, 2013 at 5:29 PM

Saudi money is probably behind the anti-fracking fanatics. If nothing else, liberals will take money from the highest bidder. Having no scruples can be financially rewarding for a leftist.

darwin on July 30, 2013 at 5:22 PM

Just ask Algore Goracle.

Steve Eggleston on July 30, 2013 at 5:29 PM

Anyone with half a brain knows this.
Obama is doing everything he can
to prop up the Saudis, like Bush did
before him.

redguy on July 30, 2013 at 5:14 PM

Obama and Bush – Brothers-From-The-Same-Saudi-GodFather.

VorDaj on July 30, 2013 at 5:31 PM

O/T, but financial Armageddon has just appeared upon the horizon. Game over man, game over!

DFCtomm on July 30, 2013 at 5:32 PM

Saudi money is probably behind the anti-fracking fanatics. If nothing else, liberals will take money from the highest bidder. Having no scruples can be financially rewarding for a leftist.

darwin on July 30, 2013 at 5:22 PM

The United Arab Emirates funded Matt Damon’s anti-fracking flick, Promised Land:

While left-leaning Hollywood often targets supposed environmental evildoers, Promised Land was also produced “in association with” Image Media Abu Dhabi, a subsidiary of Abu Dhabi Media, according to the preview’s list of credits. A spokesperson with DDA Public Relations, which runs PR for Participant Media, the company that developed the film fund backing Promised Land, confirmed that AD Media is a financier. The company is wholly owned by the government of the UAE.

Resist We Much on July 30, 2013 at 5:34 PM

If Bush were President, our media would not stop a full fledged daily report on the horrible gas prices, but with our current president, the price of gas is not an issue to be mentioned. So, everything with be fine for you in America, Mr. Prince. Obama has a special place in his heart for the Middle East, not so much for America.

mobydutch on July 30, 2013 at 5:35 PM

Then sell your oil a lot cheaper. Duh.

The Rogue Tomato on July 30, 2013 at 5:35 PM

Hey, Frog Boy. I’m not buying what you’re selling.
The Royal Family knows they are next in line to be over thrown if all the generous benefits they have been paying their subjects have to be cut. A bomb at a refinery here, a cut pipeline there, and they Royals will be flying out to Switzerland ASAP. Why? Because no ex-pat workers would be willing to stay in that hell hole of a country while it is burning down.

Agent of the Cross on July 30, 2013 at 5:19 PM

Call from the Muslim Brotherhood..line 1! Pickup!

KirknBurker on July 30, 2013 at 5:36 PM

The Saudis have in fact been diversifying for years now with mega refineries & petrochemical plants. They also have a thriving steel and aluminum industry.

Look, they can make money at $6 per barrel, while tight shale plays would all go bankrupt at that price within hours or days.

Kermit on July 30, 2013 at 5:13 PM

All OPEC has to do is drop prices for awhile, long enough to kill off the current US efforts, then raise them back up.

Ward Cleaver on July 30, 2013 at 5:38 PM

Get Teh SCOAMT and the EPA out of the way and shale becomes profitable in the $50/bbl range.

Steve Eggleston on July 30, 2013 at 5:29 PM

We know that’s not going to happen, even if the GOP were to take Congress and the Presidency. The GOP is an imperfect left. A left with a limp, but still the left.

DFCtomm on July 30, 2013 at 5:39 PM

If Bush were President, our media would not stop a full fledged daily report on the horrible gas prices, but with our current president, the price of gas is not an issue to be mentioned. So, everything with be fine for you in America, Mr. Prince. Obama has a special place in his heart for the Middle East, not so much for America.

mobydutch on July 30, 2013 at 5:35 PM

Under Obama, high gas prices are a good thing.

Ward Cleaver on July 30, 2013 at 5:40 PM

O/T, but financial Armageddon has just appeared upon the horizon. Game over man, game over!

DFCtomm on July 30, 2013 at 5:32 PM

That about sums up the idea of introducing rent-backed securities.

Steve Eggleston on July 30, 2013 at 5:45 PM

Notice that they DIDN’T say: The American green energy boom is kinda’ bad news for OPEC countries.

Socratease on July 30, 2013 at 5:45 PM

I think the next thing to do in order to transfer back the wealth is sell them the the dumb idea of solar power and provide the high tech components. Bingo they pay us back hah.

jake49 on July 30, 2013 at 5:54 PM

Under Obama, high gas prices are a good thing.

Ward Cleaver on July 30, 2013 at 5:40 PM

Absolutely! High gas prices means more revenue from gas taxes. Gas taxes pay for investments in transportation. Why would anybody object to that.

Of course under a Republican President, high gas prices means granny needs to choose between filling up the Crown Vic so she can go to mass or cutting her heart pills in half to make ends meet.

In more serious terms. The Demoncrats focus on the positive aspects of public policy when they are in charge and the negative aspects of public policy when they are not.

Happy Nomad on July 30, 2013 at 5:57 PM

I got 10 bucks says Obama will bow to the Saudis on this as soon as he hears about it on TV….

DrDeano on July 30, 2013 at 6:10 PM

So, Some time in the future, say a hundred years from now, The US (if there is still such a thing) will be sitting pretty with all the oil. Yay descendants!

birdwatcher on July 30, 2013 at 6:14 PM

Seems like the Saudi Prince is smarter than our ‘dear leader’.

easyt65 on July 30, 2013 at 6:15 PM

All OPEC has to do is drop prices for awhile, long enough to kill off the current US efforts, then raise them back up.

Ward Cleaver on July 30, 2013 at 5:38 PM

Not true anymore. Once the Nat. gas facilities are built they will produce. Oil wells not so much. Nor can the Saudi’s support their economy on much less than around $80 per barrel as I understand it. Cut off the money and they lose their heads. Literally. I just read they were planning increasing production by around 10% in the near future but can’t sell it. It costs real money to produce fresh water from salt water, etc.

Shale oil can be produced at $30 per barrel last I heard. Our issue is our govt. won’t allow the production. Saudi may go to $6 but can’t hold it very long. Having been in the petroleum business I can guarantee you a 1% surplus in the market will kill your margins.

CW20 on July 30, 2013 at 6:17 PM

Just in case it hasn’t been said yet,

Frack ‘em!

Oldnuke on July 30, 2013 at 6:23 PM

Saudi prince: The American shale boom is kinda’ bad news for OPEC countries

So the Saudis roll in with the big bucks and buy up the tar sands and the shale extraction concessions. Problem solved.

Dr. ZhivBlago on July 30, 2013 at 6:25 PM

The Saudis?

Frack ‘em!!

coldwarrior on July 30, 2013 at 6:38 PM

Barack Roadblock Obama to the Saudi rescue!

The future must not belong to those who slander the prophet of Islam outpump the Islamic billionaires who fund radical Salafi madrassas and global terrorist jihadi scum!

profitsbeard on July 30, 2013 at 7:02 PM

Oh, Boo Hoo Hoo!

Another Drew on July 30, 2013 at 7:26 PM

Hey Saudi! Let’s see you EAT that oil!

GarandFan on July 30, 2013 at 7:55 PM

So the Saudis roll in with the big bucks and buy up the tar sands and the shale extraction concessions. Problem solved.

Dr. ZhivBlago on July 30, 2013 at 6:25 PM

And what they can’t buy gets “unexpectedly” hit by sabotage by “green” groups.

I anticipate that a bunch of those terrorists that have been broken out of prisons all over the MidEast in the last couple of weeks will end up here. Tasked with crippling, if not outright destroying, our shale gas, oil, and refining capability.

I also anticipate increased sub rosa funding for groups like Earth First!, ELF, etc., for the purpose of encouraging “monkeywrenching” (their euphemism for terrorism directed at “environmental criminals”- much of which is in the lethal-effect range).

It’s called “hedging your bets, Saudi-style”.

The present administration will simply pretend it isn’t happening- then blame “right-wing militias” when that dog won’t hunt anymore. With S.J. Lee as head of DHS (which looks like a slamdunk, unfortunately), don’t expect any useful action from that quarter- just raids on anyone they can determine didn’t vote for The One.

We’re about to find out what it must have felt like to live in Western Europe in the heyday of Baader-Meinhof, Renko Sekigun, and etc.

Except that this lot will be determined to turn the lights out on our civilization. And they’ll have a lot of help doing it.

clear ether

eon

eon on July 30, 2013 at 7:57 PM

Not as long as Obysmal is beholden to the Saudis.

onlineanalyst on July 30, 2013 at 8:12 PM

BTW, who wants Keystone XL? 50% Saudi owned Motiva refining. Shell owns the other 50%

They spent well over $30 billion (it went way over budget) expanding it’s Port Arthur refinery which is configured for heavy crude.

You have to look at the entire picture.

Depends on which field is being frac’ed. Take Eagle Ford, there are two zones, Austin Chalk and the lower Shale formation. TMS shale $100/bbl is breakeven, at best.

As to natural gas, ain’t nobody really drilling for this in tight shale right now unless it is wet gas (lots of NGL) or has oil. Companies who bet heavily on dry gas in tight shale formations are teetering on bankruptcy at the low prices now.

Kermit on July 30, 2013 at 8:30 PM

Time to bust these Saudis back to tents and horses.

Sherman1864 on July 30, 2013 at 10:00 PM

kingsjester on July 30, 2013 at 5:14 PM

…ha!…you beat ‘em this morning!

KOOLAID2 on July 30, 2013 at 10:44 PM

The smart move by opec would be to flood the market right now and make fuel dirt cheap on the market. They would be foolish to think long term because fossil fuels will be obsolete in a decade.

Buddahpundit on July 30, 2013 at 11:20 PM

The smart move by opec would be to flood the market right now and make fuel dirt cheap on the market. They would be foolish to think long term because fossil fuels will be obsolete in a decade.

Buddahpundit on July 30, 2013 at 11:20 PM

Back off the bath salts.

slickwillie2001 on July 30, 2013 at 11:35 PM

eon on July 30, 2013 at 7:57 PM

The notion that the Dems are that afraid of the Greens to be put off of shale/tar extraction and the Keystone Pipeline is laughable. Actually, the notion that these Socialists give a frack about the environment at all is hysterically laughable.

Of course these pols are running interference in order to benefit their Saudi masters.

Follow the money. Forget the ideological nonsense. That’s just fodder for the TV talking heads, the bloggers and newspaper editors. That’s what keeps their paychecks coming.

It’s all about benefiting off of organized crime and using propaganda to make it sound like something loftier.

Dr. ZhivBlago on July 31, 2013 at 12:02 AM

Frak ‘em!!!

shorebird on July 31, 2013 at 1:33 AM

It almost doesn’t matter what the production price of shale oil becomes. The moment that full-scale production is authorized, the price of OPEC oil will plummet, just as it did the last time Congress approved drilling on federally owned land. It didn’t take pulling up one drop of oil to scare the Saudis into releasing expanded levels of OPEC oil internationally.

And their gambit worked perfectly, with the help of the U.S. Media and government liberals. As prices fell, they pointed at that and said, “Look, drilling will be much more expensive than that for many years, let’s not drill, let’s buy theirs!” And of course, as soon as the threat of us going after our own oil diminished, prices went right back up as OPEC fears eased.

How foolish can we continue to be?

Hey, liberals? You want money to spend on alternative energy sources? Fine, drill here, drill now, and watch the money flow. You might even get some of the oil companies to help fund your solar/wind/fart energy plans with all the surplus cash they will see. And the sooner their profits go up, the sooner more money is available in the economy, the sooner private researchers might find something better. Besides, while you folks on the Left are always scaremongering about oil running out, I’d think you would want that result. No more oil, no more air pollution, right?

Freelancer on July 31, 2013 at 9:43 AM

Freelancer on July 31, 2013 at 9:43 AM

Only problem now with OPEC dropping the price is that it utterly and totally bankrupts founding member Venezuela, and member Nigeria.

Kermit on July 31, 2013 at 10:02 AM

blink on July 31, 2013 at 1:57 PM

Production rates control market prices. Venezuela is only staying afloat because the high oil prices. It they drop to pre-Chavez level’s the country is beyond broke.

That being said, selling oil at well below market rates can be done by the Saudis if and whenever they want. Heck the only crude traded on a floor as a commodity that actually exists in real life is that on the Dubai exchange. Brent & WTI are merely widgets.

Kermit on July 31, 2013 at 2:57 PM