Chapter 1706 Ready to Move

Lao Tan is also thinking blindly. Yes, oil does make money, but extraction also costs money, especially shale oil. Although the output is large, its high extraction cost far exceeds that of traditional crude oil. It is also well known.

This is both an advantage and a disadvantage. The ancient army charged into battle, and wearing heavy armor did have higher protection, but it is inevitable to slow down the marching speed and lose flexibility.

Since the United States has used shale oil to move the big cake of the OPEC countries headed by Saudi Arabia, it is bound to bear the consequences of the other party taking advantage of the high cost of shale oil and suppressing the development of shale oil by increasing oil production and lowering oil prices!

Unfortunately, even if Lao Tan succeeds in extracting the oil, he will still have to bear the pain of losses. An ultra-small shale oil explorer like him will definitely become cannon fodder for the confrontation between the two giants. He does not know how to die , not to mention that he hasn't dug out yet.

The fact is also true. After the oil price plummeted, the U.S. shale oil industry did suffer a major blow. A lot of shale oil companies lost money, laid off employees, and closed down. For retail investors, at least people die after digging out the oil, and those who die can be regarded as understandable, while Lao Tan died without even watching the spectacular blowout scene, that's a death that can't be seen.

It is foreseeable that as oil prices continue to fall recently, the production of shale oil will inevitably slow down and continue to decline. At that time, it will not be small retail investors who will die, but those medium-sized players with a certain scale, and the scene of mourning. Maybe it's coming soon.

However, among the major shale oil producing areas in the United States, there is one place whose production is still stable and firm, and that is the Permian Basin.

In fact, Lao Tan’s choice is not wrong from a common sense point of view. Everyone wants to make money, and everyone wants to make a lot of money. For this reason, it seems reasonable to gamble on an oil field with a much higher oil production rate than other regions.

We must know that since the middle of this year, international oil prices have rebounded slightly, the number of active oil rigs in the United States has begun to increase, and oil production has rebounded. Many oilfield service providers have even reversed the situation of layoffs and started recruitment.

And the small town in the Permian, which was depressed because of the decline in oil production, is now prosperous again because of the outbreak of the shale revolution. Because the oil industry in the Permian Basin is booming again, it seems to have reproduced the grand occasion of the San Francisco gold rush.

It can be said that as long as Lao Tan successfully produces oil, even if the final result is still dead, is it worth dying?

Of course, rather than saying that the entire oil industry is picking up, it is better to say that the Permian Basin is picking up. At present, most of the increase in oil drilling operations is concentrated in the Permian Basin, and the recovery in production is also in the Permian Basin. The employment rate of the oil industry Growth, mainly in the Permian Basin.

Most fields except the Permian Basin,

It is still miserable, and the current short-term recovery of the global oil industry looks more like a one-man show in the Permian Basin.

But even under such circumstances, Lao Tan couldn't produce oil, which was really puzzling. Yang Cheng still couldn't believe that he would be unprepared and gamble his life by buying casually.

Facing his repeated questioning, Liu Yun pointed to the guest room and said, "When Auntie Qiu wakes up, you can ask her!"

Yang Sen looked at his son with strange eyes, which made him feel uncomfortable, "Why are you looking at me like that?"

"You won't be tempted, will you?"

Yang Cheng touched the back of his head in embarrassment, and if he didn't admit it, he would acquiesce.

Yang Sen stared, "Are you crazy? Want to gamble with your life?"

Yang Cheng shook his head, "No, I just think of the ultra-low mining costs in the Permian Basin, and I feel a little itchy."

The reason why the Permian Basin can be so strong is largely due to its ultra-low shale oil production cost.

Yang Cheng didn't notice it before because he didn't think about it. Because of Aunt Qiu's incident this time, he remembered the information he had read before. The break-even point of the Permian oilfield can be below 40 US dollars per barrel, which is comparable to conventional crude oil.

Moreover, the development cost of many blocks in the Permian is even less than $30/barrel.

The reason is actually very simple. In addition to the cost reduction brought about by the continuous advancement of drilling and other technologies, the geological conditions of the Permian itself are very suitable for shale oil exploration activities. This is the decisive factor. Many blocks in the Permian, page The burial of rock oil is very shallow, and oil can be produced at about 3,000 feet. Compared with other oil and gas fields with tens of thousands of feet, the cost of production has dropped by not one or two dollars.

Not only that, the Permian strata are very thick, and the target layers are densely packed. Some blocks can be divided into 10-15 layers, or even more. Such geological conditions are very conducive to the overall development.

To change the metaphor from the image, the underground oil storage layers of the Permian are stacked layer by layer like a layer cake. As long as you find the right position, you can drill a vertical well to penetrate multiple reservoir layers, so the drilling efficiency is extremely high, which makes The break-even price per barrel of oil is substantially lower than in other regions.

Regardless of geological conditions, the history of oil exploration and development in the Permian Basin has been nearly 100 years, and there is a very mature system in terms of personnel, technology, capital, and even laws and regulations.

For example, the sandstone of the Permian strata was explored in the early days, and the shale and limestone are now explored. That is to say, it is possible to buy the exhausted waste ore at a very cheap price for re-exploration. In addition, the infrastructure on the ground Including old wells are likely to be reused, plus there are many small service companies in the entire Permian Basin, which is of great significance to control costs.

Yang Cheng suspected that the piece of land that Lao Tan bought was an abandoned ore where crude oil had been mined. Otherwise, with his wealth, he might not even be able to buy the land, let alone explore.

Furthermore, because of the long history of the oil industry, the Permian Basin has a complete oil and gas pipeline network system, and it is also close to the U.S. oil consumption and inventory center. There are also many oil equipment manufacturers around, and the climate in this area is warm, basically It can realize all-weather operation 365 days a year.

Taking a step back, the land in Texas is all private property. Isn’t there a piece of land no matter how bad it is? This is not a piece of land in Alaska. Even if it is all desert, it is also land in Texas, and it can be sold for more or less money.

Yang Cheng estimated that if there was no such land, Lao Tan would have committed suicide.

Can Yang Sen not know that the mining cost of the Permian is low? Of course he knows that, as the CEO of a capital management company, although he has not directly invested in the energy industry, real estate and energy are necessarily related. No matter what he wants to mine, as long as it is on land, doesn't he have to buy land?

So not only did he know, but like Yang Cheng, he had a deep understanding of the Permian.

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