Adding fuel to the flame
Recently, some hot news made the headlines. Various respectable sources, both from the general media and our industry, claimed that the US Geological Survey (USGS) had made the largest oil and gas discovery in the United States ever.
The Wolfcamp shale in Texas is estimated to contain 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids. It is said to be worth USD 900 billion at USD 45 per barrel.
This triggered a wide array of commentators to predict that the price of oil was to remain at historical low levels as a consequence. For the project cargo industry, there are obviously two sides of this medal. Cheap fuel is beneficial. But it also means that some exploration projects are not worthwhile. And that in turn leads to fewer orders. You know the drill.
But fear not! The USGS has not actually discovered this field yet. It rather talks about undiscovered, technically recoverable resources. And as Forbes has figured out, it would cost more than USD 1.4 trillion to generate those USD 900 billion in revenue. The math is simple: The result is a net loss of USD 500 billion at USD 45 oil prices excluding all operating expenses, taxes and royalties.
What do we learn from this? Choose your news provider carefully. A big name isn’t everything, but good research and quality writing is. On that note, please enjoy the ITJ Heavyletter - your source of industry news.