Oil and gas majors now cutting back in U.S. shale gas fields
In the last 10 days, British Petroleum, Chevron, ExxonMobil and Royal Dutch Shell have all announced they will be spending less on oil and gas exploration in the U.S.[ more examples in the Examiner Article ]
Unfortunately, the results of the shale revolution have been disappointing, leading to significant asset impairment charges and negative cash flows,” [An investment banker] further asks, “Will that capital continue to be available, or will it, too, begin demanding profits rather than reserve additions and production growth?”
Also at stake are a number of high profile U.S. politicians who have staked, to a large degree, their upcoming reelection by campaigning on the claimed successes of the oil and gas companies operating within their state’s shale formation. One such politician seeking reelection this year is Pennsylvania’s Governor Tom Corbett who has been heavily touting what several leading Pennsylvanian labor economists believe are questionable job creation numbers in the state’s Marcellus Shale formation. Corbett has also offered Shell Oil more than $1.6 billion in state tax credits to locate and build an ethane refinery plant outside of Pittsburgh, Pennsylvania.We are not at peak oil, we are at peak affordable oil. This can lead to a worldwide financial collapse. For more on this see my comment on Our Finite World. For even more, read the blog, and the (mostly) intelligent discussion.
For more than 18 months Shell Oil has been unwilling to date to sign the record breaking state tax incentives agreements with Gov. Corbett and move ahead even as the governor continues to campaign on this issue. With Shell’s new CEO announcing a more than 20% cutback in its U.S. shale gas operations just last week, further doubt is now being cast on this deal.