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So Much for Peak Oil
Billions of Barrels of Oil Discovered in Texas

A U.S. energy company just discovered a “world class” oil and gas resource in west Texas, out on the fringes of the already prolific Permian basin. The WSJ reports on Apache Corp.’s encouraging new find:

The discovery, which Apache is calling “Alpine High,” is in an area near the Davis Mountains that had been overlooked by geologists and engineers, who believed it would be a poor fit for hydraulic fracturing. It could be worth $8 billion by conservative estimates, or even 10 times more, according to the company. […]

The company has begun drilling in the area and says the early wells, which produce more natural gas than oil, are capable of providing at least a 30% profit margin at today’s prices, including all costs associated with drilling. Some are so prolific that they can break even at a price of 10 cents per million British thermal units, according to the company. Natural gas futures closed Tuesday at $2.72. […]

The new play is a short distance from extensive drilling operations and is likely to stoke the speculative fever that has recently engulfed the Permian, a vast swath of geology in West Texas and New Mexico that has been gushing oil and gas for almost 100 years. The Permian has become popular again because producers have found ways to use newer technologies to extract oil from the area at a profit, even at current below-$50-a-barrel prices.

The oil industry has a long history of big discoveries that haven’t panned out, but there’s already a lot to be excited about with the Alpine High resource. For one, the first wells are already proving profitable, even at today’s bargain hydrocarbon prices. Secondly, the field’s proximity to existing drilling operations will make it easier to source the necessary transportation and services.

Speaking of long histories, this is yet another example of those “peak oil” decriers looking foolish. Gaia’s riches continue to surprise even the more bullish analysts among us, and the shale revolution put an end to the notion that the planet’s energy carrying capacity was somehow tapped out. In reality, large new reserves of oil and gas are being discovered all around the world. We’re living in an era of extraordinary energy abundance, and thanks to a market environment that has accommodated a deep pool of companies interested in exploring and inventing new ways to drill more with less, the United States stands at the center of this renaissance.

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  • Blackbeard

    It will be interesting, and instructive, to see how Hillary handles this, and other similar developments, when she is president. The Greens, an increasingly important Progressive constituency, want all this shut down of course, and she kind of promised she would during the campaign. At the same time the energy sector is one of the few areas of our economy showing signs of life and she will naturally be reluctant to provoke a recession.

    • Fat_Man

      They hate the idea of sticking knives and sharp swords into Their Great Goddess Gaia’s flesh.

      • Jim__L

        It seems 2016 is a choice between knives and sharp swords, or torches and pitchforks.

        • Andrew Allison

          I plan to vote for torches and pitchforks!

          • Jim__L

            Hm, I think we’re more likely to see the torches and pitchforks come out if the Felon gets elected. The knives and sharp swords will stick into Gaia if the A**hole (of the Bobby Fisher variety) gets elected.

  • Beauceron

    That’s great for the Mexicans!
    Bravo!

    • Fat_Man

      Mexicans?

      • Beauceron

        Sorry. I pretty much view Texas now as what it is quickly becoming and will be shortly. Simply a suburb of Mexico. The majority of its inhabitants will be Mexican, its language and culture Spanish. Texas will stay part of the US only for as long as they benefit from the relationship. I can see a time where Mexico becomes the richer, less violent, more stable country. And Texas and California and most of the SW will leave the US and rejoin it.

        Mexico is, long term, the stronger horse.

        • ImperiumVita

          Stop using the product?

        • Jim__L

          Google lets us have fun with numbers!

          Texas 2013 GDP: $1.41 Trillion
          Texas 2014 GDP: $1.65 Trillion
          California 2014 GDP: $2.31 Trillion

          Mexico 2013 GDP: $1.26 Trillion
          Mexico 2014 GDP: $1.28 Trillion

          Texas and California are the stronger horses here, short term, long term, any term you like.

          • Beauceron

            That doesn’t speak to my point. If CA and TX are (or are becoming, or will become) Mexico, then those GDP stats mean nothing. Give or take a few points, CA, NM, AZ and soon TX are about half Latino. A state is what its people are, If those people see greater benefit to, or simply prefer, being part of Mexico, then they will go back to Mexico. Perhaps they will want to become independent…but I think their attachment to the US becomes more tenuous as the years go by. Why should they stay with the US? I suppose in CA, Hollywood benefits from being English language.

          • Jim__L

            My point is that IF the SW US ever really wanted to join Mexico, Mexico proper would rapidly become irrelevant to the culture and politics of the greater region. I don’t think Mexican politicians would appreciate that very much, to the point that I suspect they would scuttle the deal.

            I think that it’s more likely that we’ll see a Renaissance in the United States. It will be especially interesting to see how much Trump’s message appeals beyond whites. Just because the chattering class can’t imagine anyone more tanned than John Boehner voting for Trump, doesn’t mean his message doesn’t resonate. I mean, how often do members of the chattering class actually talk to people more tanned than John Boehner? how often do they actually listen?

        • LarryD

          The strongest horse, among the three, is Texas. California is in decline, and they don’t want to preserve their borders. Texas, on the other hand, is growing and does want secure borders.

  • Fat_Man

    Next to socialism, Malthusianism has to be the most discredited ideology in history. The only interesting question is why it still has so many adherents.

    • f1b0nacc1

      It gives them an excuse to tell the rest of us how to live

  • FriendlyGoat

    Consumers paid a great deal of money directly to support the world of Islam in the pre-fracking era of oil prices up to $140+/barrel. When the ME collapses further into chaos as a partial result of lowered revenues, we have to wonder whether it was worse to pay them too much for oil or whether it will be just as costly to defend against their emerging radicals. We have to admit that Afghanistan, Iraq, and Syria have not been cheap to manage, and nothing is “done”.

    • Jim__L

      FG, I’m shocked to see you in favor of such regressive taxation here.

      High energy prices (especially at the pump) hit those farther down the economic ladder far more than they hit those farther up. In fact, our progressive taxation system makes it far better (from a soak-the-rich perspective) for us to spend money on those wars than it would be to tax gas.

      • seattleoutcast

        We can always use the left’s favorite excuse for abandoning Vietnam and Iraq: We weren’t supposed to be supporting those regimes in the first place. So who cares if oil prices decline and genocide occurs, we shouldn’t have been supporting the Middle East regimes since WWII anyway.

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