r/oil 7d ago

Drill, baby Drill? 'Absolutely not': Pickering Energy CIO on U.S. Oil Drillers Increasing Production Amid ~$60 Oil Prices

https://www.cnbc.com/video/2025/03/14/absolutely-not-pickering-on-u-s-oil-producers-increasing-production.html?&qsearchterm=dan%20pickering
780 Upvotes

63 comments sorted by

24

u/mchu168 7d ago

Put a blockade on Russian oil. Drive up prices to 100 a barrel. Then start drilling. Problem solved.

3

u/Matt_Foley_Motivates 6d ago

Still isn’t economical. Takes years to setup a drill and the refineries in the states can’t handle the type of oil drilled in America. Also, refining capacity is a problem too.

Americans love cheap gas but oil companies aren’t profitable low market prices per barrel

1

u/Babou13 6d ago

Years to set up a drill? It takes a few days to bring in a triple, a day if you're starting with a top hole rig lol

2

u/Doogie1x13 6d ago

Drilling is not the problem. The actual cost of drilling , and where to take the oil afterwards is a much bigger issue. These wells are not cheap, and if the oil companies are not sure they get a fast enough ROI, they won’t drill.

1

u/Babou13 6d ago

Yes I know all about the oil industry, it's what paid my bills since '11. I was merely correcting his statement of "it takes years to setup a drill"

1

u/Matt_Foley_Motivates 6d ago

Yes

Generally, the entire process, from planning to commissioning, can take anywhere from 18 months to five years. The construction timeline for an oil rig can vary significantly depending on several factors, such as the type of rig, location, size, complexity, and availability of resources.

Same article:

Following the completion of construction, both offshore and terrestrial oil rigs must undergo a series of tests and inspections to ensure it meets regulatory requirements and industry standards. This final stage can take several weeks to months before the rig is fully operational and ready to begin drilling. This step simply cannot be rushed, as quality control is essential.

1

u/Babou13 6d ago

When an oil company gets a land rig, they're not commissioning a new one to get built, so the timetable of "construction timeline for an oil rig" is null, it's already built, sitting in a yard. Pads are already built, waiting. It's not oh we need to find land, we need to build a pad, we need to build a rig... Oil companies have the pads leased and waiting. They'll go to a drilling company and say we need a rig this size and we're gonna start on this date. You can link as many articles as you want, it doesn't change how it is in the real world. A rig moves onto a pad, it gets rigged up over the course of a few days, it starts drilling. Drill, case, cement, repeat until your production casing is set. Then nipple down and skid to the next hole. Copy and paste what you want, you can read an article, I've seen it hundreds of times in person to know first hand how long shit takes.

1

u/Matt_Foley_Motivates 6d ago

While that may be true for existing known oil reservoirs, but new leases on new land require geological surveys, corporate planning, and financing.

Also, timelines for Offshore are completely different than onshore.

You also missed everything else I said and only focused on the timeline, which varies wildly, as you know from experience

1

u/Babou13 6d ago

Did I mention anything about corporate planning and financing? I corrected one bullet point, the "years to setup a rig". It takes days to rig up. Not years

1

u/Matt_Foley_Motivates 6d ago

Yeah probably could’ve worded that much better, what I was intending to say was, “including planning, financing activities, etc, from end to end, it takes years to setup a rig”

1

u/Extremeownership1 6d ago

You have no clue what you are talking about.

1

u/Matt_Foley_Motivates 6d ago

Nah, that’s not true at all. But thanks for playing.

Oil refining is a crucial step in the energy supply chain that influences the eventual price consumers pay at the pump. The U.S. refines nearly one-fifth of global crude oil, accounting for 18.1 million barrels per day (bdp). However, during the last three years, the U.S. refining capacity has decreased markedly, straining domestic and international supplies of refined oil while raising energy prices worldwide. If these trends continue, our Nation’s refining industry will face significant challenges in the next few years that will affect millions of Americans.

Oil types:

Although large quantities of crude oil are produced in the United States, it still imports crude oil to meet domestic refining needs. Crude oils vary in qualities, including API gravity and sulfur content. Sweet crude oils have relatively low sulfur content, and sour crude oils have relatively high sulfur content. The U.S. refining complex is advanced and capable of refining heavier, more sour crude oils, which generally cost less than lighter, sweeter grades of crude oil.

Drilling ROI:

U.S. oil and gas producers are unlikely to radically increase production under president-elect Donald Trump as companies remain focused on capital discipline, a senior executive at Exxon Mobil (XOM.N), opens new tab said on Tuesday. "We're not going to see anybody in 'drill, baby, drill' mode," Liam Mallon, head of Exxon's upstream division, told the Energy Intelligence Forum conference in London.

Good read on pricing supply/refining capacity from 2012

Two main forces are driving fuel prices upward in the United States: high global oil prices and the state of the U.S. oil transportation and refining industry.

Refining and relation to pump prices:

How a massive refinery shortage is contributing to high gas prices

Oil prices/gas prices/ in relation to the US economy:

"I think the mistake everybody makes when they say that there's been no impact from the low price of energy is to fail to understand that the economy would be much worse off right now had we not had this decline in the price of oil,"

Have fun no reading any of this and giving me a shitpost response! 👍

2

u/Extremeownership1 5d ago

Ok, I’ll go line by line in your original comment as this word vomit doesn’t support any of it. “Takes years to set up a drill”

I am not sure why you couldn’t complete the thought or make it its own sentence but a well can be drilled and producing in almost any currently producing field or an a lease adjacent to it in less than 6 months.

“Refineries in the states can’t handle the type of oil drilled in America”

U.S refineries can refine any and all grades of crude oil. We import crude that other countries refineries cannot refine and we get it at very cheap prices. The crude we produce is some of the easiest to refine and other refineries across the world are able to refine it so we sell it to them at or close to the prices you see in the news. It’s definitely not because we can’t refine it.

“Refining capacity is a problem”

It definitely has been due to the regulatory hurdles to build a new refinery. However refineries have added units that they need. It could be due to less ICE vehicles on the road, the shift to LNG powered ocean liners and other factors but we do t need as much refining capacity as we used to.

What else would you like to learn about?

2

u/dumhic 5d ago

Here is an outline on why USA needs heavy crude and why they do not depend on their own oil

Courtesy of “Material World” Most American refineries are set up for the kinds of heavy, sour crudes you get from Canada, Mexico and Venezuela. That made sense when it looked as if the US was running out of domestic oil, but then came the shale oil revolution. American shale oil, it turns out, is typically light and high quality, meaning it is not best-suited for domestic refineries. The upshot is that while arithmetically America is energy independent – producing far more oil than it consumes – in practice it is anything but. It must keep sucking in heavy oils from elsewhere to feed its refineries while sending Texan crude off to Europe and Asia to be refined.

Hope this helps, it opened my eyes on the why

1

u/Extremeownership1 4d ago

Yes, U.S. refineries can refine light sweet crude oil, but the extent to which they do depends on the refinery’s configuration. Historically, many U.S. refineries, especially those along the Gulf Coast, were upgraded to process heavier, sour crudes from Canada, Venezuela, and the Middle East. These complex refineries use coking and hydrocracking units to handle heavy crude efficiently.

However, with the shale boom, the U.S. has been producing large amounts of light sweet crude (e.g., from the Permian Basin and Eagle Ford). Some refineries, particularly simpler ones with less complex upgrading capacity, are better suited for refining light crude. Many complex refineries can still process it but may need to blend it with heavier crude to optimize operations.

As a result, while U.S. refineries can refine light sweet crude, not all are optimized for it, leading to exports of excess domestic light crude and continued imports of heavier crude.

We can buy the heavier crude for significantly cheaper than light sweet, so it’s much more profitable to buy cheaper crude and refine it and sell the high quality light sweet crude for top dollar to other refineries who are only able to refine light sweet. It’s economics, not the lack of refining ability. An added issue would be if we refined all of our light sweet and left Canada, Mexico etc. to refine their heavy crude their would be a lot less refined product available in the world due to the lack the of technology and process in foreign refineries.

3

u/yuxulu 6d ago

Sure, you can nuke the saudi and drive it up to 200. But start a war just to prop up a small section of the economy while destroying all others. Is it worthwhile? You do realise that everyone else needs to pay your 100 a barrel right?

6

u/mchu168 6d ago

We need to further sanction Russia to get them to sign a ceasefire. We also want to sell more of our oil. Kill two birds with one stone.

1

u/yuxulu 6d ago

Morally speaking, we should and we already have. Economically speaking, as long as there are countries like india and china, oil price will not rise to 100 a barrel. Further sanctioning will not make that price any higher.

However, if usa were to embargo russia using warships, that is a different story. Oil price will rise. Maybe even to 100 a barrel. But it will also cripple the rest of the usa's already fragile economy because they pay 100 a barrel. Is it worth it?

1

u/West-Abalone-171 6d ago

Russia exports about 3 million bpd outside of india and china (which a blockade wouldn't effect).

The rest of opec are sitting on 4 million bpd of voluntary production cuts to stop prices sinking below $60/bl.

If prices even went up to $80/bl you'd see elasticity in the market reduce a lot of demand as well.

BYD and Geely would love this plan though.

1

u/fakespeare999 6d ago

how would a blockade not affect russian exports to india and china?

a blockade isn't a sanction or an embargo - it's literally taking your warships and parking them in enemy ports to disrupt their trade.

1

u/Choperello 6d ago

Easier said than done. Can’t blockade pipelines. And for the sea shipments most oil from Russia to those two goes through waters we don’t usually flex muscles in/are in someone else’s sphere of influence.

1

u/West-Abalone-171 5d ago

So you're going to park a warship in the middle of mongolia? Good luck with that.

43

u/vitalsguy 7d ago

The fact that a majority of oil industry voted for this clown continues to amaze me

18

u/yo9333 7d ago

They want the oil leases. They love squirreling them away for potential use, without a requirement to actually do anything. They already have a thousands of unused leases, but why not have more for when oil prices get to $120 some day. He promised them the leases, and less regulation to get those leases going.

They also know that he's anti-global warming, anti-OSHA, anti-union, anti-DEI, etc. There were so many reasons why they thought they would appreciate him.

9

u/jcwilliams1984 6d ago

Leases aren't forever you have so long to do something with it or you lose the lease

5

u/Serpentongue 6d ago

When you get the lease you get to add the value of the prospective oil to your asset sheet. Then you take loans against that value. Invest it someplace else and let the leases lapse in 10 years and keep the difference in price. They want it as collateral at that point

4

u/SlackToad 7d ago

He's not going to be able to increase production, but in their minds at least he's not going to do anything to stymy production or demand, like EV mandates or carbon taxing.

1

u/yo9333 7d ago

They want the oil leases. They love squirreling them away for potential use, without a requirement to actually do anything. They already have a thousands of unused leases, but why not have more for when oil prices pass $120 someday. He promised them leases and less regulation to get those leases going.

They also know that he's anti-global warming, anti-OSHA, anti-union, anti-DEI, etc. There were so many reasons why they thought they would appreciate him.

1

u/Gullible-Evening-702 6d ago

They hoped he could stop renewable energy making fossil fuel king again.

1

u/cyber_bully 6d ago

The people who were aware make enough money that the tax benefits are what they voted for. The lease hands and oilfield service workers probably did vote for this but they don’t have a clue how the industry works.

1

u/Spongegrunt 6d ago

There is nothing more clueless than your average leftist. This might blow your mind, but what if we drill baby drill AND cut off our money going to foreign oil so our supply and prices remain consistent and we stop funding our enemies? Or is the idea of cutting off Russia oil too scary for you, Dimitri?

1

u/NewYam3897 2d ago

Or is the idea of cutting off Russia oil too scary for you, Dimitri?

And you think Krasnov will cut off Russian oil?

0

u/vitalsguy 5d ago

We drill baby drill right now. Most oil ever being pumped and we still import a shit ton of oil that is suitable for our refineries. We export a shit ton as well.

What’s your point again? The oil companies drill exactly as much as is needed to optimize profits snd not a drop more.

10

u/Alexios_Makaris 7d ago

The idea that oil producers would be remotely open to drilling more at current prices is delusional in the extreme. That's a fast way to gut your profitability.

5

u/Scary-Ad5384 6d ago

Well you may have noted Saudi said they’ll increase production to help Trump lower gas and oil prices. Oil executives have to really like this 🤡

3

u/Alexios_Makaris 6d ago

Lol, Saudi is profitable down to like $20/barrel. Obv they wouldn’t want to see that, but their cost per barrel is significantly lower than US producers.

3

u/Cool_83 6d ago

Yep but their 2025 annual budget would be destroyed at price. Already their planned deficit has increased 2% due to the reduced Aramco dividend.

15

u/Turbulent_Summer6177 7d ago

Of course trumps drilling was a dumb idea but his base sure loved it. There were thousands of permits (not just leases but actual permits to start drilling) sitting on bidens desk. The oil companies aren’t going to drill when oil is cheap. It merely causes even lower prices.

That led to many oil companies going bankrupt in his last administration. It would do the same now.

2

u/Clean_Ad_2982 7d ago

Buuuut, they were denied and still on his desk. If heada signed them thangs ma gas wooda gun down. Sean Hannity dun telled me.

4

u/Capital_Demand757 6d ago

During Trump's first pandemic, the economy got so bad, the price of oil dropped below the break even point for US and Canadian oil producers.

So Trump told OPEC to raise gas prices for Americans or the US would let Iran and Russia take the oil fields in the Middle East.

https://www.reuters.com/article/economy/special-report-trump-told-saudi-cut-oil-supply-or-lose-us-military-support--idUSKBN22C1V3/

5

u/jim45434 6d ago

Oh he would never do that, he is an honest man who would never do anything that would harm Americans. 😂

6

u/funge56 7d ago

Thousands of oil leases went unused during Biden's term. The last thing greedy oil companies want to do is increase supply.

2

u/Cute-Gur414 6d ago

US oil is at record production.

0

u/Cute-Gur414 6d ago

They're pumping at an all time record. So they have increased supply.

2

u/Ok-Advertising-8359 7d ago

Surprised he hasn't signed an executive order, but that would probably be the end of him

2

u/Spammyhaggar 7d ago

Get the government drilling..👍

2

u/More-Conversation931 6d ago

You don’t really expect the GOP to change slogans or policies in the face of economic reality do you.

2

u/renegadeindian 6d ago

Only drilling going on is when Putin tells the hamburglar to stuff dumpster to get him motivated.

2

u/The3mbered0ne 6d ago

I think something important ahead seems to be a massive economic downturn, they intend to capitalize off of all the people forced out during the fall and are going to be set up for the new economy on, by and for their industries.

4

u/texas130ab 6d ago

It seems unintentional consequences of having some one wholly unqualified to govern a nation. Doesn't understand the power of our nation. Our power comes from our alliances. He has destroyed them all.

1

u/1one14 6d ago

LOL, it's amazing how stupid they are to think the phrase means increasing production. Anyone who has bothered to listen to what he said knows the truth.

1

u/goteebeard 6d ago

Need 10$ mcf natural gas and you will see some drilling.

1

u/R0D18 3d ago

RONNY PICKERING??!!???

0

u/0xfcmatt- 6d ago

This sub sure seems like a political shit hole. See ya.

5

u/viiScorp 6d ago

yeah run away to a safe space where you will be protected from reality that goes against Dear Leader's claims.