The coming Trump administration’s yuuuge transformational opportunity
President Obama’s “fundamental transformation” of America may not outlast the Trump presidency. But providence has handed the president-elect a staggeringly important tool with which to transform the U.S. economy and our geopolitical strategy.
The news yesterday that the U.S. Geological Survey has issued a formal assessment of a vast new oilfield in Texas is one more signal that an era has ended for Arab oil producers, Wahhabism and radical Islam, and for Russia’s economy. And the United States faces a prolonged period as an even bigger energy producer and growing exporter, with profound economic opportunities capable of producing jobs. Here is the AP account of the news:
A vast field of shale rock in West Texas could yield 20 billion barrels of oil, making it the largest source of shale oil the U.S. Geological Survey has ever assessed, agency officials said.
The Wolfcamp Shale geologic formation in the Midland area also contains an estimated 16 trillion cubic feet of natural gas and 1.6 billion barrels of natural gas liquids, the agency said in a release.
The discovery is nearly three times larger than the shale oil found in 2013 in the Bakken and Three Forks formations in the Dakotas and Montana, said Chris Schenk, a Denver-based research geologist for the agency.
It is important to note, as the AP does, that this is not a discovery, but rather an expert and official assessment of the magnitude of a geological formation that was already well known.
The Wolfcamp Shale is part of the sweeping and energy-rich Permian Basin, which includes a series of basins and other geologic formations in West Texas and southern New Mexico. It's one of the most productive oil and gas regions in the U.S.
Ken Medlock, director of an energy-studies program at Rice University in Houston, said it seems "likely that we're seeing the birth of a new Permian Basin." The advent of horizontal drilling, hydraulic fracturing and other advancements will allow for the removal of shale oil at a volume that will make the basin "the dominant onshore platform for oil production," he said.
Schenk said it's been known for years that the region could yield new bountiful oil production, but it took the U.S. Geological Survey time to assess the Wolfcamp Shale and estimate the volume of that production.
Off the record, people say there are plenty more formations like Wolfcamp that haven’t yet been assessed.
"We think the potential is there for the future, and it's not going to be realized overnight," he said.
The release issued by the Geological Survey on Tuesday hints at the resurgence the oil and gas industry likely will see in Texas in the coming years following a downturn during which energy prices tumbled and tens of thousands of jobs were lost.
Now here’s where it gets really, really interesting from a geopolitical point of view. The Saudi regime is headed toward a crisis. Their receipts from oil have been cut in half, roughly, so now they are covering half of their bills, roughly. There have been plenty of rumors flying about the Saudis pushing OPEC to restrict production to drive up prices. But even without any new discoveries, American frackers can fairly quickly ramp up production if OPEC succeeds in raising prices, at the expense of market share. And because American engineers and managers never stop finding a better way, fracking is getting cheaper and better as time goes by.
Now the Saudi Royal Family, who number in the thousands, have justified their appropriation of oil wealth for lives of indolence and luxury by essentially claiming to use it to spread Wahhabi Islam around the world. And in that, they have succeeded.
Now that we don’t really need their oil in America, and can start replacing their exports elsewhere with our own supplies, we can tell them to stop funding the spread of violent jihad’s religious infrastructure.
The royals actually have a much worse problem on their hands than anything President Trump could say or do. They are dependent on food imports and on foreign workers to run their economy, and they don’t produce much of value to anyone outside other than oil.
The handwriting is on the wall for the House of Saud. The thousands of royals may end up as the least sympathetic refugees in world history as they move into their villas in balmy spots across the globe.
Meanwhile, Russia’s economy is less dependent on oil than Saudi, but the Russians earn a huge share of their foreign exchange from energy, and the price decline has crimped Putin’s budget and Russians’ lifestyles.
In the great deal-making task ahead, President Trump will have a very valuable card to play in striking agreements with Vlad.