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Barrel Hub
June 09, 2023
This is Follow The Money, an oil and gas newsletter from the team at:
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Daily Data Dump
The good, the bad, and the ugly of Texas oil production.
Best of the Best 🏆️
Every week, we sift through our proprietary data to find the best performers in Texas.
Never Quit 😢
Similarly, we find the oil producers who need a little help (i.e. call Barrel Hub).
If you’re wondering how we get this information, we’re under strict orders from the CIA not to disclose that (but if you want to know you can go here).
Daily Bulletin
Futures Curve
Lone Star Stories
We’ll see how long they can keep up their below average performance with Saudi Arabia announcing oil production cuts.
In a stunning display of intellect, UH Downtown’s Assistant Professor of Business, Dietrich von Biedenfeld, predicts that gas prices will go up as OPEC cuts oil production.
Having come to the same conclusion, we’ll be applying for an honorary Economics PhD from UH.
The most recent survey from the Dallas Federal Reserve found that the average Permian producer can break even on a new well when WTI is at $61 a barrel.
Reader Question of the Day
How is oil and gas formed?
Oil and gas are formed from organic material that is mainly deposited as sediments on the seabed and then broken down and transformed over millions of years.
Here is a detailed explanation:
Dead plankton (organic plant and animal material) sinks to the ocean floor and gets deposited together with mud, sand, and other sediments.
The resulting sediment (plankton, mud, anaerobic bacteria) is now called sapropel.
Through an increase in temperature, the sapropel is converted into kerogen.
One of the products of anaerobic decomposition of organic matter is kerogen, which at high temperature and pressure slowly generates oil and gas.
Oil is generated when the kerogen temperature reaches 60-120 °C; at higher temperatures, it is mainly gas that is generated.
As oil and gas form, they seep out of the source rock.
Because hydrocarbons are lighter than water, the oil and gas migrate upwards in porous water-bearing rock.
Oil and gas migration takes thousands of years and may extend over tens of kilometers until it is stopped by impermeable layers of rock, or the oil or gas leaks out into the sea.
Folding or faulting forms oil traps where oil and gas can accumulate in the pore space of a source rock below the trap; otherwise, it will escape to the earth's surface as seepage.
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