Saudi America: The Truth About Fracking and How It's Changing the World, McLean - B

                                                This brief book is about fracking and the transformation of America from a country that imported two-thirds of its oil in 2006 to a country that exported oil in 2015 and became the leading producer of natural gas in the world. Indeed, it is possible the US could become a "net exporter" by 2022. "Texas's Permian Basin, now ranks second to Saudi Arabia's legendary Ghawar oil field in production per day."
                                                 After the oil shortages of the 1970's, Congress encouraged the search for natural gas and oil from unconventional sources. This led to an aggressive company, Chesapeake Energy, pursuing horizontal drilling and fracturing technologies in older fields in east Texas. Other companies were soon pursuing opportunities in the Bakken Field in North Dakota, as well as the Permian in west Texas. The fracking firms tended to be run by either wildcatters or people with a wildcatting style, and analysis showed they were spending more than they took in. They were exploring and living on the cheap money available after the 2008 recession. In late 2014, Saudi Arabia and OPEC took a shot across the bow of the frackers by allowing the price of oil to drop and by early 2016, it was $26 per barrel. It was estimated that the cost of an extracted barrel  for the frackers was twice that. The shale boom appeared to be over. But it wasn't. An endless supply of cheap capital and truly creative approach to the drilling took the breakeven down to  a point where shale would be competitive.
                                                  At the end of the day, it is west Texas, the Permian Basin below Midland and the surrounding area, the home of boom and bust for a century, that is the major contributor to our geo-strategic turnaround. It was producing 1 million bd in 2010 and is expected to reach 4 million bd soon. Russia and Saudi Arabia average a bit over 10 million bd. We could be at 17 in five years. However, in an industry known for booms and busts and endless course corrections, nothing is assured. Fracked wells drop down in production much quicker than traditional ones. The flow of capital is not guaranteed either because many of these companies are not cash-flow positive. Other uncertainties are that, as a nation, we have no energy policy other than bringing back coal. Beggaring Russia and Saudi Arabia could backfire, and pushing China into world leadership in renewables raises another set of issues. Even if we achieve independence, we will still be part of a world market and will likely continue to spend $50B  per year to defend the Gulf because Europe and Japan are allies and we'd prefer that neither China nor Russia take over. In the end, the success shale business will depend on its profitability.