Striebs. I fully appreciate your point on the definition of swing producer. Maybe fill up the gap producer is a closer definition. While deep sea and offshore fields discovery and exploration are getting harder to come by and costly. So shale asset will be easier to scale up and down depending on market price although it will take longer than a few days as you quoted as a typical swing producer. And shale asset is an easier option to replace their diminishing reserves while they try to find the next North Sea. Also geopolitical and market location is a significant factor for the value and strategic asset. Oil majors like US shale for these reasons-oil is important for US economy and politics. And so while shale is not the bona fide swing producer they can quickly set up to fill the gap in production when market conditions demand it.
Regarding glut from US shale IMHO it is because of the boom in exploration phase of the US shale in the previous last 2-3years that came online from the rush of appraisal development phase that need to be consumed instead of "flared off" and this is necessary for these companies to validate their proven reserves which is necessary for takeover and service debt and asset valuation. So once their proven reserves are validated they will s ale production according to price amd demands and the glut will stabilize in line with demand.
It can also be view that shale acreage is another mean of onshore storage (if the acreage has good flow rate) as well albeit need more effort and a bit longer to draw.
So shale is an easier and cheaper asset than offshore discovery to replenish oil majors reserves and therefore maintain their market capitalization. IMHO.
AJL Price at posting:
36.5¢ Sentiment: Hold Disclosure: Held
