Oil Crashing

[hal53]

Originally Posted by martinnordegg

It's just when and how far up.

They will get their shortfall back in spades......

[martinnordegg]

Originally Posted by hal53

They will get their shortfall back in spades......

They being???

[hal53]

Originally Posted by martinnordegg

they being???

opec

[Dacotensis]

Originally Posted by martinnordegg

They being???

Oil producers? Maybe?
Guys driving delivery trucks of any sort
Vendors (gas stations)
Other vendors
Investors and developers
Any business that benefits from the production and consumption of oil...

There is a long list that are waiting to squeeze the consumer and tell us some line about how there is a shortage and here is your cost to fill up.
Like it or don't drive...

[martinnordegg]

Originally Posted by hal53

opec

Yep. No doubt they will.

[pikergolf]

Originally Posted by hal53

opec

Will the war on terror, land on the OPEC nations shores.

[dantonsen]

There is alot of oil out there and i imagine it will be a long grind down or sideways because it will probably be awhile waiting for a production cut via high cost oil production dropping off. The usa, russia, iraq and canada just hit new production records this month.

A few years of 30-60$ oil wouldnt be so bad. That was all the price was between 2002-2005. Outside the oddity of 2007-2014 oil has been pretty cheap. Now that we have fvured out how to get trillions more barrels out of the ground it might be back to the days of plenty of supply.

Engines like the 460,454, only went extinct in 1996. We might end up back in an era of abundant supply and the only restriction on burning is emmissions.

[Wild&Free]

Originally Posted by dantonsen

There is alot of oil out there and i imagine it will be a long grind down or sideways because it will probably be awhile waiting for a production cut via high cost oil production dropping off. The usa, russia, iraq and canada just hit new production records this month.

A few years of 30-60$ oil wouldnt be so bad. That was all the price was between 2002-2005. Outside the oddity of 2007-2014 oil has been pretty cheap. Now that we have fvured out how to get trillions more barrels out of the ground it might be back to the days of plenty of supply.

Engines like the 460,454, only went extinct in 1996. We might end up back in an era of abundant supply and the only restriction on burning is emmissions.

International trade via tanker, Diesel
Most Navy, Diesel
Air travel, High NGL content oils
Power generation, Gas, Oil, Coal fired reactors

all larger consumers then a fleet of 450+ gas jobs.

[dantonsen]

Originally Posted by Wild&Free

International trade via tanker, Diesel
Most Navy, Diesel
Air travel, High NGL content oils
Power generation, Gas, Oil, Coal fired reactors

all larger consumers then a fleet of 450+ gas jobs.

I guess what i was trying to say is it wasnt that long ago that we were still driving around with 460's and 454's etc under the hood. Outside the blip of 2007-2014 oil has been in comparison pretty cheap. We dont have to look back very far to find an era of abundant oil and we could easily get back there.... it is not out of the question.

We discovered a whole tonne more oil than we knew we had 10 years ago and ten years ago oil was 50$ per barrel.

2-4$ natural gas hasnt stopped the shale gas revolution either. Why would it stop shale oil?

[hal53]

Originally Posted by dantonsen

I guess what i was trying to say is it wasnt that long ago that we were still driving around with 460's and 454's etc under the hood. Outside the blip of 2007-2014 oil has been in comparison pretty cheap. We dont have to look back very far to find an era of abundant oil and we could easily get back there.... it is not out of the question.

We discovered a whole tonne more oil than we knew we had 10 years ago and ten years ago oil was 50$ per barrel.

2-4$ natural gas hasnt stopped the shale gas revolution either. Why would it stop shale oil?

^^ uh...cause they are getting $12-16 a gig over seas for their natural gas?????

[dantonsen]

Originally Posted by hal53

^^ uh...cause they are getting $12-16 a gig over seas for their natural gas?????

The USA is already exporting lng? The first export terminal in the usa isnt scheduled to ship its first load until q4 2014. last time i checked gas in north america was pretty cheap and tends to stay in north america

The first deal cheniere signed for exports amounted to about 3.50$ unit

[martinnordegg]

Originally Posted by dantonsen

The USA is already exporting lng? The first export terminal in the usa isnt scheduled to ship its first load until q4 2014. last time i checked gas in north america was pretty cheap and tends to stay in north america

The first deal cheniere signed for exports amounted to about 3.50$ unit

Hal is very correct.
European natural gas prices are through the roof. When I worked in Algeria and Tunisia that is the market the gas we were drilling for went. Big bucks!

Yes there are gas pipelines across the Med..

[Sundancefisher]

Well. If service providers and suppliers can adapt quickly and reduce costs which will come from profits and wages then oil companies can afford to drill and activity will pick back up.

We have a fundamental paradigm shift in global energy prices. Any companies hoping for higher prices will go bankrupt. Those not restricting spending will go bankrupt.

Companies are way better to adjust to a low commodity price environment and many of us should not expect raises...and in some areas expect reduced hours or reduced wages to keep working.

Service and supplier prices have shot up faster than oil prices. Everyone likes to make a huge buck but the run is over.

Interesting times but the good news is the work is still there. We just need to do it cheaper.

[Bushrat]

Originally Posted by dantonsen

I guess what i was trying to say is it wasnt that long ago that we were still driving around with 460's and 454's etc under the hood. Outside the blip of 2007-2014 oil has been in comparison pretty cheap. We dont have to look back very far to find an era of abundant oil and we could easily get back there.... it is not out of the question.

I guess you don't remember the 70's when gas was rationed in the US, big motors went the way of dinosaurs, 4 cylinder econo boxes and 4 cylinder pickup trucks began being imported and sold like hotcakes.

[Map Maker]

I remember in grade 3, the teacher and the study books all said, the earth will be depleted of oil in 20 years.

Here we are 35 years later and we got more oil than the demand.

[chasingtail]

Great song for the times were in.

https://www.youtube.com/watch?v=TLyes-bixzY

[Bergerboy]

Originally Posted by chasingtail

Great song for the times were in.

https://www.youtube.com/watch?v=TLyes-bixzY

This song is accurate.

[martinnordegg]

WTI hovering around 47 bucks now. Perhaps round 2 coming up.

[dantonsen]

Originally Posted by martinnordegg

Hal is very correct.
European natural gas prices are through the roof. When I worked in Algeria and Tunisia that is the market the gas we were drilling for went. Big bucks!

Yes there are gas pipelines across the Med..

Ummmm i am talking about north american shale gas........ but ya whatever haha, 3$ gas didnt stop the americans from drilling shale gas. 46$ oil probably wont stop NORTH AMERICAN shale oil lol

[sillyak]

Originally Posted by Sundancefisher

Well. If service providers and suppliers can adapt quickly and reduce costs which will come from profits and wages then oil companies can afford to drill and activity will pick back up.

We have a fundamental paradigm shift in global energy prices. Any companies hoping for higher prices will go bankrupt. Those not restricting spending will go bankrupt.

Companies are way better to adjust to a low commodity price environment and many of us should not expect raises...and in some areas expect reduced hours or reduced wages to keep working.

Service and supplier prices have shot up faster than oil prices. Everyone likes to make a huge buck but the run is over.

Interesting times but the good news is the work is still there. We just need to do it cheaper.

May be money to save on some services, but look at the major frac companies in Canada and the US. Most turned a very small profit in 2013 and through most of 2014 because competition between the companies has resulted in low prices. Cheaper labour (salary cuts) and cheaper diesel, sand ect. May allow prices to drop a bit on fracs, but there isn't near as much room as you make it out to be.

Wells may be a bit cheaper to drill in a downturn, but there is no getting around the huge expense of a modern horizontal, multi stage frac well.

[martinnordegg]

Originally Posted by dantonsen

Ummmm i am talking about north american shale gas........ but ya whatever haha, 3$ gas didnt stop the americans from drilling shale gas. 46$ oil probably wont stop NORTH AMERICAN shale oil lol

Depends on well costs. At current service prices and costs most wells are uneconomic to drill, including development wells. Companies won't be able to raise money to drill uneconomic wells. Very few E&P companies can live on their cash flow alone.

[Sleddawg]

Originally Posted by sillyak

May be money to save on some services, but look at the major frac companies in Canada and the US. Most turned a very small profit in 2013 and through most of 2014 because competition between the companies has resulted in low prices. Cheaper labour (salary cuts) and cheaper diesel, sand ect. May allow prices to drop a bit on fracs, but there isn't near as much room as you make it out to be.

Wells may be a bit cheaper to drill in a downturn, but there is no getting around the huge expense of a modern horizontal, multi stage frac well.

I sign frac tickets in the field, I have a hard time believing they barely turn a profit.

[omega50]

Originally Posted by dantonsen

Ummmm i am talking about north american shale gas........ but ya whatever haha, 3$ gas didnt stop the americans from drilling shale gas. 46$ oil probably wont stop NORTH AMERICAN shale oil lol

I am curious as to the expected production life of a shale oil well compared to a conventional oil well

[elkdump]

Originally Posted by Bushrat

I guess you don't remember the 70's when gas was rationed in the US, big motors went the way of dinosaurs, 4 cylinder econo boxes and 4 cylinder pickup trucks began being imported and sold like hotcakes.

Even more,, Highway maximum speeds were cut back to 55 MPH from 70 MPH. To conserve fuel on. National Level !

[Skytop B]

Originally Posted by Sleddawg

I sign frac tickets in the field, I have a hard time believing they barely turn a profit.

x1000, we use 3 different frac companies, keeps them in line. PD slashed their rates 20% to keep drilling for us. We still have 10 rigs going now but will be dropping 2-3 (gas).

[Ricktye]

The January 2016 contract on the CME shows West Texas Intermediate futures are sitting around US$56 a barrel.

http://www.edmontonjournal.com/busin..._lsa=8f10-cc9f

Originally Posted by martinnordegg

WTI hovering around 47 bucks now. Perhaps round 2 coming up.

[levigne25]

Washington with the help of Saudi Arabia created disruption in the price of oil to hurt Russia's economy for the invasion of krimea , sanctions alone was not enough . That is wy opec and th Saudis said they would not stop production to raise oil prices , cause it's all part of the plan

[The Elkster]

Originally Posted by omega50

I am curious as to the expected production life of a shale oil well compared to a conventional oil well

That is a big point of contention with Shale Oil/Gas and reserves estimates. How long they will last is an educated guess at best. Most companies generally forecast out anywhere from 25 to 50 years. They generally start with exponential decline with steep initial decline then switch to a harmonic curve to extend out the tail section of the curve. But that doesn't mean they will actually produce that way. Lots of variables/unknowns in that equation. There was a study done on the Barnett shale, the longest producing shale thus far, that showed many wells maintained exponential decline to the end of their life and were economically dead at approx. 10 years. That polk's holes in reserves predictions and ultimately $/bbl development costs but gets little media play. Basically with small "tweaks" to the tail section of the decline curve a company can increase well reserves to the point that make the economics work today.

That said a shale wells generally decline approx 80% in the first year. That's as opposed to 10-30% in an older conventional. The long term production for shale wells is low rate and not a big game changer. The early flush production is key. Wells have to pay out early or they are in trouble. Getting that first years flush production at $50/bbl is an economics killer.

[sillyak]

Originally Posted by Skytop B

x1000, we use 3 different frac companies, keeps them in line. PD slashed their rates 20% to keep drilling for us. We still have 10 rigs going now but will be dropping 2-3 (gas).

Look at their earnings reports.

[martinnordegg]

WTI under 46 bucks.