Oil and Gas Issues

[Buddy]

Another 6% loss today for ExxonMobile.  Any "counter trend rallies" in the coming months/years in the oil and gas stocks.....will be opportunities TO SELL.

There are going to be a BOATLOAD of stranded assets in the fossil fuel world.  I wonder what the Saudi's are thinking about right now. 

[Sigmetnow]

 

The national monuments slashed by Trump will officially be open to mining on Friday
Trump's unprecedented attack on public lands is already benefiting extractive industry.
https://thinkprogress.org/trump-national-monuments-mining-bc92ca54db29/

[Sigmetnow]

Although rival company Shell has pledged to spend as much as $2 billion a year on its new energies business.

BP Plans to Invest $500 Million a Year on Low-Carbon Energy
Plans to set targets for emissions from oil drilling operations
https://www.bloomberg.com/news/articles/2018-02-06/bp-plans-to-invest-500-million-a-year-on-low-carbon-energy

[Buddy]

Overall market is flat to up slightly right now.....and ExxonMobile is down more than 3%.  More people "heading out of Dodge."  Heavy volume....

Again....this is a LONG....LONG....winding road DOWN for Mobile and other oil related stocks.  Years....  Going to be very painful for anyone with a long position.  We're already 3.5 years into the oil downturn....and it has a long way to go.

https://finance.yahoo.com/quote/XOM/?p=XOM

[numerobis]

And Tesla is down about 1.5% today. It's clear the world stock markets have decided that almost all stocks were a bit overpriced. I'm not actually sure what triggered this (doubt anyone really is) whereas it wasn't triggered earlier.

(Also, Bitcoin is zooming up and down, mostly down, over the past week.)

[Alexander555]

Overall market is flat to up slightly right now.....and ExxonMobile is down more than 3%.  More people "heading out of Dodge."  Heavy volume....

Again....this is a LONG....LONG....winding road DOWN for Mobile and other oil related stocks.  Years....  Going to be very painful for anyone with a long position.  We're already 3.5 years into the oil downturn....and it has a long way to go.

https://finance.yahoo.com/quote/XOM/?p=XOM

At some point all these financial markets will get hit hard. And that includes all stocks. If you look at the population growth we have, extreme weather events like hurricanes, droughts..... Than at some point inflation will kick in. And the only tool they have to do something about that is the interest rate. They will have to rise the interest rate, no matter how deep companies, governments, consumers are in debt.

[Sigmetnow]

A Dose of Exxon, Tesla, Junk Bonds and Cold Sweats
Rough days in the stock market haven't changed the fundamentals for energy -- yet.

Some fun energy-related facts in these troubling times:

• Exxon Mobil Corp. and Chevron Corp. -- AKA American Big Oil -- just had their biggest two-session drop since the global financial crisis;
• Tesla Inc. -- AKA cash-burning bet on Big Oil's demise and all-round risk repository -- outperformed the S&P 500 across those same two sessions;
• The average yield on energy-sector junk bonds just spiked to its highest level in 60 ... days;
• Everything was down, then up, then down again Tuesday morning (as of typing this anyway).
• Energy fared worse than any other major sector in the S&P 500 in the two sessions following those halcyon times around 4:00 p.m. New York time on February 1.

Runt Of The Litter
Energy stocks lost almost a 10th of their value in two sessions, trailing a miserable market.
...

https://www.bloomberg.com/news/articles/2018-02-06/stock-market-selloff-how-big-oil-tesla-and-junk-bonds-fared

[Buddy]

Saudi Texas........ = Permian Basin

https://www.forbes.com/sites/davidblackmon/2018/02/07/pioneers-decision-cements-the-permian-basins-status-as-saudi-texas/?utm_source=yahoo&utm_medium=partner&utm_campaign=yahootix&partner=yahootix&yptr=yahoo#17f204783019

"Thus, one of the reasons for its current excess capacity in the Permian is that there are hundreds of wells that have been drilled but not yet placed into production.  That constrained situation will be gradually relieved as the dozen or so pipeline new builds and expansion projects on the books come to completion, the amount of that excess capacity will diminish."
Texas is home to roughly 60% of all the active drilling rigs in the United States.  Two-thirds of those rigs are active in the Permian Basin.

"According to the DrillingInfo daily rig count,   As the announcements by Pioneer, ExxonMobil, Halcon and Oasis indicate, we should only expect that percentage to keep rising in the years to come.  If you're in the oil and gas business, "Saudi Texas" really is the place to be."

[Buddy]

Somebody has to lie about it in order to pull the "suckers money" in.  It may as well be Goldman Sachs.....they have a long history of doing that.

https://www.cnbc.com/2018/02/01/goldman-sachs-raises-oil-price-target-topping-street-consensus.html

And of course.....Goldman also is poised to make a boatload of money when Saudi Aramco goes public.

The thing that Saudi Aramco now seems to be facing.....is not IF to go public.....it's more like, "SHIT...we better go public BEFORE EV's kick in, regardless of what the price of oil is going to be this year or next year...because it is only likely TO GO DOWN."

In other words.....SOMETHING is better than NOTHING.  The longer Saudi Aramco waits....the lower oil might go.  And Saudi Aramco is battling "Saudi Texas" in the short run over the next 2 - 3 years.....and then after that, they will be battling EV's and a dropping oil demand for the decade or two after that.

I would LOVE to be a fly on the wall in an oil meeting in Saudi Arabia right now.  The tsunami is now growing....and even though it is MOVING SLOWLY.....more and more people see it coming.  And see what it will do to the fossil fuel markets....

[Sigmetnow]

The U.S. tax cut is a $6 billion gift to Exxon

ExxonMobil scored a massive gain from the Republican tax overhaul.

The tax windfall helped Exxon's (XOM) net profits surge fivefold, the world's largest publicly traded oil company said on Friday.

Excluding the tax bonanza, Exxon's results left Wall Street wanting more. Adjusted earnings unexpectedly declined and revenue missed the mark by a wide margin. Exxon shares slumped about 5%.

One problem: Exxon isn't pumping as much oil as it used to following years of budget cuts forced by the crash in crude prices. The company's overall production dropped 3% in 2017.

Exxon said the federal tax law enacted by President Trump in December gave the company a non-cash earnings gain of $5.9 billion. That's because the corporate tax rate has been lowered from 35% to 21%. Like other companies, the reduced rate allowed Exxon to write down the amount of money it owed Uncle Sam in the future, known as deferred income taxes. ...

http://money.cnn.com/2018/02/02/investing/exxon-earnings-tax-law-oil/index.html

[Buddy]

Speaking of Exxon....

I am NOT a "technical analyst" (although I did get a degree from Trump University  ).  But this is WHY I bet my friend on Exxon....."$60 before $90".....and I made the bet when the stock price was $83 and change.

I throw up the chart of XOM because Exxon is a "big fish" in the oil and gas industry....although it has been lagging its peers over the past year or two.  And also....because "technically" it is at an important inflection point.  It has already broken DOWN from one long term trend line....and I believe it is going to break down again (although NOTHING is certain in the market).

We'll see how this plays out.  I am more of a LONG TERM FUNDAMENTAL GUY....that also keeps an eye on technical, and when THEY BOTH ALIGN....then I pay close attention.

Right now....I am bearish on the intermediate term of oil because of "the Frackers" (no relation to "The Fockers" ).  And long term....I am FUNDAMENTALLY BEARISH on oil and gas PERIOD.

IF...BIG IF....Exxon DOES move below the $75ish area it could "revist" an old support area of the mid to high $50's.  And that is why I bet $60 before $90.  But FUNDAMENTALLY....I think XOM could move MUCH LOWER over the coming few years...and you can see why I think that the $35 area is achievable....or in a worse (not WORST....but WORSE) case scenario....the $20 area is possible.  That is TOO FAR in the future to really have any grasp on....and we'll have to see how the fundamentals of fracking AND EV's play out over the coming year or two.

But there are a LOT of long term holders of oil and gas IN GENERAL....that could be very disappointed in coming years IF I AM RIGHT.

Keep in mind....I could STILL BE WRONG....and we could see $90 before $60.  But fundamentally...I just don't see it.  Note however....."The Market can remain irrational, a lot longer than you can remain solvent."

At the end of the day....it is about OTHER buyers and sellers....and what THEY think.

[Sigmetnow]

“Five of six Irish parties now support a ban on new oil and gas drilling! It's headed to Parliament with what looks like unstoppable momentum. Such thanks for great organizing!”
https://twitter.com/billmckibben/status/961287031971303426

Irish parliament set to vote for Bill to end new licences for oil and gas drilling
Government risks being left behind as parties come together to support climate action
https://www.stopclimatechaos.ie/news/2018/02/07/irish-parliament-set-to-vote-for-bill-to-end-new-l/

[Buddy]

Here's  long term look at the chart of West Texas Intermediate Crude....

NOTE:  The "shaded" grey vertical areas are recessions.

[numerobis]

You do realize you're using the same data analysis techniques that are used to "prove" that we're entering an ice age, right?

[Buddy]

You do realize you're using the same data analysis techniques that are used to "prove" that we're entering an ice age, right?

WRONG

[gerontocrat]

Exxon's share price decline seems to indicate that it is responding to more than the current market instability. The share price is approaching the level last seen when the price of crude collapsed.

The contrast with, e.g. BP plc is quite marked.

[Tor Bejnar]

Shouting "Wrong" doesn't make it so.  A more statistical analysis of the data shown would be to calculate a best fit using existing data: price per barrel is going up, if you don't cherry pick dates.

I suspect the price per barrel will reach $140 again, even with EVs and renewable power generation; inflation will get us there.  (I'm not hoping it will happen during my lifetime, though!)  With $60 fracked oil and $80 tar sands oil (approximate thresholds, from memory), scarcity will not likely drive the price to $140 (current dollars) again.

[Sigmetnow]

California says will block crude oil from Trump offshore drilling plan

California will block the transportation through its state of petroleum from new offshore oil rigs, officials told Reuters on Wednesday, a move meant to hobble the Trump administration’s effort to vastly expand drilling in U.S. federal waters.

https://www.reuters.com/article/us-usa-drilling-offshore/california-says-will-block-crude-oil-from-trump-offshore-drilling-plan-idUSKBN1FR2UY

[TerryM]

California says will block crude oil from Trump offshore drilling plan

California will block the transportation through its state of petroleum from new offshore oil rigs, officials told Reuters on Wednesday, a move meant to hobble the Trump administration’s effort to vastly expand drilling in U.S. federal waters.

https://www.reuters.com/article/us-usa-drilling-offshore/california-says-will-block-crude-oil-from-trump-offshore-drilling-plan-idUSKBN1FR2UY

Well, they could always drill it, load it on a ship. and export it to - - - somebody that wants expensive, unrefined, American Goop. It's a long way from Ukraine, but what the hey, it's not as if they're is actually going to pay for it anyway.
Terry

[Sleepy]

Ask the Norwegians, they might come up with something. They are not shy.
http://www.dno.no/en/investor-relations/announcements/2018/dno-ramping-up-kurdistan-investments-reports-strong-2017-results/

If the US don't want it back there are still plenty who do.

[Buddy]

Uh oh.....

"The crisis of collapsing oil prices has seemingly focused the industry on doing more with less," JPMorgan global commodity research analyst David Martin wrote in a report.

Thanks to more sophisticated technology and lower prices for personnel and drilling equipment, shale drillers are much leaner these days.

Societe Generale called it a "profound technological transformation" that signals shale is "coming back, and coming back strong."

http://money.cnn.com/2017/02/17/investing/us-oil-comeback-opec/index.html

In fact, SocGen said each drilling rig is now able to pump more oil "than ever before." Capital Economics estimates that the U.S. can replicate the powerful output of 2015 with half the rigs.

https://www.yahoo.com/finance/m/88fbffce-6d63-3b1c-94b6-4278ecefe9fe/ss_opec%27s-oil-price-nightmare-is.html

So....for the next 2 - 3 years....whenever oil is high enough....the frackers will keep pumping oil.  They will keep the SUPPLY SIDE of the equation high enough to "dampen price."  And by the end of 2- 3 years....it will be the "electric vehicles" that will be putting a damper on the DEMAND SIDE.

If I am Saudi Aramco.....that is NOT a pretty picture.  But it is a picture that I realize that "something may be better than nothing"....so they may come to market this year anyway.  I don't know for sure....but Saudi Aramco is really in a bit of a "wedgie".

[Sigmetnow]

"Risks to the environment and to human rights create risks for our pension fund's investments and should be addressed as part of a sustainable business plan."

Oil Investors Call for Human Rights Risk Report After Standing Rock
Marathon shareholders want the oil company to explain how it weighs environmental and social risks after the treatment of Dakota Access pipeline protesters.
https://insideclimatenews.org/news/06022018/marathon-oil-shareholder-resolution-human-rights-dakota-access-environment-social-risk-disclosure

[sidd]

China introduces yaun denominated oil futures:

https://www.reuters.com/article/us-china-oil-futures/china-plans-to-launch-crude-oil-futures-on-march-26-sources-idUSKBN1FT0P2

https://www.bloomberg.com/news/articles/2018-01-01/how-china-will-shake-up-the-oil-futures-market-quicktake-q-a

https://www.bloomberg.com/news/articles/2018-02-09/china-ends-25-year-wait-as-yuan-oil-futures-set-to-start-trading

sidd

[JimD]

The Empire strikes back?

https://www.bloomberg.com/news/articles/2018-02-13/exxon-sues-the-suers-in-fierce-bid-to-defeat-climate-lawsuits

[Buddy]

Peak Oil Demand Is A Slow-Motion Train Wreck

https://oilprice.com/Energy/Crude-Oil/Peak-Oil-Demand-Is-A-Slow-Motion-Train-Wreck.html

Excerpts from the article:

They argue that the focus shouldn’t be on the date at which oil demand peaks, but rather the fact that the peak is coming at all. “The significance of peak oil is that it signals a shift from an age of perceived scarcity to an age of abundance,” they wrote. In other words, oil won’t be on the only game in town when it comes to fueling the global transportation system, which will have far-reaching consequences for oil producers and consumers alike.

The exact date is unknowable, and in any event, the year in which the world does hit peak consumption won’t result in some abrupt “discontinuity of behavior,” the report argues. Demand growth will slow and then decline, but probably won’t fall off a cliff. So, the exact date of peak oil demand is “not particularly interesting.”

And slowing demand growth is occurring at a time when supply is less of a concern than it used to be, in large part because new drilling technologies have led to a wave of supply from shale. “The world isn’t going to run out of oil. Rather, it seems increasingly likely that significant amounts of recoverable oil will never be extracted,” the authors wrote.

[Sigmetnow]

Marathon Reaches Deal with Investors on Human Rights. Standing Rock Hoped for More.

In the face of mounting pressure from investors and the glare of public scrutiny, Marathon Petroleum Corp. officials acknowledged that the company has a responsibility to address environmental and social risks—including potential violations of the rights of indigenous people.

However, in an agreement signed Friday with a block of shareholders, the oil company also said that the ultimate responsibility for protecting human rights lies with government regulators. Human rights activists described the concessions as superficial and said the lack of binding requirements could allow the company to continue with little reform. ...

https://insideclimatenews.org/news/12022018/marathon-petroleum-shareholder-human-rights-resolution-standing-rock-dakota-access-oil

[etienne]

Peak Oil Demand Is A Slow-Motion Train Wreck

https://oilprice.com/Energy/Crude-Oil/Peak-Oil-Demand-Is-A-Slow-Motion-Train-Wreck.html

Excerpts from the article:

“The significance of peak oil is that it signals a shift from an age of perceived scarcity to an age of abundance,” they wrote.

Looks like some people don't know Jevons Paradox. Somehow I can't believe a word of that story. I'm sure that peak oil will be a peak of the offer. Prices might not reach soon the 140+$ level, but that demand would peak without having higher prices would surprise me a lot.
The issue I see for oil producers and consumers is unstable prices which makes it impossible to have a good business plan with that energy.
I agree with the peak income for oil majors concept, but not with a peak demand that would make oil abundant (lower prices closes production infrastruture which reduces abundance).
I also agree that regular price hike are very destructive for oil demand, but not because people switch to another energy source, more because they boost efficiency for people who can aford it, and reduce the oil consumption of the ones who can't because they get poorer.

[Buddy]

Sorry Alberta, BC Will Not Pay for Your Bungling

https://thetyee.ca/Opinion/2018/02/09/Sorry-Alberta-BC-Will-Not-Pay-For-Your-Bungling/

Energy expert Tony Seba believes disruptive technologies such as ever-cheaper batteries and electric vehicles will cause global oil demand to peak at 100 million barrels per day as early as 2020 and decline to 70 million by 2030, collapsing global oil prices to around $25/barrel. He specifically dismisses the business case for Canada’s bitumen exports at the 48-minute mark in this keynote presentation, saying, “any pipelines out of Canada are basically gone.”[/quote]

[numerobis]

etienne: lots of people refer to Jevon’s paradox — like what you just did.

Few actually analyze how it might apply. Care to follow through?

[etienne]

Hi Numerobis,
Yes, my thinking was too much sumarized to be understood.

On once side, Jevons Paradox (increasing efficiency increases consumption) makes me believe that we might find new users for fossil fuels if prices go down - a price reduction is for me similar to an efficiency increase but from a cost point of view.

On the other side, if prices go down, expensive production sites will slow down or stop, like in Alberta.

So between these two constraints, I don't see much space for petrol abundance.

Regular price hikes  boosts efficiency or switch toward renewable, but this doesn't help  on the way to abundance since reduced demand also reduces production.

There is a similar behavior with appartments and houses. When too many are available, construction stops until everything is sold, so abundance is only available in areas that people are leaving. This doesn't work as well with offices because there is much more technology in office's building than in appartments and houses.

[Buddy]

Etienne:

Somehow I can't believe a word of that story. I'm sure that peak oil will be a peak of the offer. Prices might not reach soon the 140+$ level, but that demand would peak without having higher prices would surprise me a lot.

Here's a quick look back at history.  If you look at 1985 - 1998.....13 years of INCREASED DEMAND for oil....and price was FLAT.  Or....you can look at 1983 - 2003....20 years of increased demand for oil.  FLAT.....

Now....what I "see" happening....is that oil demand won't be flat.  After "peaking" in 2020 - 2021 or so.....demand will slowly decrease.

So...right now....price is constrained BY SUPPLY.  And in near future....it will be constrained BY DEMAND. 
 
And...to those of you that think..."well SURELY the experts in Exxon or Chevron or XXXX would pick up on that and adjust appropriately"..... I would ask you to look back at history of companies like Kodak, Wang Computer, Digital Computer, etc...etc    And I would encourage you to look at the Tony Seba video that Sebastian was so kind to post a few weeks ago:



I'm not a "Tony groupie".....he just happens to summarize MANY of the issues/points that I had compiled in my mind from articles, facts, etc that I have researched over the last few years....and he does a much better job of telling the story of what is likely to come. 

[Sebastian Jones]

I think we might escape the pit of Jevons' paradox in this case, because a reason for a drop in fossil fuel costs would be driven by cheaper still alternatives. We are seeing this with coal, despite dropping prices, new coal uses are not springing up.
Where I do worry about Jevons is around total energy use.
To achieve real sustainability, we need to reduce energy consumption, and I'm afraid that as newish tech such as home mounted PV takes off, energy costs will fall and consumption will rise in accordance with Jevons.

[Sigmetnow]

I think we might escape the pit of Jevons' paradox in this case, because a reason for a drop in fossil fuel costs would be driven by cheaper still alternatives. We are seeing this with coal, despite dropping prices, new coal uses are not springing up.
Where I do worry about Jevons is around total energy use.
To achieve real sustainability, we need to reduce energy consumption, and I'm afraid that as newish tech such as home mounted PV takes off, energy costs will fall and consumption will rise in accordance with Jevons.

One word:  Efficiency.
Appliances, electric vehicles, manufacturing, technology will improve to be more energy-efficient.

Footnotes:
1)  People have to want these new, efficient energy-savers.  That cultural change will happen.
2)  When (and where) we need it, generating more power — from sustainable sources like wind and solar — is OK.

[Buddy]

One word:  Efficiency.
Appliances, electric vehicles, manufacturing, technology will improve to be more energy-efficient.

Footnotes:
1)  People have to want these new, efficient energy-savers.  That cultural change will happen.
2)  When (and where) we need it, generating more power — from sustainable sources like wind and solar — is OK.

We are benefitting from the CONVERGENCE of major technological tipping points that are continuing to drive down the costs of (1) Energy, and (2) Transportation, and (3) Any businesses or industries that USE energy and transportation.

The BIG LOSERS in the transformation are electric utilities and fossil fuel companies.  Pretty much everyone else wins.

A)  Solar:  For instance......cost of "solar from the rooftop" will be 4 cents per KWH by 2020
B)  Electric Vehicles:  Clearly EV's and S
C)  Self Driving Technology (for instance the drop in cost of "LIDAR"...which is basically laser radar.
D)  Computing costs:  Continue to drop like a rock....making the car (as Tony refers to it) a computer on wheels.

These things are feeding off one another to push transportation costs and energy costs down BIG TIME...and for MANY YEARS TO COME.

 

[etienne]

I saw Tony Seba's presentation in September (there was a link on https://climatecrocks.com/) and when I sent the link to friends, my comment was "Very interesting presentation on energy transition. Datas are probably right, but I feel that the conclusions he makes are too easy to be true. I'm sure we'll have many surprises in our lives".

I agree that demand will probably go down, but I don't agree that prices will be constraints by demand.  Whale oil price didn't go down when  it was replaced, or for a very short time. Production stoped.

I agree that we will have self driving cars, that it will reduce car ownership, but not that it will stop car ownership like we know it now. BMW has a concept self-driving car with the possibility to drive it if the driver wants.

I agree that we will have batteries and PV everywhere, but load balancing is a major issue that might require centralized systems (don't remember if this was also in Seba's presentation).

The point about escaping Jevons' paradox by Sebastian Jones is a very good point, I can't wait to see how things will change.

[Sleepy]

To achieve real sustainability, we need to reduce energy consumption, and I'm afraid that as newish tech such as home mounted PV takes off, energy costs will fall and consumption will rise in accordance with Jevons.

I absolutely agree. Use Sweden and our heat pumps as a living example.
In 2013 we had over 1.1 million heat pumps in this tiny nation (the only countries in Europe who bought more heat pumps than us in that year were Italy and France). The worst heat pumps will at least provide a yearly COP of 2, officials here calculate the average to COP 3.1. First image shows when this explosion started (2001).

How much would that then be visible on our energy use for housing? We use most of our energy for heating during winter so one would anitcipate a drop, right? Especially since our winters are getting warmer (that part is clearly visible in the statistics...). Second image and red curve "Bostäder".
Nothing, we do not use less energy, it's more or less the same. But without all of those heat pumps it definitely would have been higher.

Add the fact that our energy prices have gone up substantially due to the deregulation of the Swedish energy-market, that decision was taken in 1996. Third image.

Now imagine lower prices. Like in the last two graphs, after we started our nuclear plants in the 70's with "cheap" electricity. The consumption skyrocketed.

The good thing in all of this is that we already have ~90% "clean" energy. But we are destined for failure if we continue on this path. EV's are considered as the easy part along with our industry. Then it will get really hard with issues like population, agriculture, construction, transports, aviation, luxury consumption and meat. Even if we succed in all of those, we will still be around 2 tonnes CO₂eq per capita in 2050.

[numerobis]

Hi Numerobis,
Yes, my thinking was too much sumarized to be understood.

On once side, Jevons Paradox (increasing efficiency increases consumption) makes me believe that we might find new users for fossil fuels if prices go down - a price reduction is for me similar to an efficiency increase but from a cost point of view.

On the other side, if prices go down, expensive production sites will slow down or stop, like in Alberta.

So between these two constraints, I don't see much space for petrol abundance.

Regular price hikes  boosts efficiency or switch toward renewable, but this doesn't help  on the way to abundance since reduced demand also reduces production.

There is a similar behavior with appartments and houses. When too many are available, construction stops until everything is sold, so abundance is only available in areas that people are leaving. This doesn't work as well with offices because there is much more technology in office's building than in appartments and houses.

That's just the very basic supply-and-demand. In the face of oversupply, prices will fall, and then either demand picks up or supply reduces. Not related to Jevons paradox.

For any activity, there's a maximum price of oil before that activity becomes not viable. Buying an SUV, for example. When gasoline is $4/gallon, many people opt for a sedan rather than an SUV, because the SUV is too expensive. That reduces oil demand, which limits the rise in oil prices.

The advent of the EV means there's a new decision point. Maybe at $5/gallon people opt for the EV over the sedan. So now there's a maximum price on oil.

As EV prices fall, the decision point gets lower. And that means that the maximum price on transport oil falls.

And in turn that means the oil demand falls, and expensive oil is abandoned to stay in its geological storage.

[etienne]

And in turn that means the oil demand falls, and expensive oil is abandoned to stay in its geological storage.

Here we agree, but from what I understood, cheap oil production peaked around 2005, which would explain the price hike up to 145 $ per baril. So if expensive oil stays in its geological storage, maybe supply won't be enough and prices will stay like it is now, between 50$ and 70$. I don't believe in oil abundance anymore excepted for short period of time.

[Alexander555]

I think there is still plenty of oil. But the ecological cost will get bigger and bigger. One barrel of shale oil leaves you behind with 10 barrels of polluted water. And than we are not talking about the condition you leave your soil behind. There are plenty of shale formations in China, but mainly in the north. And that's a pretty dry region. In some way you could say that the US fracking industry is a disaster. Not only because it ruins your land. But it brought the price down, all over the planet. Now you have an almost new car park with heavy fossil feul consuming cars. While all the oil producing countries are  in trouble. Otherwise the global population would have been buying EVs. And the us would have had large strategic reserve in his soil. Now they are gone at bottom prices. While they have 200 billion barrels north of them , in Canada. And 300 billion barrels south of them, in Venezuela.

[Alexander555]

What would they do with all that waste water ? Because these are giant quantities.

[gerontocrat]

Speaking of Exxon....

... because Exxon is a "big fish" in the oil and gas industry....although it has been lagging its peers over the past year or two.

It seems Wall Street is not happy with EXXON - seems their Board still think they are"Masters of The Universe" and not just another big player.

https://www.bloomberg.com/news/articles/2018-02-07/wall-street-analysts-to-exxon-what-s-with-the-silent-treatment

[Sigmetnow]

Far More Methane Leaking at Oil, Gas Sites in Pennsylvania than Reported
An EDF comparison of company-reported data and research measurements finds as much as 5 times more methane, a climate-warming greenhouse gas, is leaking.

Pennsylvania Considers New Methane Rules

EDF chose to look at Pennsylvania's methane leaks because the state is expected to issue rules in March to reduce methane leaks from new oil and gas sites. The state Department of Environmental Protection is reviewing the EDF findings, said spokesman Neil Shader.

"DEP is nearing finalization of new permits that will establish thresholds for methane for new unconventional well sites and compressor stations," he said. He did not indicate if or when Pennsylvania would move to cut emissions from existing sites.

Energy In Depth, an industry advocacy group, did not respond to an email about the EDF study.

Colorado and California have adopted rules to cut methane leaks from oil and gas sites, Lyon said, which gives him hope for Pennsylvania, Texas and other oil and gas states. ...

https://insideclimatenews.org/news/16022018/methane-leaks-oil-natural-gas-data-global-warming-pennsylvania-edf-study

[Sebastian Jones]

What would they do with all that waste water ? Because these are giant quantities.

It is a lot of water!
Disposal is more or less of a "problem" depending on how compliant the regulators are. The simplest solution is to pour it into rivers (Pennsylvania), but that is frowned on most places now, and not all places have convenient streams. Some places the waste water is re-injected underground either in custom drilled disposal wells or back down old oil/gas wells (Oklahoma, many other places too). Other places they spray it onto farm fields, or into the forests (Alberta). Some just poses a conundrum so they build the largest dams and man made lakes complex in the world (Alberta  bitumen mines).

[Susan Anderson]

One problem with injection wells (underground disposal) is the staggering increase in earthquakes. We have statistics here in the US. There are some animations (can't find the one I remember) but this one minute one from the Groningen fields gives you the picture:

[Sigmetnow]

Here’s another. (Oklahoma quakes over time.)

[sidd]

" The simplest solution is to pour it into rivers (Pennsylvania) ... "

They had to quit that after they found elevated radiation levels downstream. Nw they truck it to Ohio and cause earthquakes there. The stretch on 70 from New Stanton to Ohio is chock full of haulers moving frack waste to Ohio and deadheading back. Usually 6 kilogallon sucker trucks.

It has been snowing quite a bit on 70 there this year, I'm surprised that i havent heard of wrecks yet. Stay far away from them in snow conditions, they handle like pigs in this weather. I run a few and wont send em out when theres more than half an inch in the forecast.

sidd

[Buddy]

Watch gasoline and oil inventories as well as rig count in the next several weeks.  We'll see if oil and gas equities handle the news.  I am still "bearish" in the intermediate and long term...and believe that any short term bounces will be selling opportunities.  We have had oil inventory builds the last two weeks...AND...the rig count has still been going up...especially in the Permian Basin.

[Buddy]

I think there is a significant likelihood that oil....and oil and gas stocks....have already started their next leg down (remember....oil peaked in 2013, and then had what I think is an INTERMEDIATE TERM bottom in February of 2016....and many oil stocks peaked in 2014).  But from that start....it will have MANY legs down....as well as many "countermoves" (short/intermediate rallies UP....from lower levels).

There are a few "moving parts" re oil and oil markets.  Of course....supply and demand effect the "cash markets" in O&G and O&G equities.  But politics and EXPECTED FUTURE POLICIES effect the price of O&G equities.  As well as the coming public offering of Saudi Aramco (note:  that is MORE O&G dollars that will have to be absorbed by investors wanting to invest in O&G stocks.....so it is "more supply" to the equity market).

There is a SHITLOAD (and oil and gas technical term;) of $$$$ tied up in O&G equities...and it can't all come out at once.  It started in 2014....and this will go on for many more years (IMHO).

Of course....this is a future event...so many things COULD happen.  We have the possibility of war in either the Mideast or Korea.  We also have the effects of a likely impeachment of Trump AND Pence (that is MY take).  But of course.....TIMING....is tough to predict.

HOWEVER.....ONE POSSIBILITY as to timing of the (this) next move down.....would be a late summer impeachment (I know....that's "aggressive").  In the coming weeks and months I expect things in Muellers investigation to continue to heat up...and that may effect the oil and gas equities.  If the markets see the possibility or likelihood of (1) the Donnie and Mike show getting booted out of office, AND (2) the likelihood of a BLUE TSUNAMI rolling across the US coming in November......those things could lead to more downside in oil and gas.

It also won't help if the Arctic is having yet another abysmal melting year with record breaking melting.

That could also lead to an INTERMEDIATE LOW in oil and gas equities (and oil price) sometime in the late summer or early fall.  Again...just ONE POSSIBILITY....but one I am keeping a close eye on.




 

[Buddy]

One of the interesting things to watch for over the coming months AND years....will be the effects on the economies of various countries (Russia, US, and Saudi Arabia as the top 3 producing countries).

Punk Vladi is VERY dependent on fossil fuels....and exports of fossil fuels.  The US doesn't export that much (yet)...but would still be impacted, and Saudi Arabia would be impacted a lot of course.

Russia will be fascinating to watch.  Will pressure ramp up on little Vladi over coming years and push him OUT.....and increase the power of those trying push out the corrupt Oligarchs?  It MAY create the backdrop to finally get him out of power....MAYBE (hopefully).  But this will take a few years more of weak oil prices.....balls of steel by those that resist the Oligarchs...some good leaders from the resistance.....and Vladi and the Oligarchs getting exposed like Trump and his cronies are getting exposed now.

[Buddy]

This is a picture of what Wallstreet thinks about companies that run "deep water rigs" for the oil and gas business.  The company is Transocean (HQ in Switzerland by the way).  Here is its chart from 2003 to today.  It went public in 1993 at about $16....ran up to about $170 during the peak....and is now at $9 bucks. 

One of two things:  (1) maybe its a GREAT DEAL now while the price is low, or (2) it's going lower still.

I happen to believe that RIG....a company that specializes in DEEP WATER and "harsh environment" drilling services....is going LOWER and COULD go to zero.  RIG deals with oil that costs a lot to pull out of the earth (the type that will get killed first if oil price does indeed go down further)....is going lower.  It will be a bloodbath in the future.

And here is a snapshot of the profile of Transocean.
https://finance.yahoo.com/quote/RIG/profile?p=RIG