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TerryM

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Re: Oil and Gas Issues
« Reply #3500 on: February 03, 2020, 09:35:22 PM »
^^
I'd like to squeeze in a few terms of Tulsi, possibly with OC serving as the VP in waiting. 8)


What are we going to do on our side of the border? The Tar Sands need to go & Trudeau doesn't seem to be the man to close them up.
Terry

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3501 on: February 03, 2020, 09:59:09 PM »
Lower costing fossil fuels make renewable solutions less appealing. Those bent on making a profit from the climate crisis will be hurt as badly as those that profit from fossil fuel extraction and sales. In some instances the ff producers have much deeper pockets and will weather the Coronavirus storm unscathed. Not the small fracking companies that may already be near the tipping point, but the large multinationals.


Russia has been budgeting for crude at $40 since 2014/15 and sells in the Brent market. Saudi Arabia needs a much higher price to afford her military adventures and to keep her populace in line. I'm not sure how long that monarchy can survive with lowered prices.


If the Kingdom should falter I'd expect prices to peek, at least until someone brings the fields back into full production. Iraq is still sputtering along and America seems determined to shut down Iranian production ASAP.


I don't see any winners here.
Terry

It's important to keep in mind the differences between the transportation sectors (mainly fueled by oil) and the electricity sector (where natural gas and the renewables are squeezing out coal).  There are interrelationships between oil production and natural gas prices because a lot of natural gas is produced from oil wells.  In the US, there is so much excess natural gas from the oil wells that it is keeping the price of natural gas low enough to drive the natural gas producers into bankruptcy.

In the meantime, the costs of renewables have been continuing to decrease to the point that new natural gas plants are more expensive than solar and wind farms.  Operating natural gas plants are still competitive and will remain so while the prices for natural gas are depressed.

The low prices for oil due to weak demand are starting to impact oil production in the US.  Fracking is much more expensive than convential fields and most of the US growth in production this century is driven by fracking.  The low prices for oil make fracking unprofitable (and it's questionable whether it was profitable before the coronavirus outbreak).  US oil production growth was predicted to slow this year and if the Asia demand weakens, production may decrease.

So the weak demand for oil may cause a decrease in US oil production which might ease the glut of natural gas.  But the impact on the price difference between renewables and natural gas plants wouldn't be enough to offset the capital costs of building new power plants.  It might make the operating natural gas plants competitive longer, but they would still be replaced by renewables at the end of their useful lives anyway.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3502 on: February 03, 2020, 10:02:35 PM »
The travel restrictions related to the coronavirus outbreak are reducing oil consumption by an estimated 3 million barrels per day.

https://oilprice.com/Energy/Crude-Oil/Coronavirus-Could-Cause-Chinas-Oil-Demand-To-Plunge-By-20.html

Quote
Coronavirus Could Cause China's Oil Demand To Plunge By 20%
By Tsvetana Paraskova - Feb 03, 2020

China’s oil demand amid the coronavirus outbreak is likely inflicting the worst oil demand shock to markets since the financial crisis of 2008-2009, with Chinese demand plunging by 20 percent compared to the typical demand for the season, sources with inside knowledge of the Chinese industry told Bloomberg.

Due to the extensive travel restrictions and factory activity stalling, this 20-percent plunge in oil demand is equal to around 3 million barrels per day (bpd) and is the most sudden shock to global oil demand since 9/11, according to Bloomberg.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3503 on: February 03, 2020, 10:08:35 PM »
Chevron had a great year in 2019, if you exclude the losses from fracking.

https://oilprice.com/Latest-Energy-News/World-News/Chevron-Swings-To-66B-Loss-After-Huge-Shale-Gas-Write-Off.html

Quote
Chevron Swings To $6.6B Loss After Huge Shale Gas Write-Off
By Tsvetana Paraskova - Jan 31, 2020

Chevron Corporation (NYSE: CVX) posted a fourth-quarter loss of $6.6 billion versus earnings of $3.7 billion for the same period of 2018, on the back of massive write-offs of $10.4 billion predominantly in its U.S. shale gas assets.

Don't worry, they'll make it up in volume.

Quote
Cash flow from operations in 2019 fell to $27.3 billion from $30.6 billion in 2018. 

On the production side, Chevron achieved record annual net oil-equivalent production of 3.06 million barrels per day, with Chevron’s CEO Michael Wirth commenting that “for the first time in the company’s history, annual production exceeded 3 million barrels per day of oil equivalent.”

For some reason, investors aren't impressed.

Quote
After the results release, Chevron’s shares slumped at market opening and were down nearly 3 percent at 09:45 a.m. EDT.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3504 on: February 03, 2020, 10:14:10 PM »
US oil bankruptcies are reaching "worrying" levels.  Outside of the oil and gas industry, I think most people would consider this good news.

https://oilprice.com/Energy/Energy-General/Oil-Bankruptcies-Are-Reaching-Worrying-Levels.html

Quote
Oil Bankruptcies Are Reaching Worrying Levels
By Robert Rapier - Feb 01, 2020

Law firm Haynes and Boone recently released its updated Energy Bankruptcy Reports. These reports cover North American oil and gas producers, oilfield services and midstream bankruptcies from the beginning of 2015 through 2019.

Over the entire five-year period, 208 oil and gas producers have filed for bankruptcy since Haynes and Boone’s Oil Patch Bankruptcy Monitor began tabulating E&P filings, involving approximately $121.7 billion in aggregate debt.

There was an initial wave of more than 100 bankruptcy filings in 2015 and 2016 as the oil price crash pushed some companies to the breaking point. As oil prices recovered somewhat after 2016, the number of filings declined to 24 in 2017 and 28 in 2018.

But the fourth quarter of 2018 saw a steep drop in oil prices, and that decline lingered into 2019. This resulted in a jump in the number of filings in 2019 back up to 42.

Quote
The firm writes that commodity prices will likely remain challenging for producers, noting that “the oil market appears to be resistant to sustained increases in spite of two major geopolitical events in the Middle East – the September 2019 attack on Saudi Aramco’s oil facilities and the heightened tensions following the January 7 drone attack on Iranian Major General Soleimani.”

We can now add the growing coronavirus outbreak as a challenge for oil producers, as that has helped drive down oil prices by 10 percent in the past week. Should that trend continue — and given that natural gas prices are also trading at extremely low values — 2020 will likely be another year of bankruptcies for financially strapped oil and gas producers.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3505 on: February 03, 2020, 10:22:07 PM »
While I don't necessarily agree with this guy's financial opinions, he does have a very large audience in the US.  And I think he's got this one right.

https://oilprice.com/Energy/Energy-General/Jim-Cramer-Fossil-Fuels-Are-Done.html

Quote
Jim Cramer: ‘’Fossil Fuels Are Done’’
By Nick Cunningham - Feb 01, 2020

“I’m done with fossil fuels. They’re done. They’re just done.”

CNBC’s Jim Cramer didn’t even feel the need to address the disappointing earnings from the oil majors. Chevron and ExxonMobil had just announced fourth quarter results, which saw profits drop again. Their stock prices were down by 2 percent or so. It didn’t matter. He wanted to make a larger point.

“We’re starting to see divestment all over the world. We’re starting to see big pension funds say, ‘listen, we’re not going to own them anymore,’” Cramer said on CNBC. “The world’s changed. There’s new managers. They don’t want to hear whether these are good or bad.”

The entire energy sector has been hammered over the past 18 months or so. Low oil prices have hit the industry hard, but the malaise goes beyond a cyclical downturn. Investors are souring on the whole notion of oil and gas in general. Brent is trading at $60 per barrel and the share prices of many oil companies are at lower levels than they were four years ago when Brent was in the $30s.

Quote
“We’re in the death knell phase. I know that’s very controversial. But we’re in the death knell phase,” Cramer warned. “The world has turned on them. It’s actually happening kind of quickly. You’re seeing divestiture by a lot of different funds. It’s going to be a parade that says, ‘look, these are tobacco. And we’re not going to own them.’”

rboyd

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Re: Oil and Gas Issues
« Reply #3506 on: February 03, 2020, 11:19:49 PM »
I think that a Bernie in the White House will change the general political discourse in many countries, including Canada. The Liberals are shills for big business and the Conservatives are climate deniers, and the Greens are neoliberals. Shame that the NDP is such a bloody mess.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3507 on: February 04, 2020, 12:33:05 AM »
"These are the darkest days in the industry that I can remember in awhile."
Oil bear market deepens as OPEC talks emergency action to deal with coronavirus crisis
Quote
West Texas Intermediate crude futures were below $50 per barrel in late trading Monday, after closing at $50.11, a decline of 23.7% from its Jan. 8 intraday high of $65.65 per barrel. WTI first fell more than 20% from that level on Jan. 27 on an intraday basis, putting it in a bear market, according to Refinitiv data. Brent crude prices plunged nearly 4% Monday and was down 24% from its January high, when it closed at $54.45 per barrel.
...
Oil prices were slammed Monday, as the virus continued to spread and cruise ships became a bigger concern. Japan quarantined Carnival's Diamond Princess, after a Hong Kong man who sailed on it last month tested positive with coronavirus. The 80-year old had flown to Japan to board the ship, which had 2,666 passengers and 1,045 crew on board.

Fears the virus could impact cruise ship bookings or even curb cruises has been hanging over the travel industry, after airlines cut back on flights to China. Transportation in major Chinese cities has been shut down, and Chinese flights have been grounded.
...
The Citi analysts said China's passenger and freight traffic could be down 70% for two or more weeks, before gradually recovering.

They said demand could fall by 1 million barrels a day in the first quarter, given the much larger size of China's economy and oil demand now, compared to during the SARS outbreak in 2003.
...
As for WTI, it slid below $50 in after hours trading. "We're certainly going to take a trip down in the upper $40s for a time here, potentially the low $40s, but that's as far as I'll go. We just don't know enough," said Kilduff.

Even with 1 million barrels a day of Libyan oil off the market, the world is still well supplied as demand dries up. In the U.S., gasoline demand has slipped but the U.S. industry continues to see solid exports, with oil exports of about 3.5 million barrels a day.
https://www.cnbc.com/2020/02/03/oil-bear-market-deepens-as-opec-talks-emergency-action-to-deal-with-coronavirus-crisis.html
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edmountain

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Re: Oil and Gas Issues
« Reply #3508 on: February 04, 2020, 08:34:25 PM »
Meanwhile in Canada, the federal government continues its headlong rush into building a pipeline using billions of dollars of public money. A pipeline that by the government's own assessment will release between 21 and 26 megatonnes of carbon dioxide equivalent per year counting only upstream emissions--let alone downstream.

The federal government maintains this disastrous pipeline is in the "public interest". Today, the Federal Court of Appeal ruled that the government's consultation with indigenous peoples was "reasonable" and "meaningful".

Quote
Court upholds Trans Mountain pipeline approval

Prime Minister Justin Trudeau’s government fulfilled its obligations to consult with Indigenous people when it re-approved the expansion of the Trans Mountain oil pipeline last year, a panel of the Federal Court of Appeal has ruled.

“We conclude that there is no basis for interfering with the [cabinet’s] second authorization of the Project,” the judgement states, dismissing an application by four Indigenous groups seeking to halt the project.

The decision strips away one more layer of uncertainty over the $10-billion project which is now owned by the government of Canada. The expansion will triple the capacity of the existing pipeline from Alberta’s oilsands to a shipping terminal in Burnaby, allowing Alberta greater access to overseas markets.

...
Source: https://www.theglobeandmail.com/canada/article-court-upholds-trans-mountain-pipeline-approval/

etienne

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Re: Oil and Gas Issues
« Reply #3509 on: February 04, 2020, 09:19:16 PM »
Maybe we are going toward the perfect crash. First suppliers go bankrupt because demand is so low, than when demand restarts, supply will be so low that prices will jump to the sky.

Buddy

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Re: Oil and Gas Issues
« Reply #3510 on: February 04, 2020, 09:23:50 PM »
I DO believe we will have one or more SIGNIFICANT rallies in the coming years, and we’re LIKELY to have one start this year IF we get enough “supply destruction.”

The LONG TERM TREND will remain down, even if we get a 1-2 YEAR rally.  Lower highs ...and lower lows.

FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

Buddy

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Re: Oil and Gas Issues
« Reply #3511 on: February 04, 2020, 11:22:14 PM »
And on another note ..... it’s “dinner time”:  Exxon $60 before $90 😀

https://finance.yahoo.com/quote/XOM?p=XOM&.tsrc=fin-srch
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Bruce Steele

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Re: Oil and Gas Issues
« Reply #3512 on: February 04, 2020, 11:59:27 PM »
Congratulations , What will this year bring us ?

Buddy

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Re: Oil and Gas Issues
« Reply #3513 on: February 05, 2020, 01:15:56 PM »
Bruce.  That bet I won was from about 2 and 1/2 years ago.  The reason I made the bet, when Exxon was $80 .... and the guy I bet with only needed $10 of upside ... while I needed a $20 drop ... was because of LONG TERM FUNDAMENTALS .... and LONG TERM TECHNICALS (chart pattern .... lower highs and lower lows).

As long as there is enough fracking capacity, that keeps a lid on oil prices.  And that is something to keep a close eye on.  That may end up being the source of what could be a long term (1 to 3 year or so) COUNTER TREND RALLY (long term downward trend in oil price is still in pace until oil gets to $150 a barrel).

The other long term issue is the demand curve.  When will demand peak.  I think it will peak in 2 or 3 years .... but jury is still out on that.
« Last Edit: February 05, 2020, 02:07:20 PM by Buddy »
FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

Buddy

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Re: Oil and Gas Issues
« Reply #3514 on: February 05, 2020, 01:35:02 PM »
I said a couple days ago (and further back as well) that Russia and Saudi Arabia are in bigger trouble than they think right now.

Well .... here’s something that points to that.

https://www.yahoo.com/finance/news/russian-government-pulled-25-billion-180536368.html
FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

Buddy

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FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

gerontocrat

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Re: Oil and Gas Issues
« Reply #3516 on: February 05, 2020, 07:44:41 PM »
https://finance.yahoo.com/amphtml/news/shell-boosts-crude-output-top-182158849.html
Did you get your dinner although below $60 was for less than a day ?

Market Summary > Exxon Mobil Corporation
NYSE: XOM
62.72 USD +2.76 (4.60%)
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Buddy

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Re: Oil and Gas Issues
« Reply #3517 on: February 06, 2020, 01:41:18 AM »
The bet didn’t specify, and I haven’t talked to him yet .... but I’m sure the bet will be paid.

It actually didn’t even need to have a close at $60 or below, but it did close for the day below $60.00.

As I have noted over a few years ago .... this is going to be a LONG HAUL .... and there have been many counter trend rallies already.  We will have a LONG counter trend rally at some point in the not-too-distant future that could last a year or more.
FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

crandles

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Re: Oil and Gas Issues
« Reply #3518 on: February 06, 2020, 02:28:59 AM »

Keep in mind the last bet I made with him, XOM was at $80 when I made the “$60 before $90” bet.

First things first.  XOM needs to get below $60 ... and it’s not there yet. 🤷🏻‍♂️

4th Feb closed at $59.97, is that enough or does it need a weekly or monthly average or something like that?

Rodius

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Re: Oil and Gas Issues
« Reply #3519 on: February 06, 2020, 11:15:04 AM »
Interesting read......

Government Agency Warns Global Oil Industry Is on the Brink of a Meltdown

We are not running out of oil, but it's becoming uneconomical to exploit it—another reason we need to move to renewables as quickly as possible.

https://www.vice.com/en_us/article/8848g5/government-agency-warns-global-oil-industry-is-on-the-brink-of-a-meltdown

Buddy

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Re: Oil and Gas Issues
« Reply #3520 on: February 06, 2020, 12:52:24 PM »
Regarding $60 before $90 bet, the only requirement is that it got to $60.00 or $90.00 first.  An intra day touch would have done it, but actually closed below $60.

For part of that day it had only gotten down to $60.005 (1/2 of 1 cent away) .... and I was thinking, wouldn’t THAT be a funny way to lose a bet.

About 2 years ago it got UP to $89.30 on one day, and the next day it got up to $89.25.  After it “failed” at $90 .... I felt pretty confident, and the series of “lower highs and lower lows” continued.

FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

Buddy

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Re: Oil and Gas Issues
« Reply #3521 on: February 06, 2020, 01:05:29 PM »
The article that Rodius posted is spot on.  The “low hanging fruit” in the O & G industry is gone.

This is good for renewables of course, especially as there continue to be advances in efficiency of renewables.  Fossil fuels for energy production and most of transportation are dead man walking.  It’s just a matter of time.

Like the tobacco industry before them, they will try to sell every last drop they can.

Most people still think humanity is an “advanced society”.  Laughable.
FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

Tom_Mazanec

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Re: Oil and Gas Issues
« Reply #3522 on: February 06, 2020, 01:47:31 PM »
But tobacco is still widely sold globally.
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Buddy

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Re: Oil and Gas Issues
« Reply #3523 on: February 06, 2020, 02:45:02 PM »
Yes.  And that was my point.  O & G companies will do anything to keep drilling.  Anything.  Just like the tobacco companies.

Fortunately, the alternative to O&G keeps getting less expensive through either cost reduction or efficiency improvement.  It is a dead end for O & G.  Not as soon as ALL of us would like, but an end nonetheless.
FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

Buddy

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Re: Oil and Gas Issues
« Reply #3524 on: February 06, 2020, 05:57:46 PM »
Also keep in mind that you have:

1). A killing dictator in Saudi Arabia (MBS)
2). A killing dictator in Russia in Putin (another killing in France this week by Putin)
3). A “dictator in training” in Trump.  A sociopath without a bottom, and the most corrupt administration in US history.

Those also represent the 3 largest oil producers in the world. ANYTHING can happen, and most of it is NOT very good.

Now is a good time to become acquainted with your senators and US reps.  This is going to be a crazy, dangerous year.  But NEVER succumb to a bully or dictator ... or you will have them for life.

FOX (RT) News....."The Trump Channel.....where truth and journalism are dead."

rboyd

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Re: Oil and Gas Issues
« Reply #3525 on: February 06, 2020, 06:31:46 PM »
Trump is an extension of the trend in US politics, "the most corrupt in history" is a silly statement. Corruption was rife in the US in the 1800s, also JFK only got elected because of the mafia and democrat machine in Chicago, then we have Nixon (who committed treason with the Vietnamese behind the then President's back), a Bill Clinton who sold out and then made massive amounts of money off his Presidency, then GWB who got the Supreme Court to gift him the Presidency and started a massive illegal spying apparatus, then Obama who sold out and is now cashing in at $300,000+ for a 30 minute speech to the bankers that he saved in 2008. Then of course, there is Hillary and Mr Biden and his ever "fortuitous" family. We also have all the FBI, CIA, NSA shenanigans brought into the light by the 1970s Church Committee (and a lot never got to see the light of day). Oh, and members of Congress are not subject to insider trading laws with respect to information they gain during their normal course of business.

Trump is bad, but he is nothing special. At least he hasn't started any new wars (yet) for US sons and daughters to die needlessly in. Two parties, pretty much following the same policies. We need Bernie, but he will probably get cheated again, or maybe die of "natural causes" or in an "accident".


TerryM

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Re: Oil and Gas Issues
« Reply #3526 on: February 06, 2020, 06:46:33 PM »
^^
Ramen


Let's not forget Reagan's "October Surprise, or the "fast acting cancers" that have eliminated so many of the Deep State's enemies.
Terry

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Re: Oil and Gas Issues
« Reply #3527 on: February 06, 2020, 08:32:24 PM »
Russia's reluctance for a production cut exposes possible crack in three-year-old OPEC alliance
 Thu, Feb 6 202011:31 AM EST
Quote
Russia's reluctance to jump on board a bigger OPEC production cut may signal a potential fissure within the oil producer alliance, known as OPEC plus.

Led by Saudi Arabia, other OPEC producers and Russia were considering an emergency meeting to cut production in response to the impact of the coronavirus, but it's not now clear whether that will happen.

A committee advising the producers met for three days in Vienna and on Thursday recommended a 600,000 barrel a day reduction in production to bring relief to the oil market, according to reports. The Joint Technical Committee, made up of representatives of producing countries, is not a decision making entity, and it only makes recommendations to the ministers of OPEC countries and its allies, including Russia.

However, Russian Energy Minister Alexander Novak said time is needed to weigh any impact on the oil market from the virus, which has led to a steep decline in energy demand due to a massive shutdown of transportation within China and elsewhere.
...
Oil prices have fallen more than 20% from their early January high, and the sharp drop in demand from China comes as the market was already seeing softness. China has cut off transportation in a number of major cities and grounded all flights. Airlines have cut back flights both to China and Hong Kong.

Earlier Thursday, there were reports that China National Offshore Oil Corp. declared force majeure, which means it won't take delivery of some liquefied natural gas cargoes because the coronavirus limits its ability to move import the fuel.

"There are rumors in the market of all other sorts of force majeures being declared as well," said Kilduff. He said he expects oil demand to temporarily fall by 1 million to 2 million barrels a day.
https://www.cnbc.com/2020/02/06/russias-reluctance-for-a-production-cut-exposes-possible-crack-in-three-year-old-opec-alliance.html
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Alexander555

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Re: Oil and Gas Issues
« Reply #3528 on: February 06, 2020, 08:53:11 PM »
Last week China imported on average 3 million barrels of oil a day less. And that's without the extra cities in lockdown from Sunday. That means plenty of oil is piling up.


Sigmetnow

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Re: Oil and Gas Issues
« Reply #3530 on: February 07, 2020, 12:16:48 AM »
The toxic legacy of old oil wells: California’s multibillion-dollar problem
Los Angeles Times
Quote
ARVIN, Calif. — Across much of California, fossil fuel companies are leaving thousands of oil and gas wells unplugged and idle, potentially threatening the health of people living nearby and handing taxpayers a multibillion-dollar bill for the environmental cleanup. Read the full story

Of particular concern are about 35,000 wells sitting idle, with production suspended, half of them for more than a decade. Though California recently toughened its regulations to ensure more cleanup funds are available, those measures don’t go far enough, according to a recent state report and the Times/Public Integrity analysis. California’s oil industry is in decline, which increases the chances that companies will go out of business. That in turn could leave the state with the costs for cleaning up their drilling sites, which if left unremediated can contaminate water supplies and waft fumes into people’s homes.

Under federal, state and local laws, fossil fuel companies are required to post funds, called bonds, to ensure that wells are ultimately plugged and remediated. These set-aside funds are a response to the oil industry’s history in the United States, in which thousands of companies went out of business without banking enough financial reserves to pay for remediation.

Industry representatives say they are doing their part to pay for cleanup in California, but their bonds are woefully inadequate to meet the expected costs. The Times/Public Integrity investigation found that bonds posted to the state by California’s seven largest drillers, which account for more than 75% of oil and gas wells, amount to about $230, on average, for every well they must decommission. Other bonds held by federal and local regulators don’t significantly raise those amounts. ...
https://www.latimes.com/projects/california-oil-well-drilling-idle-cleanup/
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sidd

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Re: Oil and Gas Issues
« Reply #3531 on: February 07, 2020, 02:06:42 AM »
Re:  treason with the Vietnamese behind the then President's back

Not quite. Johnson was witting, but did not disclose.

sidd

rboyd

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Re: Oil and Gas Issues
« Reply #3532 on: February 07, 2020, 07:17:44 AM »
Still treasonous behaviour, even if Johnson didn't go after Nixon for it - good 'ol "tricky dickey" Nixon.

Buddy

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Re: Oil and Gas Issues
« Reply #3533 on: February 07, 2020, 01:38:09 PM »
Here is a graph for Saudi Aramco for any of you that want to look at it from time-to-time over the next months, years, decade.

It just went public a couple months ago.  The Saudis were only able to “offload” about 1.5 % of the company stock in the IPO (they had initially wanted to offload 5%).

The current price is now below the IPO price.  Note that the “market cap” is in Saudi currency.  The US dollar market cap is under 2 Trillion US dollars.

I think the PE is about 18 (not sure if that is trailing OR forward PE though).

https://finance.yahoo.com/quote/2222.SR?p=2222.SR&.tsrc=fin-srch
« Last Edit: February 07, 2020, 05:00:28 PM by Buddy »
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Re: Oil and Gas Issues
« Reply #3534 on: February 07, 2020, 06:48:38 PM »
« Last Edit: February 07, 2020, 09:41:12 PM by Buddy »
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #3535 on: February 07, 2020, 08:51:04 PM »
The “energy” sector referred to here doesn’t specify oil & gas, but...

Junk bond scare is rising: 'No one cares. People are buying everything'
Quote
The junk default rate in 2019 rose to 3.3%, the highest level in three years and well above the non-recession norm of 2.4%, according to Fitch Ratings. Those defaults amounted to $38.6 billion, a 32% surge from 2018.

Martin said he is particularly concerned about energy, which had a default rate of 9.5%, well above the 4.4% norm though below the all-time peak of 19.7% in January 2017. Energy is the largest high-yield sector, though its share of the market is diminishing.
...
High yield-rated companies already have priced $50 billion in the first five weeks of the year, a sizzling pace as all of 2019 only saw $160 billion in issuance, according to Bank of America Global Research.

Moody's said speculative-grade bonds maturing over the next five years will total $1.2 trillion, a new record. That's up 19% from the year-ago period.

Ratings companies have been warning about a rising number of "fallen angels" that could slide from investment-grade debt down to junk. Investors with a lower risk profile might shy away from such debt, creating financing problems for those companies. ...
https://www.cnbc.com/2020/02/07/junk-bond-scare-is-rising-no-one-cares-people-are-buying-everything.html
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3536 on: February 07, 2020, 10:14:58 PM »
The “energy” sector referred to here doesn’t specify oil & gas, but...

Junk bond scare is rising: 'No one cares. People are buying everything'
Quote
The junk default rate in 2019 rose to 3.3%, the highest level in three years and well above the non-recession norm of 2.4%, according to Fitch Ratings. Those defaults amounted to $38.6 billion, a 32% surge from 2018.

Martin said he is particularly concerned about energy, which had a default rate of 9.5%, well above the 4.4% norm though below the all-time peak of 19.7% in January 2017. Energy is the largest high-yield sector, though its share of the market is diminishing.
...
High yield-rated companies already have priced $50 billion in the first five weeks of the year, a sizzling pace as all of 2019 only saw $160 billion in issuance, according to Bank of America Global Research.

Moody's said speculative-grade bonds maturing over the next five years will total $1.2 trillion, a new record. That's up 19% from the year-ago period.

Ratings companies have been warning about a rising number of "fallen angels" that could slide from investment-grade debt down to junk. Investors with a lower risk profile might shy away from such debt, creating financing problems for those companies. ...
https://www.cnbc.com/2020/02/07/junk-bond-scare-is-rising-no-one-cares-people-are-buying-everything.html

At least one of the shale gas producers was rated as "junk" status late last year.  Given the number of bankruptcies in the sector, I doubt it's the only one.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3537 on: February 07, 2020, 10:17:13 PM »
US drilling activity is way down from last year.  And oil production decreased this week.

https://oilprice.com/Energy/Energy-General/Oil-Rigs-Hold-Steady-While-Oil-Prices-Continue-to-Sink.html

Quote
Meanwhile, oil production slipped back to 12.9 million bpd after hovering at 13 million for three weeks, according to data provided by the Energy Information Administration—a high for the United States.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3538 on: February 07, 2020, 10:26:03 PM »
Another story about the US being near peak oil.

https://oilprice.com/Energy/Oil-Prices/Peak-Shale-Will-Send-Oil-Prices-Sky-High.html

Quote
Peak Shale Will Send Oil Prices Sky High
By Nick Cunningham - Feb 06, 2020

Much of the cheap oil has been produced, and the oil industry is increasingly relying on costly reserves. While the world is awash in supply right now, the market may begin to tighten up in the next few years, forcing prices higher.

Quote
That’s especially true of U.S. shale. Wall Street is taking an increasingly critical view of shale, an industry which has never been cash flow positive for any meaningful period of time. As investors, banks and other forms of finance distance themselves from unprofitable shale drilling, the rate of bankruptcies is on the rise. Clearly, at least a portion of the global oil industry needs much higher prices in order to sustain growth. The production gains of the past decade were possible via cheap credit and an overcapitalized industry in North Dakota and Texas.

U.S. shale could be nearing a peak, or, at least a plateau. There isn’t a consensus on this, by any means, but a growing number of analysts and even some within the industry are eyeing such a possibility. For example, John Hess, CEO of Hess Corp., recently said that production in the Bakken could peak within the next two years and the Permian will peak in the mid-2020s. But others have said that the Permian peak may arrive sooner. Steep decline rates mean that any slowdown in the pace of drilling will quickly impact production.

And the rest of the world may not be far behind.

Quote
The report – which was recently analyzed in an excellent article by Vice – notes that about 70 percent of the world’s oil supply comes from fields discovered before 1970, and the bulk of that comes from 10 to 20 enormous fields. The pace of discoveries has slowed dramatically in the past decade. In fact, conventional oil production largely plateaued in 2005. Since then, U.S. shale and Canadian oil sands accounted for most of the new supply. But as the number of bankruptcies in the shale patch reveal, the new forms of oil are more costly to produce.

Quote
Roughly 81 percent of existing production is already in decline. Given that the average decline rate bounces around between 5 to 7 percent per year – which translates to lost production of about 3 to 4.5 million barrels per day (mb/d) each year – the world will need to come up with an extra 40 mb/d just to keep output flat, Michaux predicts.

In other words, the market will need the equivalent of four additional Saudi Arabia’s just to replace depleted fields by 2040. But, as previously mentioned, the major source of supply growth in the past decade – U.S. shale – is running on fumes, and needs higher prices in order to grow.

The article includes the usual peak oil predictions of global economic catastrophe if production of fossil fuels decline.  I skimmed it pretty quickly but didn't notice any mentions of electric vehicles or renewable energy, which would easily replace the fossil fuels if the prices of fossil fuels skyrocket due to peak oil.

rboyd

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Re: Oil and Gas Issues
« Reply #3539 on: February 08, 2020, 12:18:23 AM »
Right now we have Venezuela (2 Mbpd) and Libya (1 Mbpd) pretty much offline, Iran constrained with sanctions (2 Mbpd+), and total OPEC/non-OPEC production cuts of at least 2.5 Mbpd. So as long as we don't have a very rapid decline in US production, we may simply end up with a better balanced market and $70 oil in the short-term. Oil demand is forecast to grow 1 Mbpd / year at the most, so a lot of give in the system. If there is a recession, which we are very overdue for, the oil price may fall significantly and never recover as transport electrification starts to really impact oil demand. 

60% of global oil use is for transport and 40% for petrochemicals etc., the latter being much harder to replace. It will take a few years for EVs to start having a significant impact on the 60% (of which half is trucks, planes and ships), but they could then start offsetting any depletion. A Bernie presidency with a big push for EVs and higher ICE efficiencies (ie less trucks and SUVs) may bring that forward.

The late 2020's could get bad for the oil exporters really fast as I would assume that domestic producers would keep production up (why waste a resource that will be worth less and less over time?) pushing all the volume impact onto the exporters.

Importers will probably want to help out some specific oil exporting nations to stay stable as well source from more stable ones. If the Middle East starts imploding as the oil rents to keep the large populations under control start disappearing it may make sense to source from anywhere but the ME. Also, probably in the interests of the US to keep Mexico and the other North and South American producers stable, same for China with Russia and possibly Iran and Iraq for the BRI although they may get caught up in ME chaos.

Only a rapid peak oil impact, from say an absolute collapse in US shale oil production within a few years, would probably outpace the electrification of transport given the current spare capacity available. At some point the Saudis, the ones that survive the civil war and massive depopulation back to sustainable levels, will go back to riding camels. And we will no longer care about what happens in the Middle East. Could be a complete sh*t-storm in between though as those nations start to collapse in the 2030s at the latest. Their populations have grown way past a sustainable level - we are talking about many 10s of millions in failed states. The rulers will probably do a run for it and take their sovereign wealth funds with them.
« Last Edit: February 08, 2020, 12:59:13 AM by rboyd »

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Re: Oil and Gas Issues
« Reply #3540 on: February 08, 2020, 08:31:11 AM »
The article includes the usual peak oil predictions of global economic catastrophe if production of fossil fuels decline.  I skimmed it pretty quickly but didn't notice any mentions of electric vehicles or renewable energy, which would easily replace the fossil fuels if the prices of fossil fuels skyrocket due to peak oil.
The easy replacement of fossil fuels by electricity is a fairytale just like a peak oil economic catastrophe is a dramatic fiction. Fossil fuels are so efficient and have such a high energy density, require so little technology to be used that they are difficult to replace. But peak oil will create a general price increase that will put out of business inefficient users which will leave more oil/coal/natural gas for the others. Prices don't go up regularely, but oscillations between high and low prices will do the job.

Buddy

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Re: Oil and Gas Issues
« Reply #3541 on: February 09, 2020, 02:40:14 PM »
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Buddy

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Re: Oil and Gas Issues
« Reply #3542 on: February 09, 2020, 03:10:38 PM »
And Kansas City is becoming a renewable energy hub ....

https://www.bizjournals.com/kansascity/news/2020/02/09/editors-briefing-you-cant-see-the-wind-but-you-can.html?ana=yahoo&yptr=yahoo

Not the Kansas City that just won the Super Bowl ... that was Kansas City, Kansas. 😉😉

We’re talking about Kansas City, Missouri, the other side of the river.  😉😉

Renewable energy will continue to apply downward pressure on oil and gas prices.
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gerontocrat

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Re: Oil and Gas Issues
« Reply #3543 on: February 10, 2020, 08:08:22 PM »
As you can see from the headline, OilPrice.com is in favour of exploiting the Arctic for fossil fuels.

https://oilprice.com/Energy/Energy-General/This-Delayed-Megaproject-Raises-Questions-About-Arctic-Energy.html
This Delayed Megaproject Raises Questions About Arctic Energy
By Simon Watkins - Feb 10, 2020, 9:31 AM CST
Quote
In the context of global liquefied natural gas (LNG) companies, Russia’s number two gas producer (after state-owned Gazprom), Novatek, has always been seen as being unusually reliable in terms of delivering its projects on time and on budget. This applied equally to the first three liquefaction and purification facilities (trains) of its US$27 billion flagship Arctic LNG project in the Yamal Peninsula (Yamal LNG) despite the full weight of U.S. sanctions being imposed on Russia in 2014 as a result of its annexation of Crimea. The announcement last week from Novatek that it has delayed the launch of the fourth train of the Yamal LNG project, then, raises serious questions about the company’s ambitious plans for the project and for similar projects being undertaken or considered by Russia in the Arctic.

the current delay to the fourth train of Yamal LNG – able to export just under 1 mtpy of LNG - is likely to be extremely short-lived, given the huge political interests involved. “It is likely to be the result of the pipelines that were initially installed that are used for gas processing not being able to optimally handle the exceptional cold temperatures involved at times, so they will need to be replaced, which is not a major setback,” Polischuk told OilPrice.com last week. “It does not mean that there is anything wrong in the basic Arctic Cascade design,” he added.***

Indeed, Arctic Cascade - based on a two-stage liquefaction process that capitalises on the colder ambient temperature in the Arctic climate to maximise energy efficiency during the liquefaction process - is the first patented liquefaction technology using equipment produced only by Russian manufacturers. The overall goal of Novatek, as the company itself has stated more than once, is to localise the fabrication and construction of LNG trains and modules to decrease the overall cost of liquefaction and develop a technological base within Russia. This means that these Arctic LNG operations are not subject to the whims of other countries and future sanctions. “I wouldn’t expect the changes that need to be taken to the current pipelines in Yamal LNG to take more than a few weeks, so the delay to Novatek’s overall schedule will be very small, and there should be no knock-on effect to the launch date of the Obsk LNG plant in 2023,” he concluded. Obsk LNG will be Novatek’s third large-scale LNG export project, with its 5 mtpy also based on the use of the Arctic Cascade technology. The final investment decision on it is due to be taken in the second half of this year.

*** I mean, what could possibly go wrong ?
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3544 on: February 10, 2020, 09:19:34 PM »
Oilprice.com reports stories that are both favorable to the industry and unfavorable.  Most of their articles have been unfavorable lately, highlighting the fact that the fossil fuel producers can't make money at the current prices.  Here's another example.

https://oilprice.com/Energy/Gas-Prices/Gasmaggedon-Sweeps-Over-Global-Gas-Market.html

Quote
“Gasmaggedon” Sweeps Over Global Gas Market
By Nick Cunningham - Feb 05, 2020

China’s state-owned gas importers are considering declaring force majeure on LNG imports, which would amplify the turmoil in global gas markets.

Quote
Shipments of oil and gas are backing up at Chinese ports, which is creating ripple effects across the world. Now, Chinese state-owned CNOOC is considering declaring force majeure on its LNG import commitments, according to the FT. Sinopec and CNPC are also apparently considering the move.

Prices were already in the dumps. JKM prices recently fell to 10-year lows. But they have continued to decline, approaching $3/MMBtu for the first time in history. Just a few weeks ago, JKM prices were trading at around $5/MMBtu, itself an incredibly low price for this time of year.

LNG exports from the U.S. are uneconomical at these price levels. Many exporters have contracts at fixed, higher prices. But shipments can be cancelled for a fee. And any spot trade would be hit hard. The question now is whether shipments will come to halt. “Forward prices for summer are now at levels where U.S. LNG shut-ins begin to seem viable,” Edmund Siau, a Singapore-based analyst with energy consultant FGE, told Bloomberg. “There is usually a lead time before a cargo can be canceled, and we expect actual supply curtailments to start happening in summer.”

Quote
There is little relief in sight. “Even with our projected increase in power sector natural gas demand due to the current low price environment, we estimate natural gas stocks to end this summer with 3.85 tcf in the ground,” Bank of America Merrill Lynch said in a recent note. “Such inventory level would be more than 100 bcf higher YoY, and does not leave much room for bearish errors from mild weather, high renewable generation, or reduced LNG exports.”

Quote
The investment bank calls the U.S. Midwest power sector is the “true market of last resort,” which means that U.S. gas prices have to fall to such low depths that coal-fired power plants are forced offline in their last redoubt – the Midwest.

“We believe the US cannot sustain reduced LNG exports this summer,” Bank of America warned. “Therefore, US natural gas prices might have to go low enough to stimulate sufficient Midwest power sector natural gas demand to balance the entire global gas market.”

vox_mundi

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Re: Oil and Gas Issues
« Reply #3545 on: February 10, 2020, 10:28:42 PM »
The Coronavirus Is a ‘Black Swan’ for Oil and Energy Markets, says Ned Davis Research
https://www.cnbc.com/2020/02/10/the-coronavirus-is-a-black-swan-for-oil-and-energy-markets-says-ned-davis-research.html

Analyst Warren Pies noted that the outbreak has reduced Chinese demand for oil by 2 million to 3 million barrels per day, which means “the oil market is looking down the barrel at no demand growth for the calendar year, and outright demand contraction is now on the table.”

At the end of January, the firm downgraded its outlook on oil to neutral from bullish, and Pies said that there could be more downside ahead.

On Monday, U.S. West Texas Intermediate crude fell to a 13-month low, as demand concerns continue to pressure prices.



Pies noted that in prior times of broad weakness in the energy sector refiners were sometimes a pocket of strength. But this time around that might not be true since this is a demand-driven decline, rather than the supply-driven declines of recent years.

----------------------------

Trading Giants Seek Oil Storage At Sea As Virus Creates Glut
https://m.chron.com/business/energy/article/Trading-Giants-Seek-Oil-Storage-at-Sea-as-Virus-15043828.php

Three of the world’s largest oil traders are seeking to store crude on tankers at sea as the industry tries to deal with a glut that’s emerged since the outbreak of the coronavirus in China.

Vitol SA, Royal Dutch Shell Plc and Litasco SA are among firms asking about hiring supertankers for storage purposes as a sharp drop in Chinese demand due to the coronavirus prompts requests for cargo deferments, according to people familiar with the matter, shipbrokers and oil traders. Two oil tanker owners said last week that there was rising demand to store, without identifying the companies making the requests.

... it shows the scale of the buying weakness in the Asian country. Storing doesn’t look profitable on paper and keeping barrels at sea would normally be more expensive than land-based options.

---------------------------

Just thinkin', but this has the potential to knock the legs out from under small tracking companies and sipper well operations.

There's a lot of overhanging debt out there and if all the other industries are effected, the banks may be reluctant to roll over the oil patch debt one more time.
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3546 on: February 11, 2020, 01:00:39 AM »
While some posters on this site like to list the enormous numbers of wind turbines or solar panels that need to be installed to produce energy, they seem to be unaware of the enormous amount of infrastructure needed to maintain fossil fuel production.  Here's an article that provides some background on oil production in the US.

https://www.worldoil.com/news/2020/2/3/us-crude-oil-and-natural-gas-production-increased-in-2018-with-10-fewer-wells

Quote
U.S. crude oil and natural gas production increased in 2018, with 10% fewer wells
2/3/2020

WASHINGTON - In 2018, while production was increasing, the total number of wells producing crude oil and natural gas in the United States fell to 982,000, down from a peak of 1,035,000 wells in 2014. This increase in production, despite the decline in the number of wells, reflects advances in technology and drilling techniques. The U.S. Energy Information Administration (EIA)’s updated U.S. Oil and Natural Gas Wells by Production Rate report shows how daily production rates of individual wells by state contributed to an increase in total crude oil and natural gas production in 2018.

Quote
Although horizontal wells are more expensive to drill than vertical wells, they contact more reservoir rock and therefore produce greater volumes. Only 1% of vertical wells produced at least 100 barrels per day of crude oil in 2018, but 32% of horizontal wells produced at least 100 barrels per day. As horizontal wells became more common, production growth continued as the well count fell.

Note that most horizontal wells are in "tight" or shale fields.  These wells have very rapid decline rates compared to conventional wells.  The following story on the potential impact of a fracking ban highlights this.

https://www.forbes.com/sites/michaellynch/2019/11/01/the-disastrous-impact-of-a-fracking-ban-on-u-s-oil-production/#7b964f1229ac

Quote
As is the case with shale gas, shale oil wells tend to decline sharply, so that a fracking ban would quickly lead to much lower production. The figure below shows the decline rates for various shale oil basins, defined as the monthly drop in production from existing wells as a share of total production. The decline rate of the biggest shale producer, the Permian, has been relatively stable at 5-6% per month, while the oldest basin, Bakken, has stabilized at a lower level, presumably reflecting the existence of many more wells that are past their initial rapid decline phase.

Quote
Applying these decline rates to current production (and the EIA’s projected trend for 2020) yields the figure below, which shows that total shale oil production would decline by 8 mb/d over the course of two years (January 2021 to December 2022). This is perhaps slightly overstated (see note at end), and would be potentially offset by in part increased conventional oil drilling, but there would easily be an increase of 4 mb/d in oil imports by the end of 2022.  Even if oil prices did not rise, that translates to an additional $7.2 billion per month on the U.S. trade deficit.



The US could meet very stringent goals for greenhouse gas reductions by implementing a fracking ban.  So if electric vehicles can take a significant market share by the late 2020s, the ban would not have the draconian effects that the article implies.

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Re: Oil and Gas Issues
« Reply #3547 on: February 11, 2020, 02:33:52 PM »
Interesting developments. Thanks for the updates!

The US could meet very stringent goals for greenhouse gas reductions by implementing a fracking ban.

One worrisome thing is that most old wells leak in way or other so even when we get there there is still some work to be done. Basically as much of the leaked emissions as possible should captured and burned instead of vented.

Of course the whole business model is profits for some and society can clean up the mess.
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Re: Oil and Gas Issues
« Reply #3548 on: February 11, 2020, 06:33:02 PM »
A couple of years ago I was at an master's presentation on the effect of shale oil development on the local communities. None of it was good:
- Benefits go to the "lucky" few that have the oil under their land, plus the state that collects oil taxes, plus some of the retailers and bars.
- The local community gets the mass immigration of young, bored and horny guys. Not good for local law and order and general safety.
- Each well required a ridiculous number of water tucks, and the impact of a wheel on the road is the square of the load. So the trucks destroy the roads, with the local community having to pick up the bill (also for all those extra police hours).

On balance, local communities seem to be net losers from such development.

gerontocrat

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Re: Oil and Gas Issues
« Reply #3549 on: February 11, 2020, 07:47:39 PM »
A tough time for frackers in the US of A. What will they do if capital for new wells remains hard to find?

https://news.ihsmarkit.com/prviewer/release_only/slug/energy-base-decline-rate-oil-and-gas-output-permian-basin-has-increased-dramatically-b
“Base Decline” Rate of Oil and Gas Output in Permian Basin has Increased Dramatically Because of Recent Growth; Operators Must Drill More Wells to Maintain Production Levels

IHS Markit Says Production from existing wells declined by 34% in 2018. By end 2019, base declines in Permian will rise to 40%
Quote
Oil and gas operators in the Permian Basin, the most prolific hydrocarbon resource basin in North America, will have to drill substantially more wells just to maintain current production levels and even more to grow production, owing to the high level of recent growth, according to an analysis by IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions.

At the start of 2010, IHS Markit noted that production for the Permian Basin was approximately 880,000 barrels per day, with virtually all production coming from conventional operations. By the end of 2010, that group of wells produced 767,000 barrels per day—a decline of 110,000 barrels per day, or 13% of production.

Fast forward to 2019 when most wells drilled in the Permian Basin were shale wells (hydraulically fractured), which decline much faster, and the situation became even more dramatic. In 2019 Permian Basin production started the year at 3.8 million barrels per day, a million barrels per day higher than the year before. IHS Markit expects that base production will decline by approximately 1.5 million barrels of oil per day by the end of 2019–a staggering 40% base decline rate.

“Unless intentionally choked back, new, individual unconventional wells decline very rapidly, often 65% to 85% in the first year, so companies with many young wells in their inventory see significant declines in production compared to companies with a balance of younger and older wells,”

“Now that capital markets have closed for many companies and investors are requiring returns, a critical objective for these companies is to slow production growth, significantly moderating their base declines,” LeBlanc said.
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