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werther

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Re: Oil and Gas Issues
« Reply #300 on: January 19, 2015, 10:02:23 AM »
For detailed news on the topic I regularly turn to oilprice.com. Reporter Nick Cunningham posted a good update 17 Januari: "Oil Industry Withdraws From High Cost Areas".

JimD

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Re: Oil and Gas Issues
« Reply #301 on: January 19, 2015, 02:24:49 PM »
http://oilprice.com/Energy/Oil-Prices/Low-Oil-Prices-Force-OPEC-Members-To-Rethink-2015-Budgets.html

As werther pointed out.

A partial answer to Lennarts question re: Saudi

Quote
Already, Saudi Arabia, the world's largest producer of oil and OPEC's richest member, has acknowledged that the steep fall in oil prices since June will leave the Riyadh government with its first budget deficit since 2011 and the largest in its history.

The Saudi budget, announced on Dec. 25, will include spending during fiscal 2015 of $229.3 billion, higher than in 2014, despite revenues estimated at only $190.7 billion, lower than in the current fiscal year. That would leave a deficit of $38.6 billion.

In fact, according to an analysis by Bloomberg in December 2014, 10 of OPEC's 12 member states – all but Qatar and Kuwait – can no longer rely on oil exports to balance their budgets. And although Saudi Arabia is losing money, Bloomberg says, its treasury has a financial reserve of nearly three-quarters of a trillion dollars.

So the Saudi deficit will amount to 5% of its reserves.  At that rate a 20 year supply.  Thus the idea that Saudi cannot afford to lose money for long is misplaced in the media.  There is no doubt that in pure number terms they can bury their high cost competitors.

It will take political pressure to turn this tide.
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #302 on: January 19, 2015, 03:11:11 PM »
Saudi Arabia's King Abdullah is in poor health.  What about the country's future?
http://www.nbcnews.com/news/world/ailing-king-abdullah-raises-questions-about-saudi-arabias-future-n287601
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #303 on: January 19, 2015, 04:13:16 PM »
Quote
The UK government’s planned shale gas revolution has barely got out of the starting blocks with just 11 new exploratory wells for shale gas and oil due to be drilled this year even before the impact of plunging oil prices has fully begun to impact on the industry.
http://www.theguardian.com/environment/2015/jan/19/uk-shale-gas-revolution-falls-flat-just-11-new-wells-planned-2015
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Laurent

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Re: Oil and Gas Issues
« Reply #304 on: January 19, 2015, 05:45:16 PM »
Oil pours into Yellowstone river after Montana pipeline breach
http://www.theguardian.com/environment/2015/jan/19/oil-yellowstone-montana-pipeline-breach

werther

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Re: Oil and Gas Issues
« Reply #305 on: January 19, 2015, 11:30:14 PM »
"Every day our options dwindle" ... JimD 17 January.

I had a glance on Qatar in the slipstream of reading the linked article on OPEC sovereign budgets.

Ras Laffan:



The BAU-mind doesn't seem to care. The sheer scale of vested interests sometimes makes me loose mine.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #306 on: January 20, 2015, 02:07:32 AM »
Saw a piece on the news tonight that offered a reminder:  those oil and gas wells that are being shut down in the U.S. are marginal wells, which were not producing much anyway.  The U.S. supply is still projected to grow by 300,000 to 600,000 barrels a day.
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JimD

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Re: Oil and Gas Issues
« Reply #307 on: January 20, 2015, 05:10:12 AM »
Saw a piece on the news tonight that offered a reminder:  those oil and gas wells that are being shut down in the U.S. are marginal wells, which were not producing much anyway.  The U.S. supply is still projected to grow by 300,000 to 600,000 barrels a day.

Yes they will be the first to be shut in.  The canary in the coal mine so to speak.  But...

This is not a trivial thing.

Those are called stripper wells.  There are about 420,000 of them of them producing oil at about 1 million barrels a day.  18% of US production.

There are another 300,000 gas stripper wells and they account for 9% of US production. 1.7 trillion cu ft.

The small companies who operate these types of wells (often family operations as the big companies do not work this part of the business) employ some 400,000 people.

The per barrel costs of these operations average in the $50-$60 range.  These folks will not last long before they have to shut down.  This will be a big hit to the economy.

On a side note these types of operations are also responsible for a lot of leaks and spills.  And I suspect a big percentage of the methane leaks.  They are all old very marginal wells and maintenance is not high on the priority list.

Oil wells do not go dry.  Production just drops to a low level and many will produce small amounts for decades as many of them have been doing.  The father of one of my friends growing up owned 50 of these wells which produced then and still do about the average of 10 barrels a day (the wells date from the 1930's and 40's).  That works out to about 15-18 million a year at $100/barrel.  If costs are $50 per you can see what kind of wealth they can create. 
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

jai mitchell

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Re: Oil and Gas Issues
« Reply #308 on: January 20, 2015, 06:18:56 AM »
Quote
The Wall Street Journal reported that several new projects from Royal Dutch Shell, Hess Corporation, ExxonMobil and Chevron are expected to come online before the end of 2015 and will have a combined production capacity of 900,000 barrels per day.

http://oilprice.com/Energy/Crude-Oil/Big-Oil-Going-Big-in-the-Gulf-of-Mexico.html

Posted on Thu, 27 November 2014

Quote
Also, there could be as much as three to four times more oil – potentially 48 billion barrels of undiscovered oil are believed to be in the Gulf of Mexico, compared to just 13 billion onshore.

With the high levels of investment, oil production is expected to rise to 1.9 million barrels by 2016, according to Wood Mackenzie. That would set a new record high for the Gulf. “We expect production from 2014 to 2016 to grow 18% annually,” Imran Khan, an analyst at Wood Mackenzie, said in a statement.
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Lennart van der Linde

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JimD

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Re: Oil and Gas Issues
« Reply #310 on: January 20, 2015, 03:51:54 PM »
Roubini on oil market and Saudi Arabia:
http://fortune.com/2015/01/13/cheap-oil-wont-last-nouriel-roubini/?utm_content=bufferb7fba&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

I agree with him.  Most likely 1-2 years and then a surge again.  But he perhaps understates the effect of low prices on the US and US companies.  And I emphasize what they are doing is just capitalism in action.  But extreme political pressure will be put on the Saudi's over time and we will see if they can stick to their guns.

Quote
Their behavior is like a typical oligopoly using predatory pricing. If you keep prices low for long enough, you get rid of those who are high marginal-cost producers, whether it’s shale gas and oil, or Russia, or Venezuela, you name it. Secondly, you commit to your fixed investment schedule and continue to increase capacity. That’s going to lead to everybody else to underinvest in increasing capacity. In the short term, you have lower oil prices, but in the medium term you’ve flushed out your competition … you take the pain for the next 12 to 18 months, but the result is higher prices and market share down the road.
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

JimD

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Re: Oil and Gas Issues
« Reply #311 on: January 20, 2015, 03:55:14 PM »
Crushing The U.S. Energy Export Dream

Quote
Exporting crude oil and natural gas from the United States is among the dumbest energy ideas of all time.

Exporting gas is dumb.

Exporting oil is dumber.

The U.S. imports almost half of the crude oil that we use. We import 7.5 million barrels per day. .......

This means that the U.S. will never be self-sufficient in oil. Not even close....

Let’s put all of this together.

• The U.S. will never be oil self-sufficient and will never import less than about 6 million barrels of oil per day.
• U.S. total production will peak in a few years and imports will increase.
• The U.S. is a relatively minor reserve holder in the world.

How does this picture fit with calls for the U.S. to become an exporter of oil? Very badly. For tight oil producers to become the swing producers of the world? Give me a break.

Perhaps we should send congressional proponents of oil export like Joe Barton (R-TX), Ted Cruz (R-TX) and Lisa Murkowski (R-AK) to “The Shark Tank” TV show to try to sell their great idea to the investors and judges...



http://www.nakedcapitalism.com/2015/01/crushing-u-s-energy-export-dream.html
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

Sigmetnow

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Re: Oil and Gas Issues
« Reply #312 on: January 20, 2015, 04:55:46 PM »
Please don't say "explosion."  ;-)

The state of fracking in the U.S.
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JimD

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Re: Oil and Gas Issues
« Reply #313 on: January 21, 2015, 04:08:46 PM »
OMG What could possibly go wrong?

Quote
Citgo Petroleum Corp. is planning to raise $2.5 billion that it will use to shore up the finances of its state-owned parent company, Petroleos de Venezuela SA, according to a person with knowledge of the matter.
The U.S. oil refining and marketing unit of PDVSA is seeking to sell $1.5 billion of bonds and obtain a $1 billion loan, according to the person, who asked not to be identified because the information is private. While Citgo’s debt ratings were cut to six levels below investment grade by Moody’s Investors Service last week on concern Venezuela will default, it’s still three steps higher than the government’s rating.
Using Citgo to sell debt would mark a new strategy to raise cash for Venezuela after the government said in October that it had scrapped a plan to sell the Houston-based company. Venezuela owes $2.3 billion to Exxon Mobil Corp. and Gold Reserve Inc. after losing arbitration cases tied to expropriations, and those rulings would make it difficult for the government to sell Citgo without having to pay them off, according to Russell Dallen, a managing partner at Caracas Capital Markets in Miami.
The only reason Citgo would issue the debt “is if they’re going to default on it,” Dallen said in a telephone interview. “And then the bank or the company they issued it to would be able to foreclose and take the property. It’s a back-door way of Venezuela selling the company.”...........

Desperate times require...

http://mobile.bloomberg.com/news/2015-01-20/citgo-said-to-plan-2-5-billion-of-debt-for-dividend-correct-.html
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

Sigmetnow

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Re: Oil and Gas Issues
« Reply #314 on: January 21, 2015, 08:39:51 PM »
Update on the Yellowstone River oil spill.  Benzene has now been found in the local drinking water.  And cleaning up oil on an icy river turns out to be much harder than usual.

http://insideclimatenews.org/news/20150121/ice-hinders-cleanup-yellowstone-oil-pipeline-spill
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JimD

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Re: Oil and Gas Issues
« Reply #315 on: January 22, 2015, 04:03:59 PM »
http://wolfstreet.com/2015/01/22/oil-gas-layoffs-cut-backs-bloodletting-meet-soaring-production/

An excellent description of a disaster.

The washout in the energy business is going to be huge.
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

jai mitchell

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Re: Oil and Gas Issues
« Reply #316 on: January 22, 2015, 05:32:43 PM »
http://wolfstreet.com/2015/01/22/oil-gas-layoffs-cut-backs-bloodletting-meet-soaring-production/

An excellent description of a disaster.

The washout in the energy business is going to be huge.

This is absolutely the best news I have seen all day!  Thanks!!!!
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crandles

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Re: Oil and Gas Issues
« Reply #317 on: January 23, 2015, 12:11:04 AM »
"oil-gas...soaring-production" is absolutely the best news I have seen all day!

news must be grim today  ;)


(Oh ok must be the reductions in new drillings.)

JimD

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Re: Oil and Gas Issues
« Reply #318 on: January 23, 2015, 02:34:29 AM »
http://wolfstreet.com/2015/01/22/oil-gas-layoffs-cut-backs-bloodletting-meet-soaring-production/

An excellent description of a disaster.

The washout in the energy business is going to be huge.

This is absolutely the best news I have seen all day!  Thanks!!!!

Glad to be of assistance.  If news of collapse in progress makes you happy you are destined to be one of the happiest men alive.
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

jai mitchell

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Re: Oil and Gas Issues
« Reply #319 on: January 23, 2015, 03:22:00 AM »
If the oil and coal industry completely collapses under it's own bloated, government subsidized weight, no one would be happier than I.

The only problem I have with it is the temporary decline in oil prices, which is supposed to increase demand, and therefore, emissions.

If we have any luck at all, these companies will all go belly up and the oil industry will collapse allowing for $10.00 gas in 2 years and a mad federally subsidized push to shift domestic transportation to electric light rail, electric bussing and privately owned plug-in electric vehicles.

don't you agree?
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SATire

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Re: Oil and Gas Issues
« Reply #320 on: January 23, 2015, 09:43:28 AM »
http://wolfstreet.com/2015/01/22/oil-gas-layoffs-cut-backs-bloodletting-meet-soaring-production/

An excellent description of a disaster.

The washout in the energy business is going to be huge.
Crazy shit! If that article is right, they would act in opposition to economics: Prices are falling so they increase production. Since the oil market is not very elastic that should result in lower prices.  So they maximize losses. OK, the money flood must go somewhere. But instead of paying more taxes voluntarily they prefer to pay more and more private subsidies resulting in a destroyed planet instead of better infrastructure/education. And I thought that insane housing debt bubble was insane - they can do much better now. That kind of "economy" is just BS.

Now in Europe ECB starts something similar: It buys safe government bonds to make the people buy more BS. Instead of increasing the prices/inflation by increased taxes (the normal way to trigger investments for the future) we do the silly thing, too. Let's see, which kind of bubble we will blow here. Tulips maybe, like in the very first bubble in Netherlands? Or probably something more destructive to speed up the things...

crandles

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Re: Oil and Gas Issues
« Reply #321 on: January 23, 2015, 12:46:01 PM »

Crazy shit! If that article is right, they would act in opposition to economics:

Is it crazy opposition to economics though?

If the main draw on cash is investment in new drilling then you cut that to the bone and other operating costs if/where possible. This is good news for lower production in a few years time a normal reaction to lower prices - produce less.

Existing operating wells are cash cows that are suddenly nowhere near as much of a source of cash. They are still a source of cash even if a high cost operation as high cost operations have lots of depreciation which is not a cash flow. Pumping more from these causing increase in positive cash flow in short term makes sense if there is a short term problem to get through. Your effect of increased production makes little difference to falling production. If others also increase production and cause further falls in prices, well that is likely to happen anyway even if you don't pump more.

More marginal decisions are whether to develop successful drill through to operations which takes cash investment. Do they have cash sufficient to last long enough and develop such sites? Lots of people will be trying to figure out how long they need to last and what cash will be available to do what.

I would suggest it is sensible reaction to situation, caused by nature of industry rather than being in opposition to economics. Economics suggests lower prices means lower production but this will tend to be a longer term effect with nature of industry dominating what happens over shorter term within its investment cycle.

Zythryn

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Re: Oil and Gas Issues
« Reply #322 on: January 23, 2015, 12:48:08 PM »
...
If we have any luck at all, these companies will all go belly up and the oil industry will collapse allowing for $10.00 gas in 2 years and a mad federally subsidized push to shift domestic transportation to electric light rail, electric bussing and privately owned plug-in electric vehicles.

don't you agree?

No, the oil industry won't collapse.
The high cost, small business drillers will go out of business.

This will lead to less supply, leading to higher prices for the surviving, large companies. 
Oil will increase in price UNLESS there is worldwide demand destruction.

The remaining companies will be healthier and will start saving more money for the next supply surge.

Meanwhile, people will be shocked by the increase at the gas pump, then pleasantly surprised by the price drops as they seem to forget they have seen this all before.

SATire

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Re: Oil and Gas Issues
« Reply #323 on: January 23, 2015, 03:20:08 PM »

Crazy shit! If that article is right, they would act in opposition to economics:

Is it crazy opposition to economics though?
It is the insanity of a debt-based economy rating cash-flow over profit. And some people wondered, why Saudi Arabia would not reduce output in the same situation, when US drillers increased it to maintain cash-flow. It is totally clear who will win this competition in the medium term. In the long term we have to drive oil consumption to zero anyway - regardless of the price... So either there will be no other producers but the very cheap ones in future or there will be no future to worry about. We need to start with a deflation economy and degrowth to get on road towards sustainability. No debt anymore, no rising prices but reduction of consumption. The economy could concentrate on maximizing quality instead of throughput to survive.

JimD

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Re: Oil and Gas Issues
« Reply #324 on: January 23, 2015, 03:52:59 PM »
If the oil and coal industry completely collapses under it's own bloated, government subsidized weight, no one would be happier than I.

The only problem I have with it is the temporary decline in oil prices, which is supposed to increase demand, and therefore, emissions.

If we have any luck at all, these companies will all go belly up and the oil industry will collapse allowing for $10.00 gas in 2 years and a mad federally subsidized push to shift domestic transportation to electric light rail, electric bussing and privately owned plug-in electric vehicles.

don't you agree?

My first thought was he is just trolling.  Or joking.  Or something.

The real answer was provided above so I will not repeat it.  But you could not be more wrong if you are serious.  While you already know that I think your approach is not meaningfully different than continuing to do what we are already doing I am a bit amazed that you can twist this story into thinking it will further your goals.  It will do the opposite.

Dramatically lower fossil and commodity prices has great potential to gut the global efforts to build your civilization based upon renewables.  How can you not see that.  The bloodbath in the oil industry will not in any way run it out of business.  It will run many of the high cost producers out of business.  That is a big difference.  It will cause significant disruptions to a host of economies of the oil producing nations - notably the US, Canada, Russia, Venezuela, Nigeria, Great Britain and so on.  As long as fossil fuels are very cheap they easily out compete renewables on a cost basis.  In hard financial times it will be very difficult to push subsidies for renewables when the lobby for subsidies for hurting oil producing states gets to work with Congress.  And do we need to mention that Congress is Republican now?  They voted this week to deny the causes of climate change in case you missed it.

The global economy is teetering on the brink of a major slowdown once again.  This will depress government efforts towards renewables especially when the costs of energy are plummeting. 

You were trolling, right?
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

JimD

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Re: Oil and Gas Issues
« Reply #325 on: January 23, 2015, 04:08:23 PM »
SATire

I know you are just ranting about the insanity of producing ever greater amounts in the face of declining prices.

It is all about the debt payments and the need to roll that debt over.  Don't forget that for the small companies in the fracking business it was never about making a profit as most of them have never made a profit in the traditional cost/income sense.  The companies are run to leverage the stock and make money off of selling the stock.  One runs out and drills a bunch of wells.  When you hit oil you advertise it up the yazoo on all the media.  Your investors from the banks and investment houses (whom you borrowed the money from and are in collusion with you) then run to the financial press and they trumpet your great discovery of reserves (no one mentions that it costs more to get the stuff out of the ground than it is worth).  The stock jumps in value as all the suckers are drawn into the frenzy.  You sell a bunch of stock.  You get rich.  Over time the stock normally goes down some and you buy some of it back cheap.  Rinse and repeat.  You get richer.  You take on more debt.  It is a sort of Ponzi scheme.  This works great until prices fall.  Then you maximize cash flow for as long as possible until you cannot borrow any more money.

When you go bankrupt you are protected by law from losing any of the money you made in the stock market.  That is personal and the company is public.  The debt is washed away and the bond holders are the losers or the public if you are really clever.  A lot of people lose their jobs and many small business go broke.  The mess you left behind becomes a public problem - you are no longer in business after all.  When prices go back up (and they will) you can start this process all over  again and the banks and the investment houses will be happy partners again.  And the suckers will line up at the door demanding to be let in.

We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

jai mitchell

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Re: Oil and Gas Issues
« Reply #326 on: January 23, 2015, 07:10:25 PM »
1.  There is no peak oil, that is a concept that was put forward by the commodity sharks who wanted to inflate the price of oil futures and justify the outrageous price increase observed in the early 2000s

2.  falling oil prices has absolutely no impact on the renewable energy sector, anyone who says differently is selling you a bridge.  In fact, it actually helps renewables due to high logistics costs see:  http://video.cnbc.com/gallery/?video=3000349091

3.  economic collapse under a "mature" capitalist environment will only be turned around by massive Keynesian expenditures in infrastructure.   

4.  When high-cost tight-oil collapses in the U.S. we will see a drop off in natural gas stocks (over the next 5 years or so) this will radically increase the cost of electricity in the U.S.   Since natural gas is the primary competitor for electric generation that is offset by renewables.  Natural gas costs up --> renewables are better.

5.  Even with lower fuel costs, electric power transport costs are dropping more rapidly.  The next big market is heavy duty electric vehicles.  http://video.cnbc.com/gallery/?video=3000349022


I hope the entire u.s. oil industry sector crashes and burns in total collapse. 

(edit)

coal too!  8)
« Last Edit: January 23, 2015, 07:38:01 PM by jai mitchell »
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #327 on: January 23, 2015, 08:33:51 PM »
...
I hope the entire u.s. oil industry sector crashes and burns in total collapse. 
...
coal too!  8)
I could like an oil collapse scenario.  Need coal to taper a bit more gradually, to transition to green electricity generation in those locations dependent on it now, but making oil/gasoline scarce and hugely expensive is just what we need to decrease flying, increase electric cars and trucks and use of trains (and bicycles and walking).  Nothing focusses the mind better than a looming catastrophe.  Energy alternatives would leap off the shelves to be adopted.  The transition would happen quicker than anyone could guess.
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #328 on: January 23, 2015, 08:35:25 PM »
People who say it cannot be done should not interrupt those who are doing it.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #329 on: January 23, 2015, 08:38:43 PM »
What's wrong with this picture?  Pretty much everything.
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Sigmetnow

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Re: Oil and Gas Issues
« Reply #330 on: January 23, 2015, 09:58:03 PM »
Surprising no one:
New Saudi King says he won't change oil production strategy.  Oil price drops to $45.59.
http://www.bloomberg.com/news/2015-01-23/oil-pares-gains-as-new-saudi-king-says-policies-won-t-change.html
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jai mitchell

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Re: Oil and Gas Issues
« Reply #331 on: January 24, 2015, 09:26:23 PM »
ISIS is Driving Oil Overproduction

a timeline:

Here's How ISIS Is Wrecking Iraq's Oil Industry
Sep. 17, 2014
http://www.businessinsider.com/how-isis-is-wrecking-iraqs-biggest-industry-2014-9

Quote
And just as importantly, ISIS, which nearly seized a refinery outside of Baghdad in June, is interrupting the one industry that makes Iraq viable not just as an economy, but as a political unit as well.

. . .

ISIS's oil profits might not be as astronomical as feared — but its ability to disrupt Iraq's leading industry denies the country of much of its economic potential while degrading vital infrastructure. In August, production dipped even in Iraq's relatively-tranquil south; production targets are being revised downward and exports have lagged in a country that's fragile enough to begin with.

ISIS sells stolen Kirkuk oil at $20 per barrel - Iraq Finance Ministry
November 09, 2014
http://rt.com/news/203723-isis-iraq-oil-smuggle/

Quote
The extremists have moved deeper into the oil rich Kirkuk region and captured more oil production facilities in the area, including one of Iraq's oldest oil fields, the director of the Public Debt Department at the Finance Ministry, Muwafaq Taha Izz al-Din Al-Houri told RIA Novosti news agency.

. . .

This week German media reported that since then the group's oil production capacity has sharply declined, according to German intelligence agency (BND) estimates. Oil production in IS-controlled areas has shrunk six-fold over the past three months, and oil transactions bring the militants some $270,000 per day

Amid Conflict with ISIS, Iraq Pumps Oil Like There's No Tomorrow
December 3rd 2014
http://www.nbcnews.com/storyline/iraq-turmoil/amid-conflict-isis-iraq-pumps-oil-theres-no-tomorrow-n260216

Quote
Tuesday's deal between the central government and the Kurdish regional government in Erbil will increase production, raising more money to fight ISIS and adding downward pressure on global oil prices, already are at their lowest levels in years, according to Kilduff and other experts.

. . .

Under the agreement, Kurdistan can sell roughly half its oil production through the Iraqi government's marketing arm and will get 17 percent of the Iraqi national budget, which is supported by sales from the Iraqi national reserve. In addition, the KRG will receive $1 billion dollars to pay, train and equip its fighting force, the peshmerga, to fight ISIS.

-----
note:  it was this point where the Saudis declared that they would no longer hold up prices, no matter how low they go.  Apparently the massive ramp-up in Iraqi production was simply too much lost market share.
-----

Iraqi PM: Falling oil price ‘disastrous’ in fight against ISIS
January 23, 2015
http://rt.com/news/225415-iraq-oil-prices-isis/

Quote
Iraq has added more oil to the market than any other OPEC cartel member, and it continues to overproduce to try and combat the damage of collapsing prices, which the country’s oil minister believes has slashed 50 percent of the state revenue. Current production is 4 million barrels per day.

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

So it seems that ISIS selling small volumes at discount prices allowed them to maintain a constant threat and regional instability.  Their funding produces a greater sense of permanence and they are beginning to become well established as a regional political power.  To oppose them the Kurds signed an agreement with the Iraqi government for development and production using U.S. industry assistance and are massively ramping up production, this so that they can fund their opposition in this long-standing war of attrition and for the 'hearts and minds' of the local Shia population.  This extra volume of production, along with U.S. shale and increased gulf of mexico production further escalated the overproduction and made Saudi action as the marginal producer untenable.  So they decided to simply continue production in a mad dash to retain market share.

so this isn't so much about U.S. or Venezuela or even Iran production, it is about Iraq production, the response to ISIS and Saudi Arabia wanting to maintain global market share.


« Last Edit: January 25, 2015, 11:50:27 PM by jai mitchell »
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AbruptSLR

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Re: Oil and Gas Issues
« Reply #332 on: January 24, 2015, 09:40:14 PM »
The linked article shows that Statoil is proceeding to develop new conventional Arctic crude oil sources even in the face of low oil market prices and threats of future carbon emission limitation agreements.   Obviously, Statoil agrees with other majors like Exxon that the world will not wean itself from crude oil within the economic life (several decades) of new Arctic oil fields.

http://www.rtcc.org/2015/01/23/arctic-still-profitable-despite-50-oil-statoil/

Extract: "Norwegian oil major Statoil will go ahead with Arctic drilling plans, despite the drop oil prices and threat of climate change."
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Re: Oil and Gas Issues
« Reply #333 on: January 25, 2015, 02:17:09 AM »
Quote
This extra volume of production, along with U.S. shale and increased gulf of mexico production further escalated the overproduction and made Saudi action as the marginal producer untenable.  So they decided to simply continue production in a mad dash to retain market share.

so this isn't so much about U.S. or Venezuela or even Iran production, it is about Iraq production, the response to ISIS and Saudi Arabia wanting to maintain global market share.

No this analysis is not correct.  Saudi Arabia is NOT the marginal producer.  That is (or rather was) the fracking, tar sands, deep water and other such high cost producers.  Marginal means you are producing at the prevailing market prices.  The Saudis and other Gulf countries produce at somewhere in the range of $10-20 per barrel.  The tar sands and fracking production is in the range of 60-80 per barrel.

The significant change in the global production statistics is the high cost oil being produced in the US and Canada.  Iraqi production has not changed with anywhere near the scale and significance.

What is happening is capitalism in the global oil market is being implemented.  We have moved away from the cartel arrangement.  There is a global over supply which is being exacerbated by the declining financial situation in many parts of the globe reducing demand.  The Americans and Canadians want the Saudis to be the swing producer like they were many times in the past.  The Saudis often filled this role but it was done to gain influence with and favor from the west.  It cost them profits and market share.  It was not done out of sound business reasons.

What we are seeing today is pure capitalism.  The low cost producers driving out the high.  Saudi, Iraq, Iran and the other Middle East producers are the lowest cost producers.  Yes they are protecting their market share (capitalism) and perhaps seeking to gain some.  But this is the way it is supposed to work.  In a time of low demand and high supply the high cost producers "should" go out of business.  If you want to manage your resources smartly this is the way it should be done.  The Saudis have one and only one way to make money in this world and that is to sell oil.  They will be the lowest cost producer always due to the vagaries of geology.  For the sake of their continued existence they MUST maximize their income from it and use it ALL up.  They want to and should be the last place on Earth where oil is produced as to do it there costs us all the least as a civilization.

The situation for the Saudi's in terms of how this might also be advantageous to what they perceive  as their national security interests is just a side benefit and makes it less likely they will take any pity on the US.  The Saudi's have deep pockets and can weather low prices better than anyone and thus will put pressure on Iran and Iraq.  The Saudi people are strong supporters of ISIS (ISIS is of course a big threat to the Royals just as Al Queda was/is) and will of course not be too troubled by their adverse effect on Iraq.  But note that the US has and will continue to bomb any oil facility that ISIS controls in order to cut down on their funding. 
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein

jai mitchell

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Re: Oil and Gas Issues
« Reply #334 on: January 25, 2015, 07:52:33 PM »
Sorry, I misspoke, I meant to say

Quote
This extra volume of production, along with U.S. shale and increased gulf of mexico production further escalated the overproduction and made Saudi action as the marginal swing producer untenable

Saudi Oil is no where near breakeven at $20.00



source:  http://www.businessinsider.com/saudi-arabia-breakeven-oil-2014-12

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Re: Oil and Gas Issues
« Reply #335 on: January 25, 2015, 11:37:39 PM »
Canadian tar sands finds it's way to the sea.


http://www.bloomberg.com/news/2014-10-08/keystone-be-darned-canada-finds-oil-route-around-obama.html


Obama is attempting to damage Putin by lowering oil prices and the lower prices are now the only obstacle to full tar sands development. Reagan broke the Soviet Union by tanking oil prices but I don't think a replay is in the cards. Canada and other producers won't throw their own economies under the bus just to punish Russia & the Saudis may not be willing, or able to flood the market for too long.
If the tar sands are fully exploited it's game over.
Terry
I do not see the drop in oil prices as being deliberate. It's the salutary result of fracking and shale oil development.

jai mitchell

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Re: Oil and Gas Issues
« Reply #336 on: January 25, 2015, 11:54:15 PM »
hardly

http://www.csmonitor.com/Environment/Energy-Voices/2015/0122/Iraq-shrugs-off-low-oil-prices-boosts-oil-output-to-record-levels

Iraq shrugs off low oil prices, boosts oil output to record levels
  January 22, 2015   

Quote
For the month of December, Iraq produced nearly 4 million barrels per day, according to Oil Minister Adel Abdul Mahdi, an all-time high for the war-torn country.

Quote
OPEC reported an uptick in production – the 12-member group produced an average of 30.2 million barrels per day (bpd) in December, about 142,000 bpd more than the previous month. The increase came almost entirely from Iraq, which does not operate under the OPEC quota. Iraq managed to boost monthly output by 285,000 bpd, more than offsetting a decline of 184,000 bpd in Libya

And more is on the way. Iraq plans on doubling oil exports from its fields in the north near Kirkuk. Currently, the Kirkuk fields export just 150,000 bpd, but pending pipeline upgrades will allow that figure to rise to 300,000 bpd “in the coming few weeks,”
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Re: Oil and Gas Issues
« Reply #337 on: January 26, 2015, 12:01:39 AM »
hardly

http://www.csmonitor.com/Environment/Energy-Voices/2015/0122/Iraq-shrugs-off-low-oil-prices-boosts-oil-output-to-record-levels

Iraq shrugs off low oil prices, boosts oil output to record levels
  January 22, 2015
That means they're adhering to pre-existing plans. I do not think there is any effort by anyone to tank oil prices.

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Re: Oil and Gas Issues
« Reply #338 on: January 26, 2015, 12:30:07 AM »
That means they're adhering to pre-existing plans. I do not think there is any effort by anyone to tank oil prices.
[/quote]

http://www.bloomberg.com/news/2014-12-18/saudi-arabia-s-naimi-says-difficult-for-opec-to-cut-oil-output.html

http://www.reuters.com/article/2014/12/22/us-oil-prices-saudi-idUSKBN0JZ05W20141222
Quote
There, OPEC kept its target output of 30 million barrels per day (bpd) unchanged, leaving the market to balance itself without the group's intervention.

That stance was seen as a shift from a longstanding policy in which OPEC powerhouse Saudi Arabia has acted as a swing supplier.

Saudi has clearly decided to cease being a swing producer. While this is nominally a decision not to lower production rather than a decision to tank oil prices, they are not stupid and know the effects that will follow from not cutting production.

So it looks like a game of semantics to me over whether this is a decision to 'tank oil prices'.

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Re: Oil and Gas Issues
« Reply #339 on: January 26, 2015, 02:36:33 PM »
"Every day our options dwindle" ... JimD 17 January.

I had a glance on Qatar in the slipstream of reading the linked article on OPEC sovereign budgets.

Ras Laffan:



The BAU-mind doesn't seem to care. The sheer scale of vested interests sometimes makes me loose mine.

I have been trying not to do this as often as I have as it can drive me mad (as in crazy) but I will respond.

I am absolutely in agreement with you, Werther. The BAU mindset is quite set and a shift in that mindset is extremely difficult. The picture you  posted captures this in a simple and stark fashion. Our civilization has invested trillions (hundreds of trillions actually, more likely thousands of trillions when you consider all of our infrastructure) in our current fossil fuel driven economy.  This fixed capital has a mind or will of its own and billions of people, in turn, depend on the continuation of the system for their well being. This is why I have always maintained that we simply cannot expect the market to devise the solutions to our dilemma. A well functioning market will continue to operate in a  manner consistent with the logic of markets, the pursuit of an acceptable ROI. No business entity can simply walk away from its invested capital. Such a business would cease to exist. Worse still, a business that would do such a thing would be immediately replaced by a business that is operating in a manner consistent with the system of capitalism and production would continue with only minor disruptions.

If we are to solve this problem, we need to begin to operate from a different paradigm.
« Last Edit: January 26, 2015, 02:42:41 PM by Shared Humanity »

jai mitchell

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Re: Oil and Gas Issues
« Reply #340 on: January 26, 2015, 07:25:36 PM »
Jim Cramer states that the $45.00 level is the absolute minimum where U.S. shale oil is no longer profitable.  He states that oil "must" not go below this level or we will lose this sector.

http://www.bing.com/videos/watch/video/cramer-s-stop-trading-dollar-45-oil-must-hold/3x2ltjwo
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solartim27

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Re: Oil and Gas Issues
« Reply #341 on: January 26, 2015, 07:34:07 PM »
FNORD

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Re: Oil and Gas Issues
« Reply #342 on: January 26, 2015, 09:06:17 PM »
Jim Cramer states that the $45.00 level is the absolute minimum where U.S. shale oil is no longer profitable.  He states that oil "must" not go below this level or we will lose this sector.

http://www.bing.com/videos/watch/video/cramer-s-stop-trading-dollar-45-oil-must-hold/3x2ltjwo

Jim Cramer is one of the MOST unreliable media pseudo investment experts.  A more accurate statement would be that below 45$ there is no such thing as a profitable fracking operation on even the best case well.  The typical costs of fracking is way above 45.  Real oil business experts put the cost for your typical fracked well in the 65-85 range.  All of these operations are going broke.

Note in your graph above that they are talking about something completely different than I am.  Comparing the cost of production with the fiscal status of the country is a way of confusing listeners into thinking that the situation is not as bad for the US as it really is.  This kind of stuff is done by the business media in the States to help pump stock prices and such.

The Saudi cash reserves are way more than sufficient to outlast anyone else in this shakeout.
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

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Re: Oil and Gas Issues
« Reply #343 on: January 27, 2015, 04:26:10 PM »
A gas pipeline in Brooke County, West Virginia exploded into a ball of flames on Monday morning, marking the fourth major mishap at a U.S. pipeline this month.
http://thinkprogress.org/climate/2015/01/27/3615805/west-virginia-gas-pipeline-explosion/
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Re: Oil and Gas Issues
« Reply #344 on: January 27, 2015, 05:07:59 PM »

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« Last Edit: January 27, 2015, 11:29:18 PM by Laurent »

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Re: Oil and Gas Issues
« Reply #347 on: January 28, 2015, 11:45:58 PM »
Bove et al. DOI: 10.1177/0022002714567952

"‘‘Oil above Water’’: Economic Interdependence and Third-party Intervention"

"We find that the likelihood of a third-party intervention increases when
(a) the country at war has large reserves of oil, (b) the relative competition in the sector
is limited, and (c) the potential intervener has a higher demand for oil."

" The United States for most of the period studied here provides an example at the high end of the oil dependence spectrum (i.e., high reserves, high demand for oil). Consistent with this, we see recurrent US involvements in the civil wars and internal affairs of Angola from 1975 until the end of the Cold War. The United States was the country with the highest demand for oil during this period, and it was known from the 1970s that Angola had oil reserves. Oil in Angola was first discovered in 1955, and many US corporations, like Chevron, have been operating in the oil-rich Cabinda region for more than 50 years. The United States has also intervened in a number of other countries with proven large oil reserves, such as in Guatemala, Indonesia, and the Philippines over the period covered by our data set (1945–1999)."

"The history of military interventions of the Union of Soviet Socialist Republics (and later the Russian Federation) is also consistent with the predictions implied by our oil-centered motivations for TPIs by oil-poor countries. Two notable military interventions in oil-rich countries took place in periods where the oil-production capacity of the Union of Soviet Socialist Republics was at its infancy, that is, Indonesia in 1958 and Nigeria (Biafran War) in 1967 to 1968. The 1973 oil crisis encouraged further Soviet intervention in oil-rich Iraq, despite the fact that USSR exports were growing. Interestingly, subsequent Russian military interventions have mostly been unrelated to the presence of oil, in line with the Russian Federation gradually becoming a major oil (and gas) exporter."

"Beyond Western military involvement in response to conflict, such as the intervention to roll back the 1990 Iraqi invasion of Kuwait, the United States also provides significant military aid and maintains troops in Persian Gulf oil producers, and the United States has a history of supporting conservative autocratic states in spite of the emphasis on democratic reform elsewhere. This military and political support is at least in part motivated to ensure that countries on the Arabian Peninsula maintain crude oil prices within a target range. The enduring record of geopolitical instability in oil-producing regions and the likely increase in the global demand for oil implies that economic incentives are likely to figure prominently in whether we see interventions in civil war. However, with a less energy-dependent United States and a more energy-dependent China, the specific states with the greatest incentives to intervene are likely to change notably in the future."

sidd

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Re: Oil and Gas Issues
« Reply #348 on: January 29, 2015, 01:51:47 AM »
Scotland Just Announced An Indefinite Ban On Fracking
http://thinkprogress.org/climate/2015/01/28/3616690/scotland-bans-fracking/
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Re: Oil and Gas Issues
« Reply #349 on: January 29, 2015, 02:55:30 PM »