No. OPEC has spare capacity and has produced more oil than now in recent past.
Posted on 05/05/2015 5:00:14 AM PDT by thackney
Glen Hann and his wife traveled from Newfoundland to western Canada’s oil fields eight winters in a row, returning to this former fishing town in the spring with income they could never hope to earn closer to home.
Then, this past December, Mr. Hann’s employers told him to stay home.
Mr. Hann is among the thousands of Newfoundlanders who have traveled west over the past decade to work in Canada’s booming oil sands, a trek that has become one of North America’s longest commutes and has supported communities in some of Canada’s poorest eastern provinces.
Now, falling oil prices are putting an end to that, leaving whole communities on “the Rock” and in other Atlantic provinces worried about a future they thought they had secured through work 2,500 miles away.
The hit to Mr. Hann and his hometown, Burgeo, point to how ripples from the oil-price crash are spreading to unexpected places. Oil towns from Aberdeen, Scotland, to Calgary are feeling the effects of lower prices. But the sector’s troubles are also sucking in towns, cities and regions around the world that depend on farther-flung oil fields to provide jobs, often in sectors such as manufacturing or infrastructure.
Since crude prices began tumbling last year, energy companies have announced plans to lay off more than 122,000 workers around the world, the majority of them in oil-field-services and drilling companies, according to research by Graves & Co., a Houston consulting firm.
As in Newfoundland, layoffs are hitting some areas that have come to rely on long commutes to oil and gas jobs to alleviate high levels of regional unemployment.
In the U.K., the rise of Aberdeen’s energy industry coincided with the decline of shipbuilding and mining in the northeast of England. Oilandgaspeople.com, an Aberdeen-based recruitment firm...
(Excerpt) Read more at wsj.com ...
But just think of all the money they are saving on cheap gas and how it is stimulating the economy! (/s)
LOL...yep Old old old news. In the old days when a boom town was about to go bust ya could tell cuz the hookers were moving on...........
I feel a price shock coming on. The Opeckers are producing at maximum rate and there is probably no room for any cushion when US production falls as it is doing now and will do so further until the boys that drill for source rock get cranked up again. Getting them going again after this crash will take a bit of doing.
We live in an Amrericentric and Eurocentric world and think that just because our economy is down the rest of the world is doing just exactly the same. That old line of when the US sneezes the world has a cold is fading I think. Our economy is artificially stifled by regulation and politics courtesy of obunghole. If he does move on, his legacy of disaster will be with us for a long time.. more than a decade I expect.
No. OPEC has spare capacity and has produced more oil than now in recent past.
The US has been significantly drilling wells but not completing them with Hydraulic Fracturing. There has never been such a backlog of US wells drilled but not yet put on line.
POil at $65 Could Free 500,000 Barrels From Shale ’Fracklog’
http://www.bloomberg.com/news/articles/2015-04-24/oil-at-65-seen-freeing-half-million-barrels-from-shale-fracklog
April 23, 2015
Oil needs to recover to $65 a barrel for U.S. drillers to tap a pent-up supply locked in shale wells and unleash more crude on markets than is produced by Libya.
Dipping into this “fracklog” would add an extra 500,000 barrels a day of oil into the market by the end of next year, Bloomberg Intelligence said in an analysis on Thursday. Producers in oil and gas fields from Texas to Pennsylvania have 4,731 idled wells at their disposal.
Prices are rebounding from a six-year low after drillers idled half the nation’s oil rigs, slowing the shale boom that boosted production to the highest in four decades. The number of wells waiting to be hydraulically fractured, known as the fracklog, has ballooned as companies wait for costs to drop. That could slow the recovery as firms quickly finish wells at the first sign of higher prices.
So you subscribe to a view of oil prices being sustained at this level for a long time to come?
I’ll be waiting to see this fraclog matrure. Color me skeptical. I think it is promulgated by a bunch of silly oilman wannabes who don’t understand these are most likely tail wells that won’t have much in the way of IP or sustainability.
If there are wells waiting on lower prices for service and higher oil prices it will mark the first time I have ever seen that kind of an economic plan executed.... storing oil in the ground after sinking well cost...though well cost is not what it once was compared to the cost of completion.
As for Opec and higher production. I’m also a skeptic that they can turn on a valve.
Oil is a tough commodity to predict isn’t it? Not like corn or soybeans, pork bellies or orange juice. Geopolitical whim can turn it all on a dime as well as all the other factors.
I don't pretend to know the future price of oil.
I’ll be waiting to see this fraclog matrure. Color me skeptical.
I've read many differing views of how it will play out. Some of the independents claim they are holding out for the completions costs to fall. I would think if oil prices rises, this will put more pressure on completion crews and equipment and that cost will rise higher than ever.
What I am certain about, is this is a different scenario in the US than we have experienced before. We will have the ability to bring more oil on line faster than before.
As for Opec and higher production. I’m also a skeptic that they can turn on a valve.
Speaking only of Saudi Arabia, they seemed to have taken a very long-term point of view. They have taken advantage of falling rig prices and increased drilling.
As U.S. cuts, Saudi oil-rig counts hit record highs
http://www.marketwatch.com/story/as-us-cuts-saudis-oil-rig-counts-hit-record-highs-2015-04-30
May 1, 2015
Oil is a tough commodity to predict isn’t it?
Absolutely. The closest thing to certainty in predicting oil prices is the assurance of being wrong.
This we agree on: “What I am certain about, is this is a different scenario in the US than we have experienced before. We will have the ability to bring more oil on line faster than before.”
Shale has certainly reduced risk of finding reservoir rock. It is now down to quality, cost and price at least for now. The West side of the Fayetville proved that just having shale is not all it takes. Most of the operators we deal with see 5 to 8 years of locations at the current drilling pace in the favorite areas. We have not yet seen all the Gulf Coast shales have to offer yet though nor all the Permian Basin has to offer.
I’ve told the kids that the world will be amply supplied with hydrocarbons for the foreseeable future. Efficiency will offset potential production declines and moderate price through demand constraints. The US will not be hostage to oil for at least awhile even though we will continue to import... being self-sufficient is probably a pipe dream unless there is some untapped inner earth thing. I expect moderate though not low prices for the rest of my life with some spikes but not terrible to manage. Average sustainability looks like between $75 and $90 a barrel oil prices I’ve managed to moderate fuel prices at the farm by timing of buys to avoid price spikes. It has not been terrible even in 2008 though it was a bit daunting to think about what was happening and why. I think my high for delivered diesel has been about $3.24 in the last 8 years. Even with recreational bulldozing I can hold expenses to $2,500 a year for fuel at that price.
And yes, the Saudis have capacity to drill and are and will and you are right, they are playing a long game. We led the world in the methods of how to get the more squeal out of the pig. Saudi is probably now where we were more than 40 years ago with tertiary recovery, infill drilling and such notwithstanding the massive water flooding in progress for a long time. However, just like us, without tens of thousands of wells the rate will may not be there. In most places the Saudis have left behind them the days of 7” tubing for production. Time will tell how this plays out.
It is hard for me to see how the banks are letting the operators set on wells to store oil without a miraculous change in their understanding of oil and economics thought that is possible. They may have figured that the wells are write offs any way and this may be a way to get at least some money back. Again, we’ll see.
Predicting the price of oil is like Donald Rumsfeld says about his taxes... that he is absolutely sure they are not correct.
Natural gas and electricity are our next big boom and challenge. Gas is just waiting on coal to finally die enough to explode base load demand. We will find out just how good the Marcellus, Utica and Haynesville really are. Next in line, if the green weenies have their way is CNG for trucks displacing diesel. At $7.00 per mmbtu or so that I see coming soon and the conversion of 5.8 mmbtu / bbl of oil... natural gas is dirt cheap. $7.00 will inspire lots of drilling though I have sold natural gas for more than $9 per mmbtu more than 30 years ago. What heady days those were!
Just a thought that I recall.. there have been more than a few successful companies that made their mark by exploiting the NE Devonian Shale for gas.
Electricity costs for coal, gas and oil change constantly and are not driven by simple economics. Coal is being politically priced out of the mix for now and that legacy of obungo will last for a long time and I think we will eventually pay for it dearly. If coal were not naturally the cheapest to use there would not be so much of it used now. I remember back in the 70s when coal was all the rage. Before that lots of power in the central US was just natural gas fired. Before that there were no coal trains from Wyoming. Before the coal trains slurry pipelines were the most desirable but those were blocked by the railroads. OG&E had a large E&P arm that searched for gas to sell and fire their steam plants.
We have never had real capitalism, socially we aren’t responsible enough for it and so we go overboard with regulation.
Oh well, gotta go.
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