Posted on 06/01/2015 4:31:19 AM PDT by thackney
Wall Street’s generous supply of funds to U.S. oil drillers helped create the American energy boom. Now that same access to easy money is keeping them going, despite oil prices that are languishing around $60 a barrel.
The flow of money into oil has allowed U.S. companies to avoid liquidity problems and kept American crude production from falling sharply. Even though more than half of the rigs that were drilling new wells in September have been banished to storage yards, in mid-May nearly 9.6 million barrels of oil a day were pumped across the country, the highest level since 1970, according to the most recent federal data.
Helped by a ready supply of money, the flow of oil from the U.S. could keep crude prices low for the remainder of 2015 and beyond.
It wasn’t supposed to happen this way. As crude prices began to plunge last year, many energy experts predicted a repeat of 1986 when U.S. oil companies lost their funding and the industry collapsed into a yearslong bust. Without money, companies had to slow or even stop drilling for the crude that helped create a global glut. Many were forced to sell out to rivals or go bankrupt.
But the gloomy scenario of that downturn hasn’t played out on a large scale this time. That is because banks, private-equity firms and institutional investors have continued to pour money into the sector even as oil companies slashed billions of dollars in spending from their budgets and laid off more than 100,000 workers.
“What makes this downturn different is there is a lot more capital available,” says Pearce Hammond, a managing director at Houston-based energy investment bank Simmons & Co. International.
Interest rates remain at historic lows, which creates significant cash in search of good investments...
(Excerpt) Read more at wsj.com ...
Two articles next to each other on FR. This one, US oil is pumping away, and another one stating US oil rigs are shutting down....
Eventually, all of this will pay off. I’m predicting that within 18 months, all that investment will pay off. Because the aim of ISIS is to conquer Saudi Arabia, and that will make the US the biggest exporter of energy. Once we are rid of OBAMA, there will be a boom in drilling in this country. All of these government lands that are now closed to drilling will be opened. That and “FRACKING” will make us the worlds largest energy exporter. OIL, GAS and coal will be very expensive and we have a large share of all these products.
it would appear that oil companies are a safer and more lucrative place to invest than government bonds
you got it backwqard.
In the long run, the Gulf States will tame the wackos
After the drilling rig is done, and the well moves into production, the flow rate will begin to decline. In tight plays like the shale Bakken, Eagle Ford, etc, that decline rate is steep.
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Without sufficient drilling to make up the loss, total production begins to decline.
“Without sufficient drilling to make up the loss”
Nothing is ‘lost’ here. Those oil reserves are not going anywhere.
It is a production ‘decline’.
From your lips to GOD’S EARS. I see that Russia is beginning to give up on Assad of Syria. Once Syria is in the hands of ISIS, guess where ISIS will go next? To Saudi Arabia. It’s been proven that these Muslims fighting ISIS has no stomach for the fight. Look what’s happening in Iraq? Also, ISIS is mainly SUNNI, and so is Saudi Arabia. I believe that Saudi Arabia will be a “CAKE WALK” for the ISIS.
Production is what fuels my trucks and keeps people employed. Oil in the ground, not so much.
you are very wrong
That is without any secondary and enhanced recovery. Water flooding and CO2 injection increases that production curve. But only if the price of oil can justify it.
There is still a lot of oil under the US soil and many decades of industry to grow around it. If we can get the government and enviro-whackos out of the way.
“Production is what fuels my trucks and keeps people employed. Oil in the ground, not so much.”
My point is no ‘loss’ of oil occurs. Oil is either reserves or production.
Some who read this might interpret this to mean we actually lose oil, when if fact is is just a lower production rate without ‘loss’.
I don't understand that.
I see. So these are not mutually exclusive but lagged and eventually a decline in drilling does show up as a decline in production...
. . . but of course, oil in the ground - combined with the value to you of your ability to fuel your trucks - is what fuels production.
“Some who read this might interpret this to mean we actually lose oil
I don’t understand that. “
this began in your post 6 which mentioned loss.
There is no loss.
There is a decline in production, but it is not a loss, just deferred for some future time.
Those not knowledgeable in the oil industry might think that there is a loss of oil or gas when rigs decline in number or when a well is shut in.
I prefer not using the word ‘loss’ or ‘lost’, as it con-notates something that is not really happening.
Okay, I see your point. I was describing production rates, but I can find a different word for the future.
Cheers!
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