Only 1% of the Bakken Play Breaks Even at Current Oil Prices

Forbes ^ | NOV 3, 2015 | Art Berman

[SaxxonWoods]

Exactly, and as you know production cuts end price declines eventually.

The Saudis are feeling the pinch now. They need a price of $106 a barrel to balance their budget. They are burning reserve cash quickly now.

[thackney]

Retail Gasoline & Diesel are both under $ 2.00 in the Houston area.

I saw $1.71 this weekend on the SW side.

There is talk of exporting oil, which we already do some some degree, right? ...to whom?

Most of the oil we export now is to Canada. I think that is more a case of moving to the closest refinery, regardless of the border.

Crude Oil Exports by Destination
http://www.eia.gov/dnav/pet/pet_move_expc_a_EPC0_EEX_mbblpd_m.htm

And I think you told me once that American refineries can only handle light oil, not heavy oil?

The Gulf Coast Refineries tend to be optimized for heavy sour oil, which is cheaper and contains more BTU's per barrel.

...thus the imports?

Thus the desire for exports. The Gulf Coast is "flooded" with Light Sweet crude oil. We should be exporting this expensive oil and importing cheaper oil our refineries are already designed to use.

We import ~7 million barrels per day because we refine far more oil than we produce domestically.

It's all confusing, how much and what type oil the US produces.

The US produces a lot of different grades, as do other regions. But we are maxing out our ability to use more light sweet, and the US shale fields mostly produce light sweet.

Yet, we still are importing and exporting oil?

We import ~16 times as much crude oil as we export. Location and qualities drive those differences.

[thackney]

The Saudis are feeling the pinch now.

The Saudis could go for several years at this price. Long before they cannot withstand, others will crater with revolution and/or war.

Nigeria, Angola, Venezuela, Algeria would some of the first I would expect to fall. If their government breaks down, I expect it will greatly impact their oil production and the results will drive the global price higher.

[marron]

In the late nineties oil dropped to $8. There was blood in the streets in a number of places around the world.

I was in Ecuador at the time. Government people hadn’t been paid in months. Ultimately the banks collapsed, and along with them, the currency. They went to the US dollar.

[thackney]

Another example of location pricing:

In the late 90’s Alaskan North Slope oil dropped to ~$5.

In 1986 it dropped to ~$3.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=F005071__3&f=M

The US West Coast, which is a significantly smaller market than the US with little infrastructure to move Crude Oil Eastward, became flooded at these times. The oil export ban is what was crushing them. For Alaskan Crude it was lifted in 90s but still ended up with significant price drops relative to a location like Texas.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=F003048623&f=M

[Presbyterian Reporter]

Your argument assumes there is an unlimited reservoir of oil underground the USA.

What if we are currently pumping the last barrels that will be ever found?

What if 20 years in the future the oil production in the USA is 3 million barrels per day and demand is still where it is today?

[TexasCajun]

Thanks for the insight.

So when we hear about oil inventories and the rate of depletion, our heavy oil is what is mostly refined in the USA, or at least Gulf Coast and the Light Oil is the majority of inventory?

The IADC rig count for US rigs as 775 as of last Friday.

Tons of rigs, equipment/spares everywhere.

[thackney]

our heavy oil is what is mostly refined in the USA

I don't think I can make that statement for the overall US. A lot of refineries use local supply, heavy or light.

But a lot of our overseas imports came into the Gulf Coast. Over the past decade or so, mostly before the shale oil production took off, there was billions and billions of dollars invested in US refineries to be upgraded to use heavy oil because it was cheaper per barrel and contained more BTUs. These tended to be port locations.

Light crude is the nearly majority of our total oil production, but it has been the overwhelming majority of our shale oil growth in production. So the increase in our domestic supply by several million barrels per day has been nearly all light sweet oil, swinging our production balance.

See also:
http://www.eia.gov/beta/petroleum/imports/browser/#/?columnendpoints=2&d=20&dt=RP&f=m&g=g&od=d&v=l&vs=PET_IMPORTS.WORLD-RP_3-G.M

[TexasCajun]

Found this, pretty good breakdown:

Number and Capacity of Petroleum Refineries

[justlurking]

Israel is an oil importer, not an exporter.

For now.

But, they claim to have found a large deposit that can be recovered with the new technologies.

[thackney]

Of Natural Gas.

It may be large enough to supply their needs, eventually.

[lonestar67]

For at least 50 years we have heard the drumbeat of

“what if we are running out of oil?”

There is no empirical evidence of running out of oil. NONE!

Observe the market moving from 100 dollars a barrel to less than 40 dollars a barrel.

What does that suggest about supply?

It suggest there is far more oil than we can imagine.

I like to point out to people that oil companies and environmentalists have every reason to conspire and agree that we are “running out of oil.” It drives the price up artificially and it gives environmentalists destructive economic powers.

Demand for oil has increased exponentially over the last 30 years. But by some miracle— the supply is always larger.

We need to stop falling for this assertion. We are being manipulated in all the worsts ways by terrorists and socialists.

[thackney]

Observe the market moving from 100 dollars a barrel to less than 40 dollars a barrel. What does that suggest about supply?

It shows that supply grew faster than demand. It says nothing about reserves. Production rates have little to do with the amount remaining in the ground.

Demand for oil has increased exponentially over the last 30 years.

Exponentially? Not by a long shot. The growth has averaged about 1.2% a year.