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Study: Shale Oil to Pressure World Prices
The National via Rig Zone ^ | July 06, 2012 | April Yee|

Posted on 07/09/2012 6:01:54 AM PDT by thackney

Oil unlocked from shale formations is set to create a supply glut that could push down crude prices, according to a new study.

Global production capacity at oilfields will increase by 17.6 million barrels per day (bpd) over the next eight years thanks in part to shale, the most significant increase in any decade since the 1980s, according to Leonardo Maugeri, a research fellow at Harvard Kennedy School's Belfer Center for Science and International Affairs.

"Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption," wrote Mr Maugeri, who is also a former senior vice president for corporate strategy and planning at Italy's Eni. "This could lead to a glut of overproduction and a steep dip in oil prices."

The United States and Iraq are forecast to lead the production increase through 2020, with Saudi Arabia, Russia and China contributing more modest additions. Pumping levels are forecast to decline in Iran, Mexico and the United Kingdom.

US producers of shale oil need crude to be priced only above US$50 to $65 a barrel for their operations to remain profitable.

The development of shale oil has already made North Dakota, home of the Bakken formation, a bigger oil producer than the Opec member Ecuador. Mr Maugeri writes that North Dakota and its neighbour Montana could become the equivalent of a large Gulf producing country within the US.


TOPICS: News/Current Events
KEYWORDS: energy; oil; oilprices; oilshale; shale
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To: OrioleFan

As much as I hate to admit it, I thnk $30/barrel is too low. I think the $50-65/barrel is right and will allow for needed reinvestment and good profit.


21 posted on 07/09/2012 7:06:30 AM PDT by WellyP (question!)
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To: Erik Latranyi

I LOVE IT

Just think what a massive global supply of 30 dollar oil would do to the economies of the middle east OPEC tyrants! Now we need to jack up the prices of food, machinery, and construction materials and watch those scumbags starve to death.


22 posted on 07/09/2012 7:12:47 AM PDT by mamelukesabre
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To: WellyP

whatevver. IF they can do it for 30 bucks then the price should be 30 bucks. The lower the better...drive that damn OPEC to hell.


23 posted on 07/09/2012 7:17:08 AM PDT by mamelukesabre
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To: cuban leaf

“..I tell anyone that will listen that we are in the biggest oil boom in the history of the world....”

I dunno about all of that, but I know about here in the Eagle Ford where I’m at. It kinda reminds me of what I read about the Alaska/Klondike gold rush in the late 1800s or so. Tons of activity going on...oil field traffic, drilling rigs and facilities going up everywhere all along the trend. You can see the effects on the local economies too: RV parks, hotels, restaurants, housing etc. being built and going up all along the trend. “Help Wanted” signs hanging out on a lot of em. It’s totally insane....I love this work, plus, it pisses off the communist DC liberals to no end that an average American might just be able to provide for his family and still maybe set a little aside for the future...despite their best efforts to see that he doesn’t. I would imagine the other newly discovered trends are, or will be, the same way.


24 posted on 07/09/2012 7:19:14 AM PDT by lgjhn23
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To: Vigilanteman

Oh, they’ll certainly take all the undeserved credit for lower gas prices, but if Obama gets back in, expect him to continue his agenda of demonizing “fossil fuels” and the oil producers. Actually, the Obama admin and all his leftist flunkies thought the public would eagerly embrace green technology i.e. a lower standard of living to “save the world.” It turns out most average Dems do not want to give up their huge cars or grand lifestyles for some Marxist plan anymore than consevative Republicans. So Obama is straddling a very narrow fence. Lower gas prices means more votes but supporting cheap oil means alienating his leftist buddies. What to do.


25 posted on 07/09/2012 7:32:21 AM PDT by driftless2
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To: Erik Latranyi
This number is declining as the experience levels in extracting oil from various shale plays rises.

Yes, as the results of decades of experience with hydraulic fracturing combined the use of horizontal steerable directional drilling and multi-lateral taps, it has declined down to the relatively low numbers in the article, $50 ~ $65.

With the right leader, we could return to $30 per barrel prices within 10 years....

You are dreaming without knowledge.

26 posted on 07/09/2012 8:00:27 AM PDT by thackney (life is fragile, handle with prayer)
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To: IMR 4350

Forget what dear leader has told us. A number of nuts on FR have told us the same thing. Once we get past the subject of shale oil, there is deep oil to be discussed. The more oil, the better, and there is a lot of it.


27 posted on 07/09/2012 8:06:21 AM PDT by pallis
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To: thackney
You are dreaming without knowledge.

I know you are knowledgeable about the industry. I am in it as well.

What most fail to consider is the impact of abundant domestic natural gas on the demand for oil, hence the price.

28 posted on 07/09/2012 8:09:22 AM PDT by Erik Latranyi (When religions have to beg the gov't for a waiver, we are already under socialism.)
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To: cuban leaf
I tell anyone that will listen that we are in the biggest oil boom in the history of the world and prices should start reflecting that, dramatically.

I’m asking your honest opinion: Am I full of sh**?

In my opinion, the first is an overstatement, but a boom is starting non-the-less.

The second is false. What you are missing is that the fields like Eagle Ford, Bakken, Wolford and the other tight formations like shale are recoverable today because of the high price of oil. It if falls dramatically, so will the drilling and then production rates.

29 posted on 07/09/2012 8:10:05 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

I had heard a long time back that for fracking to be worthwhile, oil would have to be priced at more than $30 a barrel. Did that figure increase?


30 posted on 07/09/2012 8:16:59 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: WellyP

Agreed.


31 posted on 07/09/2012 8:35:04 AM PDT by OrioleFan (Republicans believe every day is July 4th, Democrats believe every day is April 15th.)
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To: Erik Latranyi
What most fail to consider is the impact of abundant domestic natural gas on the demand for oil, hence the price.

In that context, not just increasing oil supply but reducing demand via changing fuels used by many, your number in today's dollars may be correct but I believe it will take decades.

Unless the gas is converted economically to a gasoline replacement without modification of the vehicle engines, the change over to natural gas will take decades. There are far too many gasoline engine vehicles that are not going to be replaced in ten years. Even if the supply of CNG service stations and vehicles became abundant, most people could not afford the switch without getting value for their current vehicle or continuing to run it until it dies.

If everyone wants a CNG car, who will buy your used gasoline car? How fast would a significant portion of the US ~250 million autos be replaced? Maybe 100 months to replace a 1/3 of them?

32 posted on 07/09/2012 8:57:22 AM PDT by thackney (life is fragile, handle with prayer)
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To: cuban leaf
I had heard a long time back that for fracking to be worthwhile, oil would have to be priced at more than $30 a barrel.

You were not told a truth. We have been hydraulically fracturing wells since 1949.

It isn't the process that justifies the cost, it is the formation. At low prices ($30), it cost too much to go after tight formations like the Bakken and Eagle Ford. Drilling and completing the wells would cost more than they would produce.

33 posted on 07/09/2012 9:00:51 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

Thank you. That is why I posted to you in the first place.


34 posted on 07/09/2012 9:11:25 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: thackney
"Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption," wrote Mr Maugeri, who is also a former senior vice president for corporate strategy and planning at Italy's Eni. "This could lead to a glut of overproduction and a steep dip in oil prices."

PEAK OIL!

Where are the sky-is-falling Peak Oil idiots now? Nowhere to be found. For sure.

If we can EVER get the general public to understand that twin facts that we are awash with oil and than man can't impact global climate very much, it would just crush the ability of the New World Order elites to implement Agenda 21 in the USA.

In the meantime, the MSM continues to brainwash the masses, even in the face of these facts: copious oil supplies and an world climate generally unaffected by man's impact.

Thank you for a most informative and timely post!!!!

35 posted on 07/09/2012 9:19:13 AM PDT by Freedom_Is_Not_Free (REPEAL OBAMACARE. Nothing else matters.)
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To: Freedom_Is_Not_Free

There is a significant difference between no oil available, and no cheap oil available.


36 posted on 07/09/2012 9:37:08 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
If everyone wants a CNG car, who will buy your used gasoline car?

You can already buy conversion kits all day long.

Looks like a potential cottage industry either installing the kits or selling turnkey converted used cars.

37 posted on 07/09/2012 9:50:51 AM PDT by ROCKLOBSTER (Celebrate Republicans Freed the Slaves Month.)
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To: ROCKLOBSTER

The price of the conversion kits, combined with a lack of refueling infrastructure, makes that a rather limited option compared to fleet of vehicles in the US.

Many people (including myself) drive a vehicle worth less than the cost of an installed conversion kit.


38 posted on 07/09/2012 12:32:05 PM PDT by thackney (life is fragile, handle with prayer)
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To: ROCKLOBSTER

Some number comparisons to see what I mean.

Here is a recent article talking about prices of conversion kits and fuel costs.

http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201206190001KRTRIB__BUSNEWS_14040_38064-1&params=timestamp%7C%7C06/19/2012%2012:01%20AM%20ET%7C%7Cheadline%7C%7CCNG%20vehicles%20will%20get%20more%20rebates%20under%20Oklahoma%20Corporation%20Commission%20plan%20%5BThe%20Oklahoman%2C%20Oklahoma%20City%5D%7C%7CdocSource%7C%7CKnight%20Ridder/Tribune%7C%7Cprovider%7C%7CACQUIREMEDIA%7C%7Cbridgesymbol%7C%7CUS;CHK&ticker=CHK:US

I’ll pick the following to make an example.

$10,000 conversion kit.

$3.50 gasoline cost.

$1.50 CNG cost for equal energy to gasoline.

I only get 14 mpg in my truck and drive about 12,000 miles per year.

Than mean just under 860 gallons of gas per year at $3,000 cost per year.

If I switched to CNG, my cost would be $1,285 for a savings of $1,715 per year.

It will take nearly 6 years just to break even on cost, assuming I would keep the 5 year old truck that long.

And for me, there are not enough CNG stations available, so it would take about 3 more years to pay for the home refueling unit.

The fuel cost savings are significant, but so are the expenses to convert. The market is still too early form most peoples economics to work.


39 posted on 07/09/2012 12:50:37 PM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
I am pro business and am not at all fond of interference, but there's a “but” coming: we cannot allow OPEC, the EPA or any other entity to derail the success of domestic production. It is critical to national security and I am absolutely sick of having to kowtow to Middle Eastern terrorist states in order to continue to have fuel.

Put a floor on the domestic price, at $70.00 per barrel. Do not allow OPEC to undermine domestic production via lowballing as occurred in the eighties oil bust. If there is excess then sell it spot on the world market. If spot on the world market rises above this floor, manage the increase to minimize market disruption. This wild seesawing is horribly counterproductive, calm it down.

“Fungibility” and rampant speculation has wrecked our economy just as badly as excessive regulation has. Allow this to take root and the economy benefits.

40 posted on 07/09/2012 1:08:54 PM PDT by RegulatorCountry
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