Posted on 10/25/2014 6:30:08 PM PDT by 2ndDivisionVet
Yes. I didn't mean it as a rebuke.
Could be he will be wrong for a while and then right. Or vice versa.
Could be he is being the salesman he always has been.
My view of the world crude situation is that a steady supply is only going to be more valuable, given the volatility across the globe and lack of leadership in the U.S.
If our idiot weakling president signs an agreement allowing Iran to develop nukes, oil will go to $200/bbl.
That is mostly gas in the Marcellus. Some oil, some from the Utica, but it has proved more gassy than originally talked about.
When the price of oil goes down so does the cost of exploration, drilling and producing.
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Very true. I read this week that offshore rigs had dropped 30% in price with the demand pressure taken off.
Those marginal wells, get left on the planning board for future. The fabrication and pipe manufacturing gets less orders, quits working so much overtime and the competition starts looking more at cost than delivery time.
Consulting, design and construction folk start working less overtime; average prices to the folks that hire us go down.
Saudi has some old production that is cheap to produce. But they have been spending significant dollars trying to keep their production rates up. It is the marginal cost that matters.
They spent $17-billion (significant overruns from estimates) on the Manifa project for 900,000 barrels a day.
Offshore in shallow waters, they built 27 man-made drilling islands, 13 platforms, and 15 onshore drillsites. The project includes 41 km of causeways and 3 km of bridges designed to maintain natural water flow in Manifa Bay. They have worked for over half a century trying to figure out a way to economically produce this lower value, high sulfur heavy oil with high metal content.
For the curious, I included a bunch of links for info on this project.
https://www.saudiaramcoworld.com/issue/196006/manifa-oil.field.under.the.sea.htm
http://www.theoildrum.com/node/9056
http://www.oilandgasnewsonline.com/Article/33782/No_plans_to_raise_output_capacity
file:///C:/Users/Todd%20Hackney/Downloads/Jan-De-Nul_Manifa-Field-Causeway.pdf
Thanks, always good to hear the inside story.
I think we are in pretty close agreement. I do not see and “absolute floor” though but doubt we see the $10 of years past. Quibbling perhaps even though I agree $50 to $60 is probably about as low as it will go. If we see even this $80ish much longer it will start knocking things down pretty soon. Already I am seeing some rig farming out going on as deals begin to fall apart. Investors have already become wary of raises for new shale programs just as Berman suggested they would in in April Zero Hedge interview. You have to experience something to really understand the gearing of it and they have now. It is not the cash machine they figured it would be. Probably especially now that they are seeing their JIBs come in for the full-up WI and the cost of declining production. The checks aren’t so big.
Harold Hamm has to say he believes things will just keep going on. He has everything to gain and nothing to lose. I’ve seen that before. We call it gambler’s ruin.
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