Posted on 01/12/2016 12:57:29 PM PST by thackney
I hope this does not play out till after the election.
Any shutoff of wells in an effort to boost the price will play into Left-Populist conspiracy theorists and boost someone like Bernie Sanders.
This is my thinking. The price will stay down until all the marginal producers shut in.
When oil was over $100/bbl I remember reading about a guy who drilled a stripper well on his property even though it would only produce about 4 barrels a day. I don’t know if his investment ever paid for itself.
It would be very unusual to “drill” a stripper well.
Typically it is an old well that already paid for the drilling and infrastructure and was slowly still running.
http://www.wsj.com/articles/bp-to-cut-about-4-000-exploration-and-production-jobs-1452605175
BP to Cut About 4,000 Exploration and Production Jobs
Cuts are in response to low oil prices and restructuring after Gulf of Mexico disaster
Yes, it was an unusual case. I think drilling the well cost him $100k.
Stripper Well threads are always good for a few extra bumps unrelated to the original topic...
Hah!
There will be an interesting phenomena occurring in years to come as gradually more and more of the producing wells in this country are from unconventionals.
Due to its nature, unconventionals produce at dramatically steep early declines but over time, between 7 and 12 years after initial production, the rate of production decline is very, very low, almost constant.
This causes a long ‘tail’ wherein little decline is seen, and this tail could last decades.
Just think of hundreds of thousands of these wells are producing on average say, 10 bopd, almost without decline.
It will alter significantly this country’s production modeling.
However, keep an eye out for the unstable political situations in Venezuela and Nigeria, the two biggest non-Arab oil producers within OPEC. If either if these countries’ oil production shuts down due to political turmoil (especially in Venezuela), a large fraction of the world’s oil production goes offline, and that could immediately send the price of oil through the roof.
I don’t think that is a great change from our existing conventional wells. The later years that is.
The United States has an estimated 771,000 marginal wells in production - about 410,000 oil and 361,000 natural gas wells.
https://nswa.us/custom/showpage.php?id=25
I believe the Saudis have been flooding the market to put American oil drillers out of business. Once those companies are bankrupt, domestic production is down and the price is up, they will cut production. Is that a conspiracy theory?
There are several Nations depending on oil money to keep their country stable. Saudi Arabia will far outlast most of these. They won’t deplete their cash reserves. Other countries will fall apart first and the result will raise oil prices.
Angola, Algeria are some others.
http://graphics.wsj.com/lists/opec-meeting
Mission accomplished for Obama. He is taking money from rural families with small stripper wells that help many elderly Americans make ends meet and is importing oil from our enemies in Iran so they have billions to develop nuclear bombs to destroy Israel and America. Shame on our spineless GOP for not doing anything to stop this curse on our land.
I’ll never understand these “panties in a wad” scare stories. This is nothing more than the dynamic balancing of supply and demand in a free market. High-cost wells get taken out of service first. Supply falls to meet the demand curve. When prices rise, wells get put back into service.
Maybe the authors would like to write stories in communist countries where supply and demand simply are not allowed to operate. Of course, if they did that there, they would lose their heads pretty quickly.
Stripper wells, went taken out of service typically will never come back.
If the production is stopped beyond a certain time, it has to be plugged with concrete.
Given the low production rate, if prices rise, nobody will spend the money redrilling a known very low producer.
You are missing the entire point:
The very nature of these wells, with long laterals, fracced into extremely tite formations, causes very prolonged periods of time to occur to get much production decline.
Most conventional strippers are not the same. They are in more permeable formations and are vertical. Very different mechanisms of production.
As an example: I observed a Bakken well that produced +10 years and afterwards producing at low rates that had a well that encountered virgin pressure only 100’ away from the wellbore.
We are talking about massive pressure differentials within a horizon that causes oil to ‘bleed’ into a fracture system almost constantly, with a well suffering little observable decline.
A marginal unconventional horizontal, stage-fracced well is a completely different animal than most of the wells currently classified as stripper.
This is the beginning of another cycle, and you can see how it works. OTOH, there’s more to abandoning a stripper well than just “shutting it off”. It costs some money, and some marginal wells may be kept in production just to avoid the expense, especially if crude prices may rise in the foreseeable future.
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