IEA Chief: Oil Price Slump Yet To Hit US Shale Oil Production

Rigzone ^ | Mon Oct 13, 2014 11:01am EDT | SIMON FALUSH

[Rabin]

LONDON, Oct 13

Crude oil and condensates from the United States have a break even price of below $60. OPEC members clamoring for urgent output cuts, to push prices back above $100 a barrel, suck "heavily" on oil exports.

Big Dog, Wahabi Arabia is telling the Oil Cartel, they (can't find any way to empower their PotUS) are comfortable with markedly lower oil prices for an extended period, a sharp shift in policy aimed at slowing the expansion in the U.S. shale patch.

[Rabin]

Check out Maria van der Hoeven, executive director of the International Energy Agency http://www.reuters.com/article/2014/10/13/us-shaleoil-energy-breakeven-idUSKCN0I21GG20141013

Big-Muz can hate the pig munchies til hell freezes over, and black sack their ladies svp. Its oil that's become death of them.

Rab

[2ndDivisionVet]

We’re at $2.83 a gallon regular unleaded, $3.28 for diesel.

[steel_resolve]

Its no coincidence Putin pulled his forces back from the Ukraine border recently. These low prices coupled with the sanctions are killing their economy. Interesting point about the Saudis trying to hamstring our growth.

[Chad_the_Impaler]

You are talking about reactions ... what caused the oil price plunge in the first place? Answer: yes, it is American intervention.

[Thunder90]

It could have been a corridinated release of Saudi oil reserves and ramp up of shale production, asked by the Eurozone to put pressure on Russia. And the massive slowdown of China’s economy did not help oil prices either.

[Owen]

Somewhat weak article.

First of all, the Bakken gets $20 less than WTI for its oil. It has widely varying metals content that is difficult for refineries, and of course, someone has to pay for the rail transport. So they are getting only $64/barrel right now.

Beyond that, quoting an average price like $60 doesn’t address the fact that such a quote means about half (perhaps) of the wells need a higher price for breakeven. That depends on oil flow, and if the drillers can make a good prediction on that, and the well won’t flow enough to make money at $60, it isn’t going to get drilled, which means the truckers won’t be needed on that well nor the proppant shipment.

IOW words, $60 may kill the industry about 1/2 dead.

[sauropod]

.

[Smokin' Joe]

Elections coming up—seems the price always tanks in an election year. (keeps the conservatives in the patch from donating as heavily as they might)

[samtheman]

Cheap oil in the 80s was one of the factors that helped Reagan win the cold war.

[conservatism_IS_compassion]

quoting an average price like $60 doesn’t address the fact that such a quote means about half (perhaps) of the wells need a higher price for breakeven. That depends on oil flow, and if the drillers can make a good prediction on that, and the well won’t flow enough to make money at $60, it isn’t going to get drilled, which means the truckers won’t be needed on that well nor the proppant shipment.

"Some 98 percent of crude oil and condensates from the United States have a breakeven price of below $80 and 82 percent had a breakeven price of $60 or lower,

IOW words, $60 may kill the industry about 1/2 dead.

"

The logic of the Strategic Petroleum Reserve would suggest a protective tariff on fuel to keep the Saudis from whipsawing us. Is the Strategic Petroleum Reserve storage system obsolete now? Isn’t the glop they put in there hard to refine? Shouldn’t it be gradually used up, and (partially or fully) replaced with now-conventional shale oil, to be more credible as an emergency reserve?

[cuban leaf]

Here it’s $2.89 for premium. $2.69 for regular.

[Sacajaweau]

Upstate NY...We’re at $3.40

[Sacajaweau]

More money for other goods.....like my premium increase thanks to Obamacare.

[thackney]

It has widely varying metals content that is difficult for refineries

Any link for supporting that claim?

[thackney]

Is the Strategic Petroleum Reserve storage system obsolete now? Isn’t the glop they put in there hard to refine?

Glop?

The SPR reasonably matches the mix of heavy and light oil ratio refined in the US.

[thackney]

The Strategic Petroleum Reserve (SPR) contains a number of domestic and foreign crude oils. For the most part, these are of light gravity (30 to 40° API) and contain less than 2.0 mass percent total sulfur. These crude oils are not segregated in storage but are commingled according to their sulfur content into two categories - one sweet and the other sour. For the purposes of the SPR, sweet crude oils are defined as containing a maximum of 0.50 mass percent total sulfur, while sour crude oils can contain up to a maximum of 1.99 mass percent total sulfur. Only similar quality crude oils are commingled in storage, with no mixing of sweet and sour streams being practiced.

The crude oil inventory comprising each of the eight SPR streams is stored in from two to 13 caverns, depending on the site. The attached assays for these eight streams is a volumetric average of the assays for the individual caverns comprising each stream.

http://www.spr.doe.gov/reports/Crude_Oil_Assays.htm

[conservatism_IS_compassion]

The SPR reasonably matches the mix of heavy and light oil ratio refined in the US.

Thanks, I’m glad to hear it. I had the impression that the SPR had been filled on the cheap. Glad that’s not so.

[Owen]

http://www.hydrocarbonprocessing.com/Article/3250397/Processing-shale-oils-in-FCC-Challenges-and-opportunities.html?ArticleId=3250397

[Owen]

“

“Some 98 percent of crude oil and condensates from the United States have a breakeven price of below $80 and 82 percent had a breakeven price of $60 or lower,

IOW words, $60 may kill the industry about 1/2 dead.”

Misunderstanding. That’s the entire oil industry’s breakeven price.

The industry I’m referring to that gets killed 1/2 dead at $60 is the shale oil industry. Not the entire country’s oil flow. Just shale, the current poster child for bright future.