Posted on 03/01/2015 8:53:15 AM PST by thackney
Saudi Arabia and OPEC may have dropped oil prices to stifle production in the U.S. and other competing nations, but they didn’t drop it enough to stifle the U.S. oil and gas boom from fracking, a senior expert with McKinsey and Company said in Chicago.
“If the Saudis think they’re going to put U.S. shale players out of business, they’re probably not, although there will be less drilling,” Joe Quoyeser told about 125 people, mostly graduate students, at Northwestern University’s Kellogg Energy Conference on Wednesday. ”But there are other elements of oil supply that are needed to balance the market that will have a hard time competing at $50 a barrel, including oil sands in Canada and much of the deepwater resources.”
Oil sands have to be heated to extract petroleum, a process that requires natural gas. Even at today’s low gas prices, that fixed cost means oil sands become economically viable at about $75 a barrel or more, Quoyeser said.
Beside the inherent costs of drilling at depth, deepwater drilling faces increased regulatory oversight since BP’s Deepwater Horizon disaster in 2010, which delays revenues. (And in fact, Moody’s recently downgraded Transocean’s credit rating to junk status.)
“We think these need prices on the order of $75 to $80,” said Quoyeser, who advises petroleum executives on hydraulic fracturing, lateral drilling, deepwater strategies and supply chains.
Yet U.S. crude oil production continued to rise in February, according to the Energy Information Agency, thanks largely to fracked shale wells.
Oil prices dropped more than 50 percent since June. The largely unpredicted drop was caused neither by demand shock—like the drop in consumption that occurred during the Bush economic collapse of 2008—nor by supply shock—like the fall of the Shah of Iran in 1979, Quoyeser said, but by chatter.
(Excerpt) Read more at forbes.com ...
Read post #7 and #18
Thanks.
Sorry for intruding on your thread. Let me sit this one out.
Please don’t consider asking question intrusions. I certainly don’t and I don’t think we have to agree to have a conversation.
Cheers!
Not at all. Cheers right back at you.
In a nutshell the refinery problems are hurting the supply of gasoline thus causing the gasoline price to go up while simultaneously reducing the demand for crude at the refineries thereby depressing the price of crude.
Simple economics 101 supply and demand.
You may not see the reality.
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