Posted on 01/15/2016 5:31:42 AM PST by thackney
Oil companies have scrapped $380 billion in new projects since the oil-market downturn began a year and a half ago, Wood Mackenzie said Thursday.
The energy research firm's dollar-figure estimate has nearly doubled since its first report on the matter last July, as oil prices crashed from around $60 a barrel in the summer to about $30 a barrel this week.
About $170 billion of the scrubbed projects had been scheduled to come into production from 2016 to 2020. That means 2.9 million barrels a day that the industry had planned to bring up won't hit the market until after 2025.
"The impact of lower oil prices on company plans has been brutal," said Angus Rodger, principal analyst in upstream research at Wood Mackenzie.
The industry since last summer has canceled 22 major projects tied to 7 billion barrels of oil equivalent in reserves, bringing the number of scrapped projects since the start of the downturn to 68. All told, that's 27 billion barrels of oil equivalent that will have to wait until prices recover.
On average, the projects would lose money unless crude prices were $62 a barrel, Wood Mackenzie said. Canada, where oil companies pursue thick oil sands that are expensive to produce, led the world in deferred projects.
"What began in late 2014 as a haircut to discretionary spend on exploration and pre-development projects has become a full surgical operation to cut out all non-essential operational and capital expenditure," Rodger said.
I lost a big project half way through, lost money because I bought new equipment to do it. I should have sued my customer over it, I had the PO, but in the end I would have been slitting my own throat by burning the bridge for future work. They were just the middle men anyway, it would have meant them going back to the end user, a pipeline supplier, and they probably would have slit their own throat as well.
A happy medium is what is best, but no one can even say what that is without a fight.
I’d make sure my customer was aware of my decision, and I’d try to make sure they don’t forget it when the storm clouds lift.
Let’s be truthful: Saudi Arabia deliberately set out to destroy the US oil producers. They said they would, and did it.
They won’t destroy US oil producers. Some will become bankrupt and the name will go away. But economic wells and producing fields will not go away.
But the easy money that flowed by the barrel into investing in oil drilling and hydrofrac won’t flow so quickly and easy for a while.
Oh yeah, that has been explained to them in no uncertain words.
But with no threats.
Well done! Sometimes that’s all you can do.
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