Posted on 12/03/2014 12:14:10 PM PST by jyro
I can't think of a tax I have even been for so this is new ground for me. Think about a tax on imported oil. Discuss.
Wow.
Just... wow.
Both wells have casing cemented in place, both wells have some pressure differential, and after the flowback period of relatively high production after a frac or IP in an overpressured reservoir, the lithostatic pressure exerted on the fluids in the pore spaces is the same as any similar rock at the same depth, the fluid dynamics subject to the same influences, and the reservoir rock subject to the same sorts of degradations associated with shutting a vertical well in.
The only differences are that the horizontal wellbore has much more exposure to the pay, and that the rock has fractures induced by the frac job--which may be present in a vertical well also.
Those fractures do not pulverize the rock, they open permeability corridors through which oil can flow after it comes out of the pores into the fractures. While certainly more efficient, it is not a vaccination against bubble points, moveable solids, or other pore blockages, which will severely impair future production when the attempt is made to put the well back on line.
The only way to get that well back anywhere close to IP, or even the former production is to re-frac the well, and that presents certain mechanical difficulties if the liner was perforated as the frac stages were run. The inside of that production liner is no longer smooth, and setting packers to isolate portions of the wellbore for a multistage re-frac would be incredibly difficult, if you could even get the frac string to bottom.
That means the new frac would have to be less efficient because there would be less control over what part of the wellbore was fracced.
All of that is expensive--getting up there with drilling costs.
Of the 8-10 million dollars spent on drilling and bringing a Bakken well on line, only about 4 million are spent drilling and casing the hole. The rest goes to leases, permits, and production costs, chief among which is the frac.
Right now, the last wells I'd shut in would be the ones with the highest differential pressure (still in the steep part of the depletion curve).
The oil coming out of those wells is likely being delivered to fulfill contracts at a higher price than current spot (with the market in decline), and since those may be producing at 4-5 times the rate of more mature wells (say, 2-3 years old), you'd want to keep them online.
The problem is that the wells which have reached a nearly level depletion curve are the ones which would be most susceptible to formation damage from being shut in because the differential pressure is less than with virgin reservoir. To renew that production would require production work on more wells for the same amount of production off line, and due to the nature of production being high at first and tapering off steeply to 25-30% of IP, they are more likely to have reached payout.
You'd be taking a chance on screwing them up when they are at the point in their life where the production is profit.
Now that may work differently in different basins and rock types, I have only worked wells in the Williston Basin and the Rockies for 35 years and may not have encountered those situations, which is why I asked.
The purpose of the law would be, first, to communicate that Congress doesn’t appreciate having our markets and our suppliers arbitrarily jerked around by foreigners. And second, to make it clear that the president can do something serious about it - and that if he does, that action could stick indefinitely.
How much more do you think I should pay for gas? In order to ensure my prosperity?
Why? Come on, man. We are taxed enough already.
Encourage competition....it’ll drive down prices and encourage better products.
A tax will merely raise the price of a barrel of oil, no? The cost of imported oil into the US will rise which will raise prices overall. What is to keep other countries from doing the same to our oil that we export?
I’m personally willing to pay more to be oil self-sufficient. Other countries requiring imports don’t have a domestic oil supply. As long as we use more oil than we produce, there is no real need for the USA to export oil. With a higher price for import oil, domestic oil production will become more feasible.
“It must me be magic then that our economy has remained strong relative to most nations.”
This is incorrect, because it ignores how much stronger we likely would have been without the US government squandering every advantage we had. Just pissing them away, the enormous gains we made from WWII through the 1980s.
For a great example of this, why has the US spent trillions of dollars to make China a super power? In exchange, we get a hell of a lot of cheap consumer goods sent in expensive shipping containers, that now sit in rusting mountains outside our major ports.
http://upload.wikimedia.org/wikipedia/commons/b/b3/Prc1952-2005gdp.gif
Were our leaders so astoundingly naive as to think if we made China wealthy it would become our friend?
I’m afraid they were. So instead of America being miles ahead of the rest of the world, economically, we are now being overtaken by China. Instead of the Pax Americana, we are becoming dependent on the good graces of allies who contribute almost nothing, but demand control over our actions.
America used to have heavy industry. Now look at Detroit.
What kind of car do you drive? Were they made here, of American parts, assembled here from parts made elsewhere, or completely made in other countries?
Why did our internationalist leaders give all of it away, or make it possible for companies who do nothing for our nation to access our markets? Surely there is a special place in Hell for them, underneath the logo of the Chamber of Commerce.
I’ll stick with the wisdom of Adam Smith.
Have you ever read Wealth of Nations?
Really, every other country should have a tariff related to how the tax our exports/subsidize their domestic companies.
they already do
Yes, I’ve seen your page of corporate logos.
My perspective is the Republican leadership have become as obsolescent as were the old Whig leadership.
Calvin Coolidge was wrong. The business of America is *not* business. The business of America is Americans. If those Americans own businesses that are loyal and patriotic to America, I’m all for them. But if their loyalties are divided, they are as untrustworthy as are mercenaries in battle, willing to switch sides for whoever offers them the most loot.
The Democrats embrace International Socialism, via the Socialist International, an organization of leftist political parties from around the world.
Chamber of Commerce Republicans embrace Internationalist Capitalism, whose ends are much the same, backing rule by faceless bureaucrats. A Rollerball world of corporate government.
The Whig leaders fell because they could not bring themselves to oppose slavery, loathed by the rank and file of the party, because slavery was business, and business had to be good. So the rank and file left the Whig party and formed the Republicans, as much as not to destroy the institution of slavery.
The Whig leaders wormed back into the good graces of the Republicans, then began again their ascent in the party, to bring back “business first” leadership. And when they did, over and over again, the result was disaster for the party and the nation.
Perhaps this is why RINOs detest conservatives so much. Because they worship a god other than Mammon.
LOL, Those represent what I do to make my career. Most people don't see business as evil. They are how I fed my family, provided shelter and have an enjoyable life. Business also provides most of the things I purchase.
I don't want government selecting who should do well, who should be financially punished, who should be financially rewarded.
Great terminology!!!
I assume you would agree that organized crime should be punished for their crimes.
Yes...
and??
If these traitors were around in the 1940's we'd be speaking German on the east coast and Japanese onthe West coast.
If the mafia had enough influence in government to keep government from prosecuting themselves...
and they had some legitimate “front” businesses”...
if the mafia’s operatives then said “hey, government should leave businesses to do as they please, stop harassing and regulating all businesses”...
the local people would kind of have a problem.
while it would be good to leave legitimate businesses alone, it would be difficult to get corrupted prosecutors to consistently prosecute government wrongdoing or to consistently prosecute the criminals hiding behind front companies.
in essence, the fox would be guarding the henhouse.
I think Singapore is the only country that doesn't have an import tariff on USA made product and agriculture.
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