Posted on 09/02/2010 3:44:05 AM PDT by Rashputin
And the Germans are worried that peak oil may hit as early as this year.
http://www.spiegel.de/international/germany/0,1518,715138,00.html
Of course, that crash in price set up the last runup, because when the price is too low no one risks capital to go out and drill wells.
When curent wells deplete, and the next fields haven't been found (much less developed), there is a shortage with a runup in price.
Yes, some speculators get in on that, because they realize refiners have to have feedstocks or shut down.
So the price tends to run up, gradually at first, then spike, overcorrect and re-stabilize.
The shape of the curve from 1977 to 1984 and the recent runup through today are very similar, but the price inevitably stabilizes somewhere above its last stable price.
For the pre-Carter price to stable price after that boom, the factor was roughly 5X (four dollars a bbl before, $20 (+/-) afterwards). This time, 20 before, 80 after, which is in the ball park.
When the currency inflates or devalues (same thing) the price will go up, if it deflates, the price may well come down, but all in all, you will find trends similar in the buying power of the dollar in all relatively unmanipulated markets.
ping....
It should be half what it is now. That’s a given.
OPEC will probably glut the market to stop Obamas ‘green’ scams. The Fed is losing the ability to create inflation anyway because there is no demand due to lack of credit and cash by the US consumers. Looks like a big storm is headed our way. Batten down the hatches,
Most people on here know we’re being gouged and have been since late 2006 or so.
Neither. In 1980 you could drill a nice vertical well for 1/2 million. You could not even drill the wells we are drilling in the Bakken--horizontal well technology was not that far along. You couldn't produce these wells at rates fast enough to hit payout in a short enough time to get the funding to drill them--which now costs about 4 million. Completion costs are in the neighborhood of another 4 million.
No one in the industry is doing this out of the kindness of their heart, they want to be compensated for the long hours (days, often) away from home, the remote locations and danger involved in making a living out here.
Not to mention the fact that those who invest in drilling wells want a return on that investment, one which is not without risk.
I'm not cheering for higher prices, but the ones out there are set by refinery bid (the buyer), not the seller.
When the buyers don't want to pay enough to encourage more drilling, drillers and companies drilling exploration and development wells will stop drilling them, for the same reason any one else would stop working if the paycheck isn't there (it's a business, not a charity).
If you think the price of a barrel of oil or a gallon of gas is too much, buy a windmill and a Volt and reduce demand.
Shut down domestic drilling, (hint: the saudis have plenty of production without drilling any more), and see where that leaves us.
Before the crash of '86 we produced almost half of our own oil, now it's more like 30%. Drop the price more, and you will increase our dependence on foreign sources, not lower it.
And what makes you say that?
Just one question: with all the bureaucratic hurdles, reporting, and environmental protections required: Who would drill it for $10 a barrel?
Just moved a rig of location last weekend and setting up to frac next week. These are Canyon Sands wells at about 8500ft, if we can come in under 1.3 million we’ll be happy.
What was used to estimate this price?
60 minutes article/episode on oil speculation
http://www.cbsnews.com/stories/2009/01/08/60minutes/main4707770_page3.shtml
We're drilling horizontal wells, 1280 acre spacing, about 10,000 down, about 10,000 'over', TD at between 19,500 and 20,000 in 25-35 days from spud.
It used to take 120 days to drill a 13,500 ft. vertical well here (30+ years ago). A lot has changed...what one pdc bit costs now would have bought all the bits in one of those holes (not correcting for inflation, of course).
We had that in 2008 when oil hit, I think, $137 a bbl.
Thats everything, this is our 12th Canyon Sands on the ranch and they’ve all come in the same way, about 180 MCF gas per day and 60 to 75 BOPD. They typicaly fall of to about 80 MCF and 30 to 40 BOPD within 8 months and most are still holding after 2 years. I’ve got 2 central batterys with 3 500’s on each, they’ll keep you busy. We just put 2 on plunger lift this spring, we lost a little gas but we gained about 15% in BOPD.
These vary but generally produce an averge of about 1500 BOPD and .5 MMCF, but tend to have a fairly sharp decline curve down to about 200 BOPD. Liner and frac costs are similar to drilling costs, and you usually end up with three 400s on the location (or more) and truck the oil out, but the pipeline situation is getting better. After a couple years, they go on pump, but the good ones are paid for by then.
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