Skip to comments.U.S. oil boom divides OPEC
Posted on 05/28/2013 11:00:19 AM PDT by Ernest_at_the_Beach
LONDON (MarketWatch) Rising American output of shale oil is rewriting global trade patterns and deepening fault lines within the Organization of the Petroleum Exporting Countries, limiting its ability to mount a collective response. A crucial OPEC meeting in Vienna on Friday will mark the first stage of a debate on shales oils impact.
The meeting is unlikely to lead to a change in production levels, several OPEC delegates said but inaction would set the stage for a future showdown. We are heading toward some problems, a delegate from a Persian Gulf OPEC member said.
Oil output from the U.S. and Canada is set to rise about 21% from this year to 2018, according to data from the International Energy Agency, largely a result of growing production from fracking and other technologies that access once-inaccessible reserves.
African OPEC members such as Algeria and Nigeria which produce oil of similar grade to shale oil are suffering the worst effects from the North American oil boom; Nigeria oil minister Diezani Alison-Madueke deemed U.S. shale oil a grave concern.
(Excerpt) Read more at marketwatch.com ...
Why is oil 95 bucks a bbl then?
Quick, give some more money to the Sierra Club or call in chits from the ObaMao adminisstration to surpress domestic production in the U.S.A. and Canada.
While Saudi Arabia can tolerate lower prices, “there will be some members, like Venezuela, Iran who will struggle at $90,” said Amrita Sen, chief oil analyst at London-based Energy Aspects Ltd. The front month Brent contract for July settled at $102.62 a barrel Monday. Venezuela’s oil minister said on Monday that he would push for a cut in OPEC production if oil falls below $100 a barrel.
Iran needs high prices to offset the loss of $26 billion of oil revenue last year from tough Western sanctions on its exports, according to estimates from the U.S. Energy Information Administration.
Algeria, which has been rattled by riots over food and housing, needs an oil price of $121 a barrel to cover planned domestic spendingincluding for roads, jobs and housingaccording to the International Monetary Fund.
From a look at few years ago, most of the oil producers in the Middle East needed from about $85 to $95 dollars per barrel to break even.
Should there not be a pretty big increase in production from Iraq coming on the market?
That is if they stop blowing themselves up because of some Sunni/Shite grudge from 800 years ago.
You and thackney keep me well informed and I just love it when you guys just wipe the floor with all those "alternative energy" bufoons with your factual posts, pings and realistic comments!!!
Then BOBTHENAILER comes around and gives 'em GAS!!! Hoo boy!!! What a hoot!!!
Better shut it down, quick, Baraq!
It may still be high due to refining.
I wonder all our new domestic production is easy to refine. The sweet crude from the Islamic states is usually the easiest to refine....while the Venezulan oil is tough to refine (which probably curtailed a lot of Chavez nuttiness....they had to refine their oil outside country)
Also...shale and tar sands oil costs more to extract
As long as the Islamics, Free Trader Globalists, and the enviros don’t gang up to stop domestic production (those three will try...guarantee)...petrol should drop if the free market is allowed to run course
What about the super top secret Halliburton pipeline in Afghanistan and the oil we are stealing from Iraq? How does that figure into this?
Because the old mighty buck isn’t worth a buck anymore.
Why is oil 95 bucks a bbl then?
they think it’s a fair price ?
Forgive my ignorance to Petroleum Engineering.
What oil(forgetting transportation cost to refinery and the danger to life and limb of getting it from its source)is worth the most?
light sweet crude
Is Quaker State, ie Penn St crude oil still the best?
Where does Canadian shale oil fit on this graph?
Please define US- mars, US-LLS, US-WTI. Keep in mind I am a lumber trader and just barely passed inorganic chemistry.
Don’t tell them this. But there is a brilliant strategic move OPEC could make that would SLOW the tidal wave of petroleum production they see coming. This is a secret....
If they were to significantly ramp up production and drive the price of a barrel of oil down to about $40/barrel, the shale development and several other processes would be too expensive to bring oil to market (at least for new ventures). They would have to wait out the market before driving it back up.
Here’s the crutch for them. They would have to accept a low ROI and potentially even some profit loss for a while to stave off the onslaught. They would have to compete (uh oh). But they do have the power right now to affect supply and demand (at least for a little while longer) to the extent that they can manipulate the futures markets.
Don’t worry, they would never dream of doing this.
I am skeptical of those numbers. I'm not sure if those numbers are based on current Vs. historic value of the dollar or what. But that seems extremely high. I would think that number would be closer to $45 or $50/ barrel. But I'm no expert. Do you have any source recommendation for that?
You make me laugh....hope things are going well.
McCain was in Syria for a few hours yesterday,...and the Euros are lifting the weapons embargo for the rebels....and the a Senate committee has voted funds for the Sunni rebels in Syria.
Russia said OK we are sending more S-300 missiles to Assad.
How high will oil go, Comrade Bubba?!
Keep in mind, the transportation cost, and lack of sufficient transportation capacity greatly effects the price of oil at location. The exact same oil today, at different locations can vary in price by over $20. light sweet crude
In general, that is the most desired. But light can become so light that it losses value. In general, something approaching near gasoline tends to be the most valuable. But if it is so light it is mostly butane, it will not bring top dollar.
Is Quaker State, ie Penn St crude oil still the best?
I don't know that was ever true outside of commercials.
US mars - Shell's production from Ursa, Mensa and Mars offshore platforms commingles with Amberkjack pipeline volumes to create MARS BLEND crude in the caverns at Loop. It is a large enough volume to get traded as a commodity. All of these are contract agreements that not only determine quality, but also location of delivery. Adders/discounts to prices tend to be standard for known quality changes and/or different delivery locations. Mars is 30.3° API gravity and 1.91% sulfur delivered to the Loop. (Louisiana Offshore Oil Port)
LLS - Louisiana Light Sweet is 35.6° (lighter than Mars) and 0.37% sulfur (sweeter than Mars) delivered to St James, Louisiana (also gulf coast)
US-WTI is the price you normally hear quoted, when the news generically talks about the price of oil. It is West Texas Intermediate, 39.6° (lighter than LLS) and 0.24% sulfur (slightly sweeter than LLS) delivered to Cushing, OK. This location has become bottle-necked due to the shale oil production, too much coming into one location. It has created a discount in the WTI price even while the demand for it has climbed, because the supply has climbed faster.
So what comes out of the northern Alberta sands?
Also, what comes out of the Balken, ND & MT?
Keep in mind, you can get far different qualities of oil from the same surface location but different fields at different depth below ground. There is no set rule all are the same in an area. The fields are from sediment 10s of millions of years apart. Far different conditions exist in these time periods and produce different oils. Also the “cooking” time tends to be less in shallower fields resulting in heavier oils from nearer time periods.
The oil sands are “young” or more exactly “less thermally mature”, ie less cooking has been done. They technically don’t produce oil but rather Bitumen. Very heavy but also with a lot of BTU’s per barrel. It can be cooked or processed (thermally cracked) to produce lighter more valuable hydrocarbons more suited for transportation fuel. Some of this is done on or near site with an upgrader, producing a synthetic crude, or it is diluted with something like Naptha or Natural Gas Liquids (butane, propane) to get in thin enough to pump to a refinery, where they do the same cracking.
The Bakken shale play produces Light Sweet Crude, 41° (very light without being too light) and 0.2% sulfur (very sweet). Their problem is the pipeline bottlenecks, including to Cushing, OK. Today more of the Bakken oils moves out of state by rail than by pipeline.
It was due to the high parafin content in PA oil, right? That’s what I always heard.
I should have said, the Alberta oil sands produces Athabascan Bitumen. It is 7.7~9.0° API. 10° is water density so this stuff is so heavy it sinks, not floats in water. The sulfur also tends to be high, 4.4~5.4% sulfur.
Some locations will have different values but Alberta sands tends to be quite thick and sour.
Over 450 different oils listed at:
So says Wikipedia:
Pennsylvania grade crude oil is thermally stable and has a high viscosity index. It is generally free of asphalt and has only trace amounts of sulfur and nitrogen. It is also high in paraffin and other waxes making it highly desirable for refinement into petroleum lubricants such as motor oil. Its products are also valuable for use in certain hydraulic applications. By-products are commonly found in consumer goods such as cosmetics, and topical ointments.
But since they don’t site sources, I’m not sure this more than gossip, possible just stuff from commercials.
Senator McCain has nevere seen a war that we shouldn't be involved in. Usually, on the wrong side...
Courtesy of Buffet. My guess the TransCanada will be delayed for sometime because of the Buffet/Obama connection.
Because the old mighty buck isnt worth a buck anymore.
Yeah but with rising US oil production—the dollar is rising —which puts downward pressure on oil and gold.
The 95 to 115 range bandied about is not production cost; but, attributed toward needed revenue to dispense thus maintaining political stability.
Thanks. Very interesting.
I was at a meeting with some RR execs and a RR car leasing agent. He said tankers were a boom. They couldn’t make enough. Was he exaggerating?
I’ve heard they cannot build tanker rail cars fast enough to meet demand.
Tank car boom masks dearth of orders for other rail cars
Tank-car orders will jump, but demand for other car types will remain flat or decline in 2013
The 1 million barrels Marathon borrowed last year has been replaced, but the previous 2011 sale of oil (30 million) has not.
U.S. Ending Stocks of Crude Oil in SPR
STRATEGIC PETROLEUM RESERVE
Mirrors their words exactly. It looks like an economy that is booming in certain markets and among crony markets (rhymes with phony) being goosed by the government.
The feedback I get from clients and suppliers along with other businesses is their orders are up and down. Some have seen their best year in a decade, while others their worst.