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High Oil Prices Are Here To Stay
nasdaq ^ | June 09, 2014, 09:30:00 AM EDT | By StreetAuthority

Posted on 06/09/2014 5:29:20 PM PDT by ckilmer

American oil production is surging. Yet oil prices remain near $100 a barrel.

You may be wondering: When will all of this additional production finally overtake demand and push the price of oil down?

You can find one answer in the price of oil futures -- which say we can expect oil to fall to closer to $80 in the coming few years and stay there.

(Excerpt) Read more at nasdaq.com ...


TOPICS: Business/Economy
KEYWORDS: bakken; eaglefordpermian; energy; methane; opec; petroleum; shaleoil; thatstheplan

1 posted on 06/09/2014 5:29:20 PM PDT by ckilmer
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To: ckilmer

Perhaps the GOP could tell the dems to get off of this minimum wage BS and look at doing something that will actually lower the cost of living instead?


2 posted on 06/09/2014 5:32:10 PM PDT by Phillyred
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To: ckilmer

“..Yet oil prices remain near $100 a barrel..”

which proves which many have believed, and that is that “supply and demand” plays no role in the oil industry.

It has always appeared to be manipulated - but before we thought it was the Arabs.


3 posted on 06/09/2014 5:35:42 PM PDT by elpadre (AfganistaMr Obama said the goal was to "disrupt, dismantle and defeat al-hereQaeda" and its allies.)
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To: Phillyred

The US is at least $17T in debt that they admit to. It’s at least 4x that. The problem is spending. Look to Detroit as electing DemocRats is not good and neither is electing RINOs.


4 posted on 06/09/2014 5:36:18 PM PDT by VRWC For Truth (Roberts has perverted the Constitution)
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To: thackney; bestintxas; Kennard; nuke rocketeer; crusty old prospector
What EOG sees -- and the market doesn't seem to grasp -- is that for all intents and purposes, the horizontal oil boom is coming from only two plays: the Bakken Formation in the upper Midwest and the Eagle Ford Shale in South Texas. A slide from EOG's most recent investor presentation illustrates this clearly:

Fully three-quarters of the horizontal oil being produced in the United States comes from the Bakken and Eagle Ford. Without these plays, the horizontal boom would be barely noticeable.

Equally important to note is that production growth in both the Bakken and the Eagle Ford is slowing significantly. The growth of production both by rate and absolute amount in both of these plays appears to have peaked.

During his recent presentation, EOG's Thomas was asked what the next big horizontal oil play in the United States would be. His answer? There isn't going to be one.

EOG has scoured the United States and hasn't found a new play with anything close to the productive capability of the Bakken and Eagle Ford.

What makes the Bakken and Eagle Ford unique is that they are crude oil plays. Most of the other large horizontal plays are "combo" plays that have large hydrocarbon accumulations, but much of those hydrocarbons are in the form of natural gas and natural gas liquids.

For example, in his presentation, Thomas referred to the Permian Basin in West Texas as having lots of barrels of oil equivalent (BOEs) -- but heavy on the "equivalent" and light on the oil. There is going to be a lot of production from the Permian in the coming years, but a great deal of it won't be oil.

5 posted on 06/09/2014 5:36:31 PM PDT by ckilmer
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To: ckilmer

Production is up and demand is supposedly down.

Any one smell a rat?


6 posted on 06/09/2014 5:36:57 PM PDT by mylife (The roar of the masses could be farts)
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To: mylife

You’ll get the oil championing guy on here bashing you for saying such things. Can’t question the poor oil industry like that.


7 posted on 06/09/2014 5:38:27 PM PDT by Monty22002
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To: mylife

It’s called ‘the declining value of the dollar’.


8 posted on 06/09/2014 5:38:57 PM PDT by jjotto ("Ya could look it up!")
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To: jjotto

I see it all around.
$6 an lb ground beef.

Jeez these guys are killing us.


9 posted on 06/09/2014 5:40:38 PM PDT by mylife (The roar of the masses could be farts)
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To: elpadre

So they really do have a ‘magic potion’ that has eluded the Democrats all these centuries?


10 posted on 06/09/2014 5:43:15 PM PDT by Balding_Eagle (Want to keep your doctor? Remove your Democrat Senator.)
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To: thackney; bestintxas; Kennard; nuke rocketeer; crusty old prospector

I think the plateau at the end of the graph will go sharply higher when summer reports come out.

EOG’s take on the Permian is telling. That explains why they’re doing a massive amount of new drilling in the Eagle Ford right now. This means that at least EOG’s leases in the Permian are don’t have a lot of oil but rather a lot of natural gas and NGL’s.

Should EOG’s word that there won’t be anymore eagle ford or bakkens in the USA — be taken as gospel? Or just a very educated opinion right at this moment.


11 posted on 06/09/2014 5:43:44 PM PDT by ckilmer
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To: Phillyred

Like that is going to happen.


12 posted on 06/09/2014 5:44:49 PM PDT by Blood of Tyrants (Haven't you lost enough freedoms? Support an end to the WOD now.)
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To: ckilmer

For those who want to see a video showing how horizontal drilling and fracking is done, Northern Gas and Oil has a great one. It’s 6 minutes.

It includes a visual piece on how fresh water aquifers are protected from contamination.

http://www.northernoil.com/drilling-video


13 posted on 06/09/2014 5:46:09 PM PDT by Balding_Eagle (Want to keep your doctor? Remove your Democrat Senator.)
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Of course the beef market actually makes sense.
Severe drought, higher prices. Lag in the price rise.

Things are like in cartoons with the slow motion water hose schtick in Tom and Jerry.


14 posted on 06/09/2014 5:48:52 PM PDT by mylife (The roar of the masses could be farts)
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To: jjotto

Yes. Oil is traded in dollars. As the dollar goes up the price of oil comes down. As the dollar goes down the price of oil goes up. Since the Fed will continue to devalue the dollar right into collapse I think this article is right that the price of oil is likely to stay up just not for the reason they are stating.

We are thinking of buying one of these little beauties as a hedge www.eliomotors.com
$6,800 and 84MPG


15 posted on 06/09/2014 5:52:40 PM PDT by Georgia Girl 2 (The only purpose o f a pistol is to fight your way back to the rifle you should never have dropped.)
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To: ckilmer

The WTI crude future is over $104 today. Speaking of the future, it’s likely that many more people will be driving cars and trucks in developing countries over the next few decades—maybe several hundred million.


16 posted on 06/09/2014 5:53:17 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: Georgia Girl 2

Cool. Can it fly?


17 posted on 06/09/2014 5:59:31 PM PDT by jjotto ("Ya could look it up!")
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To: ckilmer
"Should EOG’s word that there won’t be anymore eagle ford or bakkens in the USA — be taken as gospel? Or just a very educated opinion right at this moment."

Could it be a back door way of saying that the other reserves are to expensive to develop given the current price?

18 posted on 06/09/2014 6:03:50 PM PDT by buckalfa (Charter Member of the Group W Bench)
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To: jjotto

It doesn’t fly but it will do over 100 MPH. We are really seriously thinking about putting in an order for one. Its supposed to be getting a 5 star crash rating and Pep Boys is going to be servicing them. So you just drive to any Pep Boys in your area for the servicing and repairs..


19 posted on 06/09/2014 6:06:48 PM PDT by Georgia Girl 2 (The only purpose o f a pistol is to fight your way back to the rifle you should never have dropped.)
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To: Balding_Eagle

“.. they may have played a role - “eluded the Democrats all these centuries” - dunno what, but something is amiss.

but “supply, demand?”


20 posted on 06/09/2014 6:07:37 PM PDT by elpadre (AfganistaMr Obama said the goal was to "disrupt, dismantle and defeat al-hereQaeda" and its allies.)
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To: elpadre

There was a recent vote in the California legislature regarding fracking. Oil companies gave money to Democrats AND Republicans to DEFEAT IT!


21 posted on 06/09/2014 6:11:28 PM PDT by Enterprise ("Those who can make you believe absurdities can make you commit atrocities." Voltaire)
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To: ckilmer
Ugh,

Getting due for a new ride........want a truck......but told myself this weekend, them dang gas prices ain't never coming down.

Can anyone say Honda ?

22 posted on 06/09/2014 6:12:32 PM PDT by onona (I’ve pretty much given up on sanity returning.)
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To: Georgia Girl 2
We are thinking of buying one of these little beauties as a hedge www.eliomotors.com $6,800 and 84MPG

hmmmmmmmmm

23 posted on 06/09/2014 6:17:12 PM PDT by onona (I’ve pretty much given up on sanity returning.)
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To: ckilmer

If you look closely at the chart you posted, you will see that all the formations peaked in October 2013 or so. Chances are, this was a decision from board rooms, rather than a natural slowing of production.

Perhaps the more important measure would be recoverable oil reserves. From an Alberta perspective, the recoverable reserves in the Athabasca oil sands grows each year as new technology pushes that figure upwards. In addition, some of the older plays are extended by enhanced recovery methods like SAGD, CO2 injection (Weyburn Field), etc.

Because of where EOG came from (Enron Oil and Gas), and having met the former President of EOG Canada in 2000, I take anything said by the ‘brass’ at EOG with more than a grain of salt. The moment I heard that man speak in 2000, I took a distinct dislike to him. Arrogant, hyperactive blarney, with little substance, cut from the same cloth as Skilling. First impressions are lasting!


24 posted on 06/09/2014 6:30:00 PM PDT by A Formerly Proud Canadian (I once was blind but now I see...)
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To: ckilmer

The Permian will ultimately make more oil. EOG is driven by the higher rates of return in the Eagle Ford and the Bakken. Once that is drilled up within the next decade, they will go to the Delaware And Midland Basin but they have a much smaller acreage position.


25 posted on 06/09/2014 6:56:15 PM PDT by crusty old prospector
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To: ckilmer

PXD. That’s your big player in the Midland Basin. The Delaware has many playas. They all need more water and sand.


26 posted on 06/09/2014 7:00:26 PM PDT by crusty old prospector
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To: ckilmer

I keep waiting to be correct. It will happen. Booms never last long.


27 posted on 06/09/2014 7:21:23 PM PDT by Sequoyah101
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To: mylife
"Production is up and demand is supposedly down. Any one smell a rat?

Gasoline prices will start falling before the November election.
28 posted on 06/09/2014 7:36:21 PM PDT by clearcarbon
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To: ckilmer; All
Bill Thomas of EOG was referring to horizontal plays. The Permian is mostly vertical. That's the reason he downplayed it. Their EF wells produce proportionately more NG and NGLs, so it's not the mix.

The recent dip in EF and Bakken production is due to temporary industry changes such as reduced spacing, not reservoir depletion. Thomas circled it as an predictor of future declines, which I take as an effort to discourage competition.

Thomas also said that prolonged oil prices under $90WTI will shut down most horizontal drilling. He wants over 100% ROIs. I think he's playing up his advantages of strong land positions, technology and data to cool his competitor's hype.

29 posted on 06/09/2014 7:51:18 PM PDT by Praxeologue
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To: Kennard

http://www.eogresources.com/investors/investor_pres.html


30 posted on 06/09/2014 7:58:37 PM PDT by Praxeologue
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To: elpadre
Global Demand has continued to rise with the supply lately. The US is not the dominate force in rising petroleum demand.

Image and video hosting by TinyPic

Image and video hosting by TinyPic

31 posted on 06/10/2014 4:39:34 AM PDT by thackney (life is fragile, handle with prayer)
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To: mylife

Global demand is up, not down.

Oil is a globally priced, fungible commodity.


32 posted on 06/10/2014 4:41:32 AM PDT by thackney (life is fragile, handle with prayer)
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To: ckilmer

Go back to previous postings I have made here.

The Bakken is unique, and the Eagleford has only a relatively tiny window of commercial activity along its liquids maturity belt.

No one has found the widespread commercial accumulation as these two have.

Chances are no one will.

Physics dictates liquids does not move very well through such tite rock


33 posted on 06/10/2014 6:05:45 AM PDT by bestintxas (Every time a RINO bites the dust a founding father gets his wings)
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To: mylife

That is the plan.


34 posted on 06/10/2014 6:08:01 AM PDT by riri (Plannedopolis-look it up. It's how the elites plan for US to live.)
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To: Kennard
The Permian is mostly vertical.

Since the price of oil has come back from it's nadit in the early 90's, they have been doing a lot of horizontal drilling in the old oil fields in the Permian Basin. A lot of the drilling around Glasscock County have been horizontal wells, especially around Garden City. Most of the property owners in Garden City are getting royalty checks from wells drilled horizontally under their lots.

Going back in the old established fields and re-drilling/fracking the old wells makes sense for doing secondary and tertiary recovery projects. The original wells probably got less than 20% of the avialable oil out of the pay zones.

35 posted on 06/10/2014 7:22:38 AM PDT by nuke rocketeer (File CONGRESS.SYS corrupted: Re-boot Washington D.C (Y/N)?)
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