Posted on 10/16/2014 4:21:33 AM PDT by thackney
Darn, bummer.
Look on the bright side.
We have OBOLACARE.
OBOLACARE: If you like your Ebola and piles of vomit, you can keep your OBOLACARE.
Brought to you by the government that cares.
However low they go, won’t matter to us.
I expect most states will jump on the opportunity to take a page out of Tom Corbett’s playbook and slap a big tax on gasoline to replenish their coffers.
I filled up last Thursday at $2.94. I noticed on Tuesday it had dropped to $2.91.
Those are the lowest prices in over a year.
A year ago, the prices were in the $3.06 range and eventually reached the $3.30 range.
Old article, more like 40 now with latest equipment and good geology. But some companies with lots of debt might go under as margins will be thinner.
I think the savings in cost would be a very small sliver of the loss in profit.
U.S. shale producers could keep pumping oil economically even if Brent dropped to $60 a barrel, Bjornar Tonhaugen, an analyst with Oslo-based Rystad Energy, said in an e-mailed report. Brent would need to remain at $50 a barrel for 12 months before North American shale output drops 500,000 barrels a day, he said.
Morgan Stanley said Eagle Ford break-even costs range from $30 to $60 a barrel. Most U.S. tight-oil reserves break even from $60 to $80, Barclays Plc (BARC) said in slides presented at the Argus European Crude Conference in Geneva last week.
“We continue to be impressed by how much operators are improving their operations,” R.T. Dukes, an upstream analyst for Wood Mackenzie Ltd. in Houston, said by phone. “There’s enough out there that significant development would continue even at $75 or $80.”
Lag Time
If West Texas Intermediate, the U.S. benchmark, fell to $80 or less for an extended time, drilling activity in U.S. tight oil plays would decrease, RBC Capital Markets said in a note today. WTI fell to $81.84 today on the New York Mercantile Exchange, the lowest since June 28, 2012.
There will be a lag time between falling prices and any drop in drilling activity, Jurecky said. When oil prices dropped by $111 a barrel between July and December 2008, the oil rig count didn’t begin to decline until November, according to data from oil services provider Baker Hughes Inc. (BHI)
http://www.bloomberg.com/news/2014-10-14/u-s-shale-oil-output-growing-even-as-prices-drop-eia.html
I also read an interesting article about how the process of converting natural gas into gasoline and diesel has been worked out. It requires coal, but I can’t see the US running out of natural gas or coal in the next few hundred years. The conversion process using natural gas would be cheaper than shale production.
Sasol and Shell have commercial sized facilities doing this.
It requires coal
I have not seen that.
The conversion process using natural gas would be cheaper than shale production.
Not what I have seen. Shell has commercial Gas-To-Liquids in Malaysia and Qatar. They recently canceled plans to build in the US, while they are investing in US Shale production.
http://www.shell.com/global/future-energy/natural-gas/gtl.html
Guess I was wrong on the price that squeezes the domestic shale producers, as Thackney & others here have said it is more like $55-$65. that would put a hurtin’ on them.
http://www.cnbc.com/id/102094881
Keep in mind, there is no one cut off, just an average.
$90 will produce less $100
$80 will produce less $90
$70 will produce less $80
$60 will produce less $70
etc...
The marginal locations will go away first, the sweetspots will hold on towards the end.
First time I've seen gas that low since Obama got elected.
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