Posted on 02/20/2015 4:33:23 AM PST by thackney
Maybe some time soon he’ll boast about how far-sighted he was, and just was acting to protect an inevitable glut and boom/bust in the oil sector.
I don't think so.
Banning activity in ANWAR will eventually cause the Alaskan pipeline to close.
Production from existing wells feeding the pipeline are slowly declining, without new drilling and more oil on tap the flow of oil in the Alaskan pipeline is too small to maintain the viscosity....and the entire pipeline freezes solid.
which area of the oil business are you in? regards.
Must be tough having to deal with these disruptions. It's amazing how these unions have been allowed to lock up the gateway to Asia. I can't think of anything comparable for the east coast. If this persists, I wonder if the trade numbers with Asia will be affected. It would be amusing if the trade deficit actually shrank.
I could see how this could be done to service destinations in the Southwestern US but, eventually trucking freight becomes too much of a difference to other final destinations.
I think the port strike is already effecting US GDP. It is just a question of how much.
This is another reason why China is going to spend Billion$ to build the new canal through Nicarauga.
I expect that will be a bonanza for the Gulf Coast ports, including Corpus Christie. No way a Chinese entrepreneur is spending $50b all by his lonesome to build a Nicaraguan canal. Even if he had the financial resources, it's far too easy for the Nicaraguan government to stiff someone like that once the canal is complete. Far more dangerous to stiff the Chinese government, which won't sweat the monetary loss, will benefit from lowered transportation costs to the country's exporters, and could potentially take steps against the offending Nicaraguan pols ranging from yanking Chinese foreign aid, funding their opponents to arming their neighbors.
There will be a lot of properties change hands at fire sale prices.
Companies do not go bankrupt because they are unprofitable, they go bankrupt because they run out of money. Procurement of properties and development of properties eats cash, that's why rigs are being sidelined.
If a property is producing and the owner can pay expenses and cover interest they are probably just fine.
I believe it was EOG that bought up numerous 5 year leases in 2010 in the Turtle Mountains with a goal of 500 wells. There were 2 wells staked off 3 miles from us.
As history shows, they pulled up stakes and stayed out west.
Hopefully when these leases expire this year someone else will come in. As you said, the Canadians have had good luck, I sorta hope one of them buys the leases and drills.
That's as good a summary as I've seen.
I’m part of facility design engineering. Mostly midstream these days with some plant troubleshooting. I’ve also worked upstream and downstream in the past.
I’ve always worked for design, consulting and/or construction since I left the utility business a couple decades ago.
Note especially that the spread between Brent (Euro) and WTI (West Texas Intermediate) is fast approaching $10 a barrel, when just a couple weeks ago they were essentially identical.
There are several reasons for this, but the simplest is that there is a glut of WTI, that U.S. storage capacity is maxxed out, and that stored oil increased this last week by about 7 billion barrels.
Under these conditions, a price increase is unlikely, yet producers have to pay for wells already pumping and so continue producing.
In short: Brent crude prices are only a part of the story, and while Brent production is falling, U.S. production is rising.
Now all we’ve gotta do is get rid of the ethanol mandate, and gas (and food!) prices can return to rational levels.
7 million not billion...
This is false mac_truck. Or should I call it a lie and should I say that you are lying again.
The Saudis actually cut oil production slightly in 2014. Meanwhile the Russians didn't cut production.
Add to that the Russians in 2014 put more oil on the market than the Russians.
So if you think the Saudis are manipulating the market than how can you possibly think that the Russians aren't?
Cut Russia’s flow of oil off to Europe, get the Saudis, gulf Arabs, and US/Canadian frackers to make up the difference.
No more soft sanctions on Russia. Time to go for the juglier and declare Russia a terrorist state. Legislation is sitting on Obama’s desk to put very harsh sanctions on Russia, and Congress should meet in extraordinary session to pass the terrorist declaration on Russia.
Stop trying to F#%K around with the petroleum industry. In advocating to do so you are no different than Obama and his elite supporters.
You aren't smart enough to figure out how to do it without doing much more harm than good.
What's more, they acted predictably. Again for those (not you) who are willfully ignorant of the market realities:
--Production in North America is climbing rapidly.
--Canada and the US are not members of OPEC.
--The market is currently oversupplied to the tune of 1.5-2.0 mbd.
--To bring the market back into balance would require some period of time of underproduction of 1-2 mbd. The low price is not just a function of current production, BUT OF INVENTORY
--OPEC internal politics are such that OPEC members aren't willing to take a 10% cut in their production for any period of time. All the other members want the Sauds, the largest producers, to act as the swing supplier, IE take the cut.
--This is only a short term solution. With prices in the $100 bbl range North American production would rise again until the market was oversupplied. Then, the Sauds would have to balance the market again.
--The Sauds periodically apply some market discipline to the rest of OPEC. They are okay with letting the smaller OPEC producers feel pain. Once they have their 'heads on straight' they can have a conversation about shared cuts.
--The Sauds run their Petro business like the major oil companies do. They look down the road and see a time when there is less of a market for oil in general. They want oil prices at a level where alternatives are less attractive...so they can sell that ocean of oil under their ground. Remember, the Stone Age didn't end because we ran out of rocks...and the Bronze Age didn't end because we ran out of bronze.
--There a certain benefit for them of lower prices putting a financial hurt on Putin. This is a good thing.
--They are not market makers. They are unable at the present time to be anything but a market taker.
The market will sort itself out, unless un requited authoritarians with 'the best of intentions' F#%K it up.
-btw Do you support sanctions on Iran...yes or no?
How're those Iran oil sanctions working out? Is there any evidence Iran cannot sell every barrel they wish to produce? Anywhere? Has it affected their ability to obtain and operate centrifuges?
The US can decide to sanction the Sauds. Since we will be the only country doing so, it will have no measurable effect upon their ability to sell oil or the price they receive. It will only serve to alienate one of the few Arab allies we have in the ME.
To quote Dogbert, "Do you know the meaning of the word, 'Fungible?'" It's the international version of refusing to buy gasoline on Thursdays "to send a message." The message sent? "I'm economically illiterate!"
So, I'm not worried about any type of sanction you can dream up. I'm worried about what you might do when you find the things that are easy are useless.
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