Posted on 08/17/2015 3:52:22 PM PDT by bestintxas
The lowest crude prices in six years might not be enough to put the brakes on the U.S. energy renaissance.
Some parts of North Dakota’s Bakken shale play are profitable at less than $30 a barrel as companies tap bigger wells and benefit from lower drilling costs, according to a Bloomberg Intelligence analysis. That’s less than half the level of some estimates when the oil rout began last year.
The lower bar for profitability is one reason why U.S. oil production has remained near a 40-year high even as crude prices fell more than 50 percent over the past year to the lowest level since March 2009.
“One of the explanations for why production hasn’t fallen off is that the cost has gone down so much,” David Hackett, president of Stillwater Associates LLC, an energy consulting firm in Irvine, California, said by phone. “The marginal cost to produce has shrunk pretty dramatically with the drop in prices. The efficient drillers are now able to take advantage.”
West Texas Intermediate crude for September delivery fell to $42.23 a barrel Thursday, the lowest settlement since March 2009. In North Dakota, where producers have to offer discounts to account for extra transportation costs, the price of Bakken oil was to $30.80 Wednesday, according to Royal Dutch Shell PLC.
(Excerpt) Read more at expressnews.com ...
Imaging $30 oil and production remaining virtually flat.
The Saudis are shaking in their boots, and the likes of Venezuela will be hemorrhaging.
Meanwhile in CAvwe have $4 gas because refineries are increasing profits 1200%.
.
They tried riding the bull, and now they’ll get the horns.
forty gallons/barrel. one barrel costs roughly $45. 45/40=1.125 per gallon. Retail price $4.00. How does that translate to a 1200 percent profit?
We are also seeing a good old fashion learning curve.
Over time workers, managers, transporters, get better at what they are doing-i.e. more productive. So the entire cost curve drops down. Also, North Dakota is a Right-to-Work state and there are probably no 1930’s great depression union imposed work rules to deal with.
(Full disclosure-I belonged to a maritime union once and
and president of an SEIU bargaining unit (not by choice)
Meanwhile in CAvwe have $4 gas because refineries are increasing profits 1200%.
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Does the rat legislature and the rat governor have anything to do with it? Like putting unreasonable standards on the refineries?
I live in Illinois, I know how it is.
The refineries have been caught doing it and the state doesn’t care. There was also a 45 cent a gallon tax increase not even applied yet.
The Saudis are shaking in their boots, and the likes of Venezuela will be hemorrhaging.
.....................
Venezuela is the worst case. That government will likely be kicked out in the next year as they lose the ability to payoff anyone.
The Saudis however are sitting on 700 billion in cash. They’re currently burning through that cash but the burn rate is less than 100 billion annually.
The other big group that low oil prices are hurting badly are the big deepwater companies. They’re shelving a lot of investments. These wells take billion of dollars and multiple years to bring onstream but when they do these well produce 100k -300k barrels @ day. So these projects are no longer in the pipeline.
In a couple years low oil prices and lower supply will start to force prices up....no one but the frackers can move pretty quickly when the price of oil meets profitable price points.
The saudis will get higher prices but nothing like the 80-100@barrel that they need to pay their bills. They’re going to need another revenue source or they’re going to have to scale back on their largess.
imho this is just the first wave of technological innovation.
Its the technology that comes after 2020 that will kill the saudis.
The refineries increased their PROFITS 1200%.
That’s against a barrel of oil. A barrel of refined gas is more than that.
“The refineries increased their PROFITS 1200%.”
you need to demonstrate this statement by some backup, please.
I suspect it is the government and its onerous Environmental restrictions which is the cause instead of refiners.
I got that from KFI news radio in Los Angeles about three days ago.
I just paid $4.03 today and last time barrels of oil were cheap we were paying about $2.32.
Some typical California BS is going on against the citizens.
Maybe they have a free gas for illegals going on.
these two posting have nothing to do with the article I linked.
What is the purpose in what you posted anyway?
there are always those who forget that some companies make most of their money during very short timeframes.
Christmas retailers, for example.
I worked for an oil company which had a chemical business and it made money for them only once in every ten years.
Meaning?
Should we pay so much more than most of the country?
“Should we pay so much more than most of the country?”
the voters in your state continue to elect the most liberal politicians to run their state. I have lived in both New England and CA and CA is definitely worse.
Yes. Make poor decisions, pay the price.
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