Posted on 08/23/2015 12:29:40 PM PDT by thackney
I haven’t seen discussions of oil sands for sale or bankruptcy.
They tend to be large corporations in long term projects.
“How does this make any sense for them?”
ever own any stock? Is it up every single day or does sometimes it goes down?
If you sell every time it goes down, you are guaranteed to lose, and lose bigtime.
A company works the same way, short time losses no big deal, just be smart on looking to see if that is a long-term loss situation.
“If I could predict the price of oil, I would NOT have to work for a living. “
But you can predict the price of oil. It will change and not stay the same.
That is my prediction. Unfortunately, it will not make me any money.
“Longer term, irrational markets return to pricing based on fundamental factors like the cost to produce something and make a profit. In the long run, $40/bbl oil is not a price sufficient to entice enough oil producers to produce at a level that can satisfy global demand. Hence, prices will rise.”
My economics background tells me that what we are witnessing in the price of oil is indeed very rational, not irrational.
The current price level confirms to me that oil has been seriously overpriced compared to its intrinsic value. Just because the kingdoms in the ME need higher prices to BE thier budgets, does not mean the oil is worth that higher price.
Cartels have distorted the value of this commodity, and when they can no longer control, the value will seek a rational level.
Hope your job is secure in current fluctutions. Nice to be retired and watching from the sidelines,
The price of oil is down. Shelve it but keep it ready for when prices go back up.
“Because it would cost them more to shutdown in the long run.”
It’s my understanding that shutting down these systems isn’t nearly as damaging to the fields as it is to shut down an oil well suddenly, and skilled people can’t be fired/hired at the drop of a hat. It also involves cash flow. Gotta keep that flowing.
As the article states, the current price of oil is above some of the existing production cost. That won't last and demand for oil continues to climb.
Tough to pay the bills without making sales. Cash flow is often king for many.
“It’s my understanding that shutting down these systems isn’t nearly as damaging to the fields as it is to shut down an oil well suddenly, and skilled people can’t be fired/hired at the drop of a hat. It also involves cash flow. Gotta keep that flowing.”
It all depends upon the type of oil/reservoir being exploited.
with its huge attendant maintenance costs, one cannot easily shutdown an offshore well or field, as an example. Those fields enjoying response from secondary or tertiary applications, such as waterflooding, Carbon Dioxide, or Steam is also a tough one to shut down wells or fields.
gas wells and fields are easier to shut down with some caveats, such as coalbed methane or strong water-drives. One will lose a lot of reserves if either is shut down for any lengthy period.
any piece of equipment made of steel will deteriorate over time, whether it is downhole well casing, ground separators, or an automobile.
Skilled people in the oil patch are indeed tough to come by, whether it is a oil-rig worker or a geologist.
I retired last year after 41 years as a petroleum engineer and have seen many ups and downs come and go.
during the past several years, there were so few seasoned petroleum engineers available, my company hired almost 100% foreign nationals to satisfy its needs here in the US. That is not now the case.
“As the article states, the current price of oil is above some of the existing production cost. “
My point is price will never get low enough to exceed the production costs of much of OPEC.
lol
But even Saudi doesn’t have enough “cheap” supply to meet global demand. Saudi has gone into multiple recovery methods in Ghawar trying to keep the production rate up. They have spent over $10 billion on Manifa artificial islands to produce heavy cheaper value oil.
The Saudis have had assisted recovery at Ghawar since the 70s.
Even now, it is far lower costs than here in US
Their average costs are significant lower. But their marginal cost, the cost to produce the next additional barrel is getting expensive, relative to their past production costs.
Have you looked at what they had to do for Manifa?
CGES: Manifa Is an Expensive Development
http://www.rigzone.com/news/oil_gas/a/127903/CGES_Manifa_Is_an_Expensive_Development
The CGES revealed that estimates of investment intensity per peak daily barrel range from the ultra-cheap $2,500 (per peak daily barrel) for development of the Haradh III zone of the supergiant Ghawar oilfield to $10,000 for the massive Khurais et al development and finally $17,500 for the Manifa field, the most expensive development in Saudi Arabia.
They are not spending those dollars because they have a surplus of cheap oil sources.
Understood.
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