OPEC EXPECTED TO CUT - WHERES THE CUT FROM UNCLE SAM

[Boat + 1,324]

8 minutes ago, Douglas Buckland said:

 

Seems to me the US has millions and millions of oil per day exports to go before they equal other worldleaders. Get over it.

 

Above is what you wrote. Assuming you are fluent in English, from your other rants, you must be able to see that you are somehow equating “...millions and millions of oil per day exports...” to “equal other worldleaders.”

 

The way this is written, you are comparing volumes to people.

 

But hey, what do I know, you are the data, science, and technology expert. Perhaps it is simply your writing skills which suck.

 

Well Dougles we do have a communication problem. I was making the point that the US net exports little oil and that just recently. The idea that somehow US oil has contributed unfairly to the world market is just silly as mentioned. Other nations that export and have for years would be causing any excess in the market.

When you confused world leader as people, well that is also correct in the sense that Lybia for example is almost shut down over politics. There are many other examples.
You for example rant about Permian production and did so even as the US had to import oil just to satisfy US consumption. That’s just wild hyperbolic rhetoric. Not only that but you have a preference for Canadian tar sands which makes no sense. 
As an America who believes supplying our own energy it’s a stance I believe in. That fracking tech that made US able to consume US FF products has been a boon for US and world consumers. 
I typically don’t respond to your insults but tonight I suppose I’m feeling a little frisky. Carry on while we have free speech. The farthest thing from loyal speech in my mind.

You don’t like my opinions just block-em.

[Douglas Buckland + 6,308]

Well, first off, I don’t know where you got the idea that I am a fan of ‘Canadian tar sands’. I really don’t know much about them and rarely post a comment in those discussions.

Secondly, the US STILL has to import oil to satisfy domestic consumption. 
 

That “fracking tech” you mentioned has been around long before the shale oil fiasco ever started up.

Finally, the ability to utilize domesticly produced oil and gas is highly dependent on the domestic players being able to turn a profit. If they can’t, they cease operations and the oil and gas stays in the ground, benefitting neither us or anybody else.

The 800lb gorilla in the room, in regards to oil prices, has always been the global glut or over supply of oil. This is simply common sense. If there is an over supply of any commodity, the price will remain depressed until demand is starting to outstrip supply.

For years, every producing country on the planet has been aware of the over supplied market, yet they all keep shoving more oil into the market! Did anyone really expect prices to recover when they kept making the situation worse?

The US shale oil players were in a unique situation as opposed to OPEC and OPEC+, they operated in a ‘free market’ where production cuts could not be mandated by the government whereas OPEC+ are essentially national oil companies where production cuts CAN be mandated.

OPEC+ effected a few production cuts in an effort to dry up the glut. These production cuts only benefitted the shale oil players as they simply continued to drill, frack and produce like crazy. This effectively destroyed any benefits of the production cuts and any attempts to dry up the glut.

Keep in mind that the majority of the shale oil players were deep in debt and not profitable when oil was around $50/bbl. Now that their absolutely asinie greed and lack of discipline, combined with the effects on demand created by the corona virus and the price war between Russia and Saudi has pushed prices below $40/bbl, the shale oil players are up the creek and screaming for protectionist measures.

At the end of the day, the shale oil players did this to themselves and need to realize that myself, and many others who lost their jobs and have been out of work for years, really don’t give a damn if THEY go out of business now or not!

[Wombat + 1,028]

39 minutes ago, Douglas Buckland said:

Well, first off, I don’t know where you got the idea that I am a fan of ‘Canadian tar sands’. I really don’t know much about them and rarely post a comment in those discussions.

Secondly, the US STILL has to import oil to satisfy domestic consumption. 
 

That “fracking tech” you mentioned has been around long before the shale oil fiasco ever started up.

Finally, the ability to utilize domesticly produced oil and gas is highly dependent on the domestic players being able to turn a profit. If they can’t, they cease operations and the oil and gas stays in the ground, benefitting neither us or anybody else.

The 800lb gorilla in the room, in regards to oil prices, has always been the global glut or over supply of oil. This is simply common sense. If there is an over supply of any commodity, the price will remain depressed until demand is starting to outstrip supply.

For years, every producing country on the planet has been aware of the over supplied market, yet they all keep shoving more oil into the market! Did anyone really expect prices to recover when they kept making the situation worse?

The US shale oil players were in a unique situation as opposed to OPEC and OPEC+, they operated in a ‘free market’ where production cuts could not be mandated by the government whereas OPEC+ are essentially national oil companies where production cuts CAN be mandated.

OPEC+ effected a few production cuts in an effort to dry up the glut. These production cuts only benefitted the shale oil players as they simply continued to drill, frack and produce like crazy. This effectively destroyed any benefits of the production cuts and any attempts to dry up the glut.

Keep in mind that the majority of the shale oil players were deep in debt and not profitable when oil was around $50/bbl. Now that their absolutely asinie greed and lack of discipline, combined with the effects on demand created by the corona virus and the price war between Russia and Saudi has pushed prices below $40/bbl, the shale oil players are up the creek and screaming for protectionist measures.

At the end of the day, the shale oil players did this to themselves and need to realize that myself, and many others who lost their jobs and have been out of work for years, really don’t give a damn if THEY go out of business now or not!

I can see the sense to both of your arguments, but I would add that whoever provides the oil industry with demand forecasts should shoulder some of the blame? The IEA, for example, was forecasting 1.5-2.0mmb/d of growth for the next 10 years! Insane. It is as though the global financial crisis of 08 never happened and they thought the debt bombs would never explode again? Truth is, we just entering the 2nd chapter of the last crisis, and this really will be "the big one". I am expecting the Dow to fall 70-90%, just by looking at the historical graph of last 150 years. It is (was), just as exponential as the debt that fuelled it.

[Wombat + 1,028]

On 3/10/2020 at 5:41 PM, Douglas Buckland said:

But the US doesn’t need anywhere near the market for their oil and gas that Saudi and Russia do.

Don't kid yourself Doug, Australia and Qatar are two largest LNG exporters on the planet and US plans to export more than the two of us combined. Then there is Canada, PNG, Russia, Israel, Egypt, Cyprus etc. Demand forecasts were crazy. The "idea" was that batteries would never get cheap enough to displace the need for gas as a supplement to ever-growing amount of intermittent renewables. Turns out that the price of batteries has already fallen 90% over ten years and set to halve again over next 2-3 years.

[Douglas Buckland + 6,308]

Wombat,

Perhaps I wasn’t clear. What I meant was that the US has plenty of domestic demand to ‘sop’ up their production. I think that this does not apply to either Rissia and Saudi and that they are more dependent on external markets to sell their oil.

[James Regan + 1,776]

How easily can shale well be choked back or shut in once producing? Are they as easily manipulated as per conventional wells?

[Douglas Buckland + 6,308]

3 minutes ago, James Regan said:

How easily can shale well be choked back or shut in once producing? Are they as easily manipulated as per conventional wells?

Good question Jimmy!

Just off the top of my head I’d say that shutting in a tight well and then expecting it to resume it’s ‘original’ production would be wishful thinking.

I’ll need to research this.

A very good question coming from one who practices the nlack art of subsea engineering...😂

[James Regan + 1,776]

3 minutes ago, Douglas Buckland said:

Good question Jimmy!

Just off the top of my head I’d say that shutting in a tight well and then expecting it to resume it’s ‘original’ production would be wishful thinking.

I’ll need to research this.

A very good question coming from one who practices the nlack art of subsea engineering...😂

I would assume not due to the amount of well drilled in close proximity of each other, it appears that the play needs to be gang raped to get the desired results. If so then it’s not looking good for the LTI sector. Let’s see how easily these wells can be manipulated. Yes we black art wizards 🧙🏽‍♂️ often come up with something that makes sense to the untouched. I will crawl back into my cavern in the moon pool and stir up the cauldron waiting for the next spell to be applied 😂😂

[Douglas Buckland + 6,308]

9 minutes ago, James Regan said:

How easily can shale well be choked back or shut in once producing? Are they as easily manipulated as per conventional wells?

“We show that the practice of "well conditioning", "resting" or "soak-in" i.e. shutting in the well for a significant time after hydraulic fracturing and before connecting to pipeline as well as frequent shut-in impedes the water unloading from the dry gas reservoirs. This leads to reduction in matrix permeability with an additional skin introduced by water imbibition.”

6. Conclusions

Our results show that regardless of its timing, shut-in cannot generate any incremental regained oil relative permeability.

[Douglas Buckland + 6,308]

3 minutes ago, James Regan said:

I would assume not due to the amount of well drilled in close proximity of each other, it appears that the play needs to be gang raped to get the desired results. If so then it’s not looking good for the LTI sector. Let’s see how easily these wells can be manipulated. Yes we black art wizards 🧙🏽‍♂️ often come up with something that makes sense to the untouched. I will crawl back into my cavern in the moon pool and stir up the cauldron waiting for the next spell to be applied 😂😂

Wizard,

A quick perusal on the internet seems to indicate that a after an extended shut-in that an LTO well can/will develop ‘skin’ effects in the near wellbore region, which would include the additional area generated by fracking.

We need some clever reservoir engineer who is familiar with these wells to give us a definitive answer....

HEY! Is there a clever LTO reservoir engineer in the house?

[James Regan + 1,776]

Thought I would throw this out there, obviously a Shale Junky it’s ironic how his brash study in 2015 means absolutely nothing at this moment in time. 

The claims regarding conventional and start up are simply untrue , I have seen it on very large offshore fields shut in, it’s a procedure to start up involving water injection etc with down hole pumps start ups or gas lift , these well don’t simply collapse as they have been well planned and unlike the shale plays have huge mitigation scenarios. Just a thought do LTO producers carry out DWOPs with the contractors?

Other than economics will dictate is the only take away I got out of it, would have liked to have seen some science behind his start up claims, I’m dubiously waiting for retort...

 

https://blogs.platts.com/2015/01/09/oil-wells-shut-reoen/

Edited March 11, 2020 by James Regan

[wrs + 893]

Shale wells are shut in and restarted all the time.  When new wells nearby are being frac'd, the producing wells are often shut in.  The flow is adjusted on the new wells and the producing wells together.  Flow management is the key for producing these wells.  The operators want to maintain as much formation pressure as possible while pumping the most oil and the least gas.

What they adjust are the chokes on the wells which also can produce changes in the flow so it's important to have someone that knows the flow characteristics of the wells to manage the chokes and the flow.  The oil can't flow out faster than the choke allows and so they can up the production on one well for a month and lower it on another.  I see it in my royalty reports all the time.  

I don't believe this obviously self destructive exercise in futility being put on by the Saudis and the Russians is going to hurt shale a bit.  The wells will be maintained at lower production if the operators deem that they want to produce less.  Once the Saudis are executed by a popular uprising from their people and their production goes to zero like Iran or Venezueal, the shale wells will cycle back up and capture the $100 oil.

There is a lot more oil down there to be gotten and the sooner KSA is done shooting their feet off, the better for us in Texas.  The only way production will decline is if the price of oil stays this low for a year and I don't think that Russia or KSA can handle that.

Edited March 11, 2020 by wrs

[James Regan + 1,776]

I think any hopes of a quick back room meeting to sort out this pissing competition have passed and we now are deep into an all out war. KSA will ramp up to 13million Bbl/Day and now the UAE has come out in support and will increase production from 3ml to 4ml. This shows the Middle East countries in OPEC are playing an “all in” strategy. OPEC are tired of being used as the get out of jail card and have lost respect, I think this is the big play to try to make OPEC what it was even if it means temporarily shooting their toes off but bear in mind they use steel toe caps. 
This is going to get nasty and expect 20+ Oil for the months ahead.

[Old-Ruffneck + 1,246]

53 minutes ago, wrs said:

There is a lot more oil down there to be gotten and the sooner KSA is done shooting their feet off, the better for us in Texas.  The only way production will decline is if the price of oil stays this low for a year and I don't think that Russia or KSA can handle that.

I agree, I don't thinks KSA or Russia can realistically go 6 months on 20$ oil, or less as being predicted. I really question whether KSA can ramp up to 12mbd, possibly 9 to 10mbd. But flooding the market hurts all producing nations, not just US Shale. Solution would be to buy all 20 dollar oil and store it. We do have the capacity to take on as much as they want to throw our way. 

[wrs + 893]

12 minutes ago, Old-Ruffneck said:

I agree, I don't thinks KSA or Russia can realistically go 6 months on 20$ oil, or less as being predicted. I really question whether KSA can ramp up to 12mbd, possibly 9 to 10mbd. But flooding the market hurts all producing nations, not just US Shale. Solution would be to buy all 20 dollar oil and store it. We do have the capacity to take on as much as they want to throw our way. 

We also have yet to see CV affect oil production but I think that is still to come and when it does, expect oil to rebound.  

[James Regan + 1,776]

14 minutes ago, wrs said:

We also have yet to see CV affect oil production but I think that is still to come and when it does, expect oil to rebound.  

As with any temporary uncontrollable event we will see a reverse of sorts but CV affect will be minimal compared to the spat. Sure demand will increase and at 20+ will be taken advantage of if volume and capacity is not your driving factor your a lot safer than if your price defines the commodity and said economic production of, different animals same zoo.

[Douglas Buckland + 6,308]

2 hours ago, James Regan said:

I would assume not due to the amount of well drilled in close proximity of each other, it appears that the play needs to be gang raped to get the desired results. If so then it’s not looking good for the LTI sector. Let’s see how easily these wells can be manipulated. Yes we black art wizards 🧙🏽‍♂️ often come up with something that makes sense to the untouched. I will crawl back into my cavern in the moon pool and stir up the cauldron waiting for the next spell to be applied 😂😂

This from Mike Shellman, so you can take it to the bank:
 

I've been asked this several times this week. Funny that. You are spot on regarding near wellbore skin damage. Perhaps more important I believe is proppant embedment and frac closure. They're putting tiny sand in the tail ends of these frac's anyway, lots of 100 mesh powder, and lets not forget that though there is some brittleness factor in shaley carbonates in the Permian, for the most part this shale is just lousy mudstone that is pretty soft. I think the proppant embedment thing at shut in is a serious problem. I frac'ed some very tight sandstones, like the Olmos, etc. and we could never shut them in because of that. And the Austin Chalk was worse. Those induced fractures would squeeze shut and the well would lock up. 

Can't shut in shale oil wells for very long. They decline so rapidly that the best way to slow production rates,improve prices, cooperate with the rest of the world, save resources, etc. is just not drill the damn things until thereare needed. That's the beauty of shale that peopleoverlook...spud to tanks  can be less than 4 months. 

[wrs + 893]

2 minutes ago, James Regan said:

As with any temporary uncontrollable event we will see a reverse of sorts but CV affect will be minimal compared to the spat. Sure demand will increase and at 20+ will be taken advantage of if volume and capacity is not your driving factor your a lot safer than if your price defines the commodity and said economic production of, different animals same zoo.

CV cost about $20/bbl before the spat. It has been the main focus for demand destruction because of the restrictions on activity in China.  I am saying that supply destruction may occur as a result of CV fear/quarantines in the ME.

[El Nikko + 2,145]

4 minutes ago, Douglas Buckland said:

This from Mike Shellman, so you can take it to the bank:
 

I've been asked this several times this week. Funny that. You are spot on regarding near wellbore skin damage. Perhaps more important I believe is proppant embedment and frac closure. They're putting tiny sand in the tail ends of these frac's anyway, lots of 100 mesh powder, and lets not forget that though there is some brittleness factor in shaley carbonates in the Permian, for the most part this shale is just lousy mudstone that is pretty soft. I think the proppant embedment thing at shut in is a serious problem. I frac'ed some very tight sandstones, like the Olmos, etc. and we could never shut them in because of that. And the Austin Chalk was worse. Those induced fractures would squeeze shut and the well would lock up. 

Can't shut in shale oil wells for very long. They decline so rapidly that the best way to slow production rates,improve prices, cooperate with the rest of the world, save resources, etc. is just not drill the damn things until thereare needed. That's the beauty of shale that peopleoverlook...spud to tanks  can be less than 4 months. 

interesting

[Douglas Buckland + 6,308]

I sincerely hope that Trump does NOT bail out the shale oil industry! They did this to themselves, and if they fail, so be it. Also, if they fail it would be a big step in drying up the glut.

[James Regan + 1,776]

9 minutes ago, Douglas Buckland said:

I sincerely hope that Trump does NOT bail out the shale oil industry! They did this to themselves, and if they fail, so be it. Also, if they fail it would be a big step in drying up the glut.

If it’s bailed out as it was “bailed in” then kiss goodbye to any credible talk of free markets. It’s a cartel like any other, let’s not kid ourselves.

[wrs + 893]

25 minutes ago, Douglas Buckland said:

I sincerely hope that Trump does NOT bail out the shale oil industry! They did this to themselves, and if they fail, so be it. Also, if they fail it would be a big step in drying up the glut.

Protecting against anti-competitive behavior is not bailing out.  A temporary tariff would be reasonable protection.  Low cost loans to drill more wells would be bailing out.  Let's see what they do if anyhing.  Again, shale doing it to themselves isn't any different than any other business and what the Russians and the Saudis are doing wouldn't be possible if they had free markets.

[El Nikko + 2,145]

46 minutes ago, Douglas Buckland said:

This from Mike Shellman, so you can take it to the bank:
 

I've been asked this several times this week. Funny that. You are spot on regarding near wellbore skin damage. Perhaps more important I believe is proppant embedment and frac closure. They're putting tiny sand in the tail ends of these frac's anyway, lots of 100 mesh powder, and lets not forget that though there is some brittleness factor in shaley carbonates in the Permian, for the most part this shale is just lousy mudstone that is pretty soft. I think the proppant embedment thing at shut in is a serious problem. I frac'ed some very tight sandstones, like the Olmos, etc. and we could never shut them in because of that. And the Austin Chalk was worse. Those induced fractures would squeeze shut and the well would lock up. 

Can't shut in shale oil wells for very long. They decline so rapidly that the best way to slow production rates,improve prices, cooperate with the rest of the world, save resources, etc. is just not drill the damn things until thereare needed. That's the beauty of shale that peopleoverlook...spud to tanks  can be less than 4 months. 

OK From the guy I referenced yesterday

"A suggestion on how to balance supply and not lose cash flow for the year. If you shut in a well that came on in 2019 while the coronavirus demand shock is here.... when you bring it back on, all my work over 10 years demonstrates that it will take 1.5x the time it was down to get back to the exact same cumulative volume!!

Short term, balancing supply will increase prices. Long term, demand destruction will go away and demand will increase. In both cases prices go up. AND in the current year, a 60 day new well shut in will be at exactly the same cumulative production with flush volumes after its been on for 90 days!! That means you actually save volumes and increase cash flow. "

So a well drilled last year can be shut down for 60 days and when put back on line it only takes 90 days to be back to the same production level.

The point he's making is for bigger companies to shut production on newer wells and keep producing from the older ones (which have more issues after being shut down), especially since many companies are only hedged for ~60% of their production. No point producing from those 2019 wells and selling the oil at a loss.

Edited March 11, 2020 by El Nikko

[El Nikko + 2,145]

[Douglas Buckland + 6,308]

10 hours ago, wrs said:

Protecting against anti-competitive behavior is not bailing out.  A temporary tariff would be reasonable protection.  Low cost loans to drill more wells would be bailing out.  Let's see what they do if anyhing.  Again, shale doing it to themselves isn't any different than any other business and what the Russians and the Saudis are doing wouldn't be possible if they had free markets.

And if frogs had wings they wouldn’t bump their asses! Russia and Saudi do not have free markets, so we have to deal with that fact.,Supposedly the US does. If shale cannot compete in the global market then they must be allowed to fail unless they can become competitive.

How can you possibly put all of this on Saudi or Russia when the shale players never took ANY steps to control themselves and shore up the price?

Basically Saudi and Russia have said, ‘If the US wants to play the game of unrestricted production, we will also!’.

Tell me I’m wrong...