Which producers will shut in first?

[John Snyder + 4]

On 3/30/2020 at 6:54 PM, Dan Clemmensen said:

I'm not an oil person. Can someone please explain the "shut in" process? How expensive is it, and how hard/expensive/possible is it to turn the well back on? Would it be cheaper to simply reduce production to minimal levels at multiple wells, or shut in one well? I'm most;y interested in actual costs, here. If there are considerations about royalties or bonds or other funny money, the industry can ask for some sort of legislative relief and I hope they will get it.

Some of the suggestions here are guesses. Shutting in a well is problematic on many levels, it is best to turn the spigot and reduce the flow rates, not stopping the flow. When a well is stopped, the oil/gas/water mix migrates and finds the weakest points. This leads to EPA issues where you have now contaminated a water aquifer, etc. It can be a nightmare. True shutdown of a well takes money to concrete the damn thing under pressure. Think about a well bore hole, there is a pipe pushed through, that twists and turns following the path the drill bit took, but the drill ripped out more than the width of the pipe. When you stop the flow, the pressurized liquid matrix slips around the edges of the pipe stem and migrates up to the next available porous layer, typically a sand interval. 

[Jan van Eck + 7,558]

1 minute ago, Wombat said:

Bullshit, you are digging yourselves in deeper. Got rid of the TPP (which excluded China), tried tariffs but they failed so you quit. See my comments in "Saudi sending Armada of oil to America" to see real cause of the problem.

The tariffs re doing just fine. The US steel and aluminum industries are coming back to life with the new tariff structures.  More importantly, the developments have made it clear to various others that reliance on a China supply chain is somewhere between risky and unworkable, and the re-structuring of parts supply chains starting from China are being started.  For tooling, that is a slow process.  When the tooling is either repatriated from China, or new tooling is built, then the dis-engagement will be clear.  

Equally, the individual decisions of consumers to not purchase goods made in China is having its effect.  The largest vendor of Chines-made goods in the USA is the WalMart Corporation, which imports about $60 billion US from China, for sale to its US customers.  Anecdotally, lots of customers are refusing to buy those goods, so I anticipate that WalMart will restructure its China sourcing.  If you as an individual have a choice between buying a sofa at the Raymour & Flanagan furniture store, or one from North Carolina or Italy, which do you choose?  [I chose the one from Italy, although it did cost me more.  Nice leather.]   It is the cumulative effect of individual decisions that will chip away at the import chain from China. 

[Jan van Eck + 7,558]

5 minutes ago, John Snyder said:

When you stop the flow, the pressurized liquid matrix slips around the edges of the pipe stem and migrates up to the next available porous layer, typically a sand interval. 

There are apparently some 10,000 abandoned wells in Southern Alberta and Saskatchewan, now "orphan wells," where nobody is claiming ownership.  You have to wonder what the cumulative effect of that on the water table is.  Ugh. 

It is my personal view that, once you start pumping out some oil reservoir, it is a better social approach to just pump it totally dry.  That implies less drilling, however, which goes against the grain of the oil-man!

[Wombat + 1,028]

2 minutes ago, Jan van Eck said:

The tariffs re doing just fine. The US steel and aluminum industries are coming back to life with the new tariff structures.  More importantly, the developments have made it clear to various others that reliance on a China supply chain is somewhere between risky and unworkable, and the re-structuring of parts supply chains starting from China are being started.  For tooling, that is a slow process.  When the tooling is either repatriated from China, or new tooling is built, then the dis-engagement will be clear.  

Equally, the individual decisions of consumers to not purchase goods made in China is having its effect.  The largest vendor of Chines-made goods in the USA is the WalMart Corporation, which imports about $60 billion US from China, for sale to its US customers.  Anecdotally, lots of customers are refusing to buy those goods, so I anticipate that WalMart will restructure its China sourcing.  If you as an individual have a choice between buying a sofa at the Raymour & Flanagan furniture store, or one from North Carolina or Italy, which do you choose?  [I chose the one from Italy, although it did cost me more.  Nice leather.]   It is the cumulative effect of individual decisions that will chip away at the import chain from China. 

Stop dreaming and read my comments in the other article. I have heard so much wishful thinking in our elite circles regarding the coming demise of China that it makes me wanna puke. First it was the "they will become old before they become rich" theory, then it was "they will get stuck in the middle-income trap", now "they spend more on their police than their military and are more scared of their own people than other countries, so they will surely fail"? And yet we lurch from one financial crisis to another, sell off another chunk of the farm each time, and just blame the "banksters" for giving us big, cheap mortgages, as if that was the only friggin problem? As I say, read my comments in the other article about the "competitiveness trap" we are in.

[Jan van Eck + 7,558]

2 minutes ago, Wombat said:

Stop dreaming

I find it difficult to see how you conclude that I am "dreaming."

[Wombat + 1,028]

3 minutes ago, Jan van Eck said:

I find it difficult to see how you conclude that I am "dreaming."

 

3 minutes ago, Jan van Eck said:

I find it difficult to see how you conclude that I am "dreaming."

It is Australian slang for "get your head out of the clouds"?

[Enthalpic + 1,496]

14 minutes ago, Jan van Eck said:

There are apparently some 10,000 abandoned wells in Southern Alberta and Saskatchewan, now "orphan wells," where nobody is claiming ownership.  You have to wonder what the cumulative effect of that on the water table is.  Ugh. 

It is my personal view that, once you start pumping out some oil reservoir, it is a better social approach to just pump it totally dry.  That implies less drilling, however, which goes against the grain of the oil-man!

Sadly the taxpayer is paying to slowly clean those up.  Yet another form of oil subsidy (go bankrupt and we will clean it up ourselves). 

New regulations require a cleanup fund in savings before well approval.

Back in the "always be drilling and pumping days" nobody thought oil could fail so we just trusted their promises that they would clean up their own mess.