The GREAT OPEC+ Agreement

[nsdp + 449]

2 minutes ago, nsdp said:

I gather  you are unfamiliar with how a tariff works on even one product especially oil/gas products.   Putting a tariff on imported oil is just like putting a tax surcharge on every tax payer in the country.  

Second, like most posters here you are ignorant of refinery design and operation. I am a 49 year veteran of the oil/gas business and a Valero Retiree.  Refineries are designed to operate with a specific gravity of crude and a maximum sulfur/heavy metals content .    Change that spec and operating efficiency goes to hell in a hand basket.  For example Valero has  thirteen refineries, Only three(the smallest) can run shale- Eagle Ford without importing and blending heavy oil imports using 2 or three imported barrels for every one light domestic barrel.   That is why MARS crude sells for more than WTI. That ratio of heavy -light refining capacity  is very typical across every refiner in the Gulf Coast.

Your tariff idea would close 80+% of PADD III refineries.

 

[nsdp + 449]

On 4/11/2020 at 2:18 PM, Gerry Maddoux said:

You miss the point: I don't care how much oil the Saudis produce, or Putin either--I just don't want it over here.

Whose oil do you want to import. Sulfur content on Canadian tar sands limits how much of it you can run without building a $300 million amine scrubber. PADDIII refineries are designed for heavy imports.

[Gerry Maddoux + 3,627]

6 minutes ago, nsdp said:

Your tariff idea would close 80+% of PADD III refineries.

Wrong--they'd find the heavy sour from one of several other sources--Canada or Mexico, both land-based neighbors with pretty good relations with the US. 

 

9 minutes ago, nsdp said:

Second, like most posters here you are ignorant of refinery design and operation. 

I imagine most posters here realize that the refineries are old and would cost a fortune to retrofit, thereby needing a mixed feedstock of LTO + heavy oil. 

 

11 minutes ago, nsdp said:

Putting a tariff on imported oil is just like putting a tax surcharge on every tax payer in the country.  

I'd like to be gracious about this, but your comment is just total bullshit. Sorry. Maybe that works when putting a tariff on medications and medical supplies made in China but not when we "make" our own oil. 

[יאן דיגילוב + 3]

12 minutes ago, nsdp said:

I gather  you are unfamiliar with how a tariff works on even one product especially oil/gas products.   Putting a tariff on imported oil is just like putting a tax surcharge on every tax payer in the country.  

Second, like most posters here you are ignorant of refinery design and operation.  Refineries are designed to operate with a specific gravity of crude and a maximum sulfur/heavy metals content .    Change that spec and operating efficiency goes to hell in a hand basket.  For example Valero has  thirteen refineries, Only three(the smallest) can run shale- Eagle Ford without importing and blending heavy oil imports using 2 or three imported barrels for every one light domestic barrel.   That is why MARS crude sells for more than WTI. That ratio of heavy -light refining capacity  is very typical across every refiner in the Gulf Coast.

Your tariff idea would close 80+% of PADD III refineries.

dear friend i agree that it will hit refineries but the demand is slashing also no? meanwhile from those 3 barrels we will leave only the domestic ! just till Prince will raise the head from the sand that he putted himself into!

i didn't say the tariffs to be forever just till foolish war and a foolish too much production stop ! 

and i am from country that have tariffs on a lot of products, somehow our economics really strong!  just need to manage it all not just pass law!

 

i leave with an say "for every action have to be reaction" we cant give everybody to do base on those night sleep (dad Putin TOLD ME NO lets punish the world, I CANT SLEEP)!

 

lets see what futures stocks will tell even before Aramco will opens its mouth on May costs!

Edited April 12, 2020 by יאן דיגילוב

[nsdp + 449]

1 minute ago, Gerry Maddoux said:

Wrong--they'd find the heavy sour from one of several other sources--Canada or Mexico, both land-based neighbors with pretty good relations with the US. 

 

I imagine most posters here real.ize that the refineries are old and would cost a fortune to retrofit, thereby needing a mixed feedstock of LTO + heavy oil. 

 

I'd like to be gracious about this, but your comment is just total bullshit. Sorry. Maybe that works when putting a tariff on medications and medical supplies made in China but not when we "make" our own oil. 

Gerry , how many years have you worked in the patch? !  I  am a 49 year retiree from  working for the likes of early on Tenneco. and then  Amoco,and Valero.  Refinery turnarounds and upgrades means that the average unit in a refinery be it distillation, reformer, cracker  etc is no more than about 7 years old.  Corrosion like what  hit Exxon in  Torrance, California is why your concept of being old is dubious.  OSHA and  U.S. Chemical Safety Board  would shut you down otherwise.  . https://www.cbsnews.com/news/california-exxonmobil-refinery-explosion/      Sulfur spec on WCS limits how much you can blend.  Except for ARAMCO Motivia no one in PADD III can run it with out diluting. Mexico doesn't sell Maya per se. They take it to Deer Park use their half of the refinery and send the product back to Mexico. Ignorance on your part.

You are the kind who has to read the instructions on the heel of  your boot to know how to empty the urine accumulation inside.

Have you ever even been inside the process area  of a refinery? 

[nsdp + 449]

31 minutes ago, יאן דיגילוב said:

i agree that it will hit refineries but the demand is slashing also no? meanwhile from those 3 barrels we will leave only the domestic ! just till Prince will raise the head from the sand that he putted himself into!

i didn't say the tariffs to be forever just till foolish war and a foolish too much production stop ! 

and i am from country that have tariffs on a lot of products, somehow our economics really strong!  just need to manage it all not just pass law!

 

i leave with an say "for every action have to be reaction" we cant give everybody to do base on those night sleep (dad Putin TOLD ME NO lets punish the world, I CANT SLEEP)!

I gather that you do not understand chemical engineering.  You need all three to four barrels in the mix for the refinery to run stably and safely. https://www.csb.gov/updated-bp-texas-city-animation-on-the-15th-anniversary-of-the-explosion/  I worked in the Amoco Gas Plant inside this refinery from 1981 to1986.

[יאן דיגילוב + 3]

1 minute ago, nsdp said:

I gather that you do not understand chemical engineering.  You need all three to four barrels in the mix for the refinery to run stably and safely. https://www.csb.gov/updated-bp-texas-city-animation-on-the-15th-anniversary-of-the-explosion/  I worked in the Amoco Gas Plant inside this refinery from 1981 to1986.

on this you right! studied computer SC and LAW  but i know the market is fluted Pal ! the storage is full guess it will be enough no ? other cases they will buy chip somewhere else and stock a new pile ! 

 

i am invested in all of this firms of oil and gas when they was 80$ off like apa i bought in 4$ so you have also understand there is also heart and not just of mind in people like me! 

[RickO 0]

The cure for low prices is low prices.

[Dan Clemmensen + 1,011]

1 hour ago, nsdp said:

I gather  you are unfamiliar with how a tariff works on even one product especially oil/gas products.   Putting a tariff on imported oil is just like putting a tax surcharge on every tax payer in the country.  

Second, like most posters here you are ignorant of refinery design and operation.  Refineries are designed to operate with a specific gravity of crude and a maximum sulfur/heavy metals content .    Change that spec and operating efficiency goes to hell in a hand basket.  For example Valero has  thirteen refineries, Only three(the smallest) can run shale- Eagle Ford without importing and blending heavy oil imports using 2 or three imported barrels for every one light domestic barrel.   That is why MARS crude sells for more than WTI. That ratio of heavy -light refining capacity  is very typical across every refiner in the Gulf Coast.

Your tariff idea would close 80+% of PADD III refineries.

I am not the original poster. I am an ignorant outsider, trying to learn about the impact on the US  of OPEC+ decisions. I'm looking for knowledge, not an argument.

Yes, a tariff is effectively a tax on consumers. This cost is only justified if the increased national security (freedom from capricious OPEC+ action) is worth it. The resulting cost per gallon of gasoline will be lower than the cost which would result if the OPEC+ plan to kill US shale and then drive crude prices up to $80/bbl  is allowed to proceed.

Yes, I am pretty much completely ignorant of the details of the sensitivity of refineries to the input product mix. I had assumed that the refineries could be adjusted through some range of input mixes that included a mix we could produce "locally" (US+Canada+Mexico). Thank you for correcting this for me.

I presume from your other remarks that the refinery equipment upgrade cycle is on the order of 7 years. Is this a useful estimator of how long is takes to adjust a refinery to an new input mix?

If refineries need some specific type of OPEC oil, the tariffs can be adjusted to allow tarrif-free one-for-one swap of domestic oil for OPEC oil, subject to some reasonable rules, as the refineries are reconfigured in an orderly manner.

[Outlaw Jackie + 78]

On 4/9/2020 at 7:58 PM, TNK said:

What a joke, it will avoid US tariffs while doing nothing to halt the collapse of prices. First and foremost - History tells us that ALL production cut "deals" are a joke - they are typically violated within the 1st week of implementation. Secondly - Saudi Arabia, within the past few days, gorged on lining up tankers - conveniently, they left until May to implement the supposed cuts - until then, they will have the spigots WIDE OPEN.  

Good to hear a credible source here; liquid prices have tanked.  How about down there?  That's per barrel, not per gallon or liter.  Went negative ($0.69) last week. 

 

 

 

 

 

[BradleyPNW + 282]

On 4/9/2020 at 4:58 PM, TNK said:

What a joke, it will avoid US tariffs while doing nothing to halt the collapse of prices.

"Libertarianism for thee but not for me."

Anyway, US shale did a great job placing a ceiling on oil prices and undermining OPEC cartel power. For that, I'm grateful. However, we no longer need domestic production anymore. Instead, the next step is to export US shale services to foreign allies and neutrals. 

[יאן דיגילוב + 3]

1 minute ago, BradleyPNW said:

"Libertarianism for thee but not for me."

Anyway, US shale did a great job placing a ceiling on oil prices and undermining OPEC cartel power. For that, I'm grateful. However, we no longer need domestic production anymore. Instead, the next step is to export US shale services to foreign allies and neutrals. 

how we do this if we have the Atlantic and the Pacific as our neighbors ? Salmans Kingdom have india china africa more... 
Latin america is all producers..  maybe to France US can produce but her neighbors from Africa already there!
Us should use what it makes ! not give some king in C type country rule the price over it ! 

[BradleyPNW + 282]

3 minutes ago, יאן דיגילוב said:

how we do this if we have the Atlantic and the Pacific as our neighbors ? Salmans Kingdom have india china africa more... 
Latin america is all producers..  maybe to France US can produce but her neighbors from Africa already there!
Us should use what it makes ! not give some king in C type country rule the price over it ! 

Normally, you do it with a functioning state department. But Donald killed that so we need to boot him and get a competent leader back in the Oval Office. 

[יאן דיגילוב + 3]

futures go up 5% so deal was still good. so oil stocks also will go up lets see if it pass 26

[Dan Clemmensen + 1,011]

"The great OPEC agreement" will have no effect on when you must stop production at a particular well. You will stop when your mid-stream connection can no longer take your oil because there is no place to put it. The exact timing will vary depending on your circumstances, but all available commercial storage in the US is projected to be filled by mid May according to the most recent article on OilPrice. Another commenter here stated that that some specific Gulf Coast storage is already full. The SPR has an additional 77 million bbl of storage available, but it can only be filled at 4 million bbl/day and at a high cost because the oil that comes back out will be of lower quality than the oil that goes in, due to mixing. But that's only another 20 days, and only at 4 million bbl/day. None of this is depends any pricing, OPEC or otherwise. The effect on price is obvious, I think: price will be zero or negative after storage is almost full, for any production in excess of consumption. Consumption is projected to be down by about 30% for April.

[nsdp + 449]

3 hours ago, יאן דיגילוב said:

futures go up 5% so deal was still good. so oil stocks also will go up lets see if it pass 26

 

 

3 hours ago, Dan Clemmensen said:

"The great OPEC agreement" will have no effect on when you must stop production at a particular well. You will stop when your mid-stream connection can no longer take your oil because there is no place to put it. The exact timing will vary depending on your circumstances, but all available commercial storage in the US is projected to be filled by mid May according to the most recent article on OilPrice. Another commenter here stated that that some specific Gulf Coast storage is already full. The SPR has an additional 77 million bbl of storage available, but it can only be filled at 4 million bbl/day and at a high cost because the oil that comes back out will be of lower quality than the oil that goes in, due to mixing. But that's only another 20 days, and only at 4 million bbl/day. None of this is depends any pricing, OPEC or otherwise. The effect on price is obvious, I think: price will be zero or negative after storage is almost full, for any production in excess of consumption. Consumption is projected to be down by about 30% for April.

One thing every one needs to remember is WTI and Brent are "paper barrels" not "wet barrels" that you can  haul down to the refinery and have  processed into Gasoline, Reformate, Naphtha, JP or diesel.  Click the April 2020 link to get real world in field crude oil prices paid by refinersnot what a bunch of Ivy League MBA's.put up while playing grab ass.  Varies from $7.50/b to $14/b and this is with OPEC+ in place. https://www.crudeoilsupply.com/CrudeOilS. upply/Bulletin/PriceBulletinList?reportingArea=Laurel&country=US&showAll=False

As for storage  what bank is going to lend the money on that.  Got to have money to buy the barrels before you can store them  The banks got badly burned in the 1980's and 2008.  they are keeping  a very short leash on any oil investments.

 

Read Arthur Berman. I don't often agree with him as I think he is too much of a cheerleader for the industry.  but this one sounds right. https://oilprice.com/Energy/Crude-Oil/Why-The-OPEC-Output-Cut-Is-Irrelevant.html

Edited April 13, 2020 by nsdp
page didn't format correctly.

[Mark Potochnik + 8]

Oh yeah. Oil skyrocketed to $24. Wow. How many will go BK?

Edited April 13, 2020 by Mark Potochnik
Grammar

[Douglas Buckland + 6,308]

@Gerry Maddoux
 

”You are the kind who has to read the instructions on the heel of  your boot to know how to empty the urine accumulation inside.”

Heck Gerry! Seems you’ve got the same damn Redwings I’ve got! I found the instructions difficult to read as well. Lucky we’ve got some 49 year old young buck to sort us out!

PS: I finally just drilled some holes through the soles. Works like a charm!😂

[Gerry Maddoux + 3,627]

^

Made my day!

[Mark Potochnik + 8]

OMG what happened to that agreement? Oil down 4¢ right now.

[Dave Gilmour + 20]

If I was Shell I would refuse to sell oil at $31. I would only sell at $60. Take it or leave it!

[Refman + 207]

14 hours ago, nsdp said:

Except for ARAMCO Motivia no one in PADD III can run it with out diluting. Mexico doesn't sell Maya per se. They take it to Deer Park use their half of the refinery and send the product back to Mexico. Ignorance on your part.

We have several ships just loaded Maya for use in our PAD III refineries, we buy it all the time

[Dan Warnick + 6,100]

What's a boot?  And why would someone want to urinate in it?  LOL!

I have no idea where this thread is going, but it sure is fun to follow it!

[Etienne + 2]

Saudi's not-so-clever massive loading of VLCC's should be met with restrictions on off-loading to no more than the average of 1Q. With VLCC lease rates up 678%, this will sharply increase holding costs and a restriction on off-loading excess floating inventory will create a disincentive to pull a stunt like this again.

[Gerry Maddoux + 3,627]

16 hours ago, nsdp said:

Mexico doesn't sell Maya per se. They take it to Deer Park use their half of the refinery and send the product back to Mexico. Ignorance on your part.

You are the kind who has to read the instructions on the heel of  your boot to know how to empty the urine accumulation inside.

1 hour ago, Refman said:

We have several ships just loaded Maya for use in our PAD III refineries, we buy it all the time

nsdp: I'll be glad to send you the old Redwings I've worn for years. On friendly advice, I drilled holes in them yesterday to keep my feet dry, but I left the instructions on the heel for someone who might need them. Be sure to wash your hands afterward--they leak like a sieve. 😀