What Is Holding U.S. Oil Production Back?

[Mark Sloan + 9]

Oil prices are sitting well above the $100 mark and show no sign of falling back any time soon, but that doesn’t mean that a wave of new production will come online. U.S. oil producers are struggling with rising costs caused by inflation, a labor shortage, and investor sentiment, all of which impact their ability to boost production. In a recent survey of oil and gas firms by the Dallas Fed, nearly a third of respondents said growth would not be dependent on the price of oil.

https://oilprice.com/Energy/Energy-General/What-Is-Holding-US-Oil-Production-Back.html

 

 

 

[Jay McKinsey + 1,490]

2 hours ago, Mark Sloan said:

Oil prices are sitting well above the $100 mark and show no sign of falling back any time soon, but that doesn’t mean that a wave of new production will come online. U.S. oil producers are struggling with rising costs caused by inflation, a labor shortage, and investor sentiment, all of which impact their ability to boost production. In a recent survey of oil and gas firms by the Dallas Fed, nearly a third of respondents said growth would not be dependent on the price of oil.

https://oilprice.com/Energy/Energy-General/What-Is-Holding-US-Oil-Production-Back.html

 

 

 

The majors bought out the small players and Wall Street is tired of the treadmill. They want standard consistent returns. So no high cost, low return drilling binges. We are seeing the true cost of American shale oil, it's expensive.

Edited March 29, 2022 by Jay McKinsey

[Eyes Wide Open + 3,552]

3 minutes ago, Jay McKinsey said:

The big boys bought out the small players and Wall Street is tired of the treadmill and wants standard consistent returns. So no drilling binges. We are seeing the true cost of American shale oil, its expensive.

As in cooler heads will prevail? After all the EU does need a new fossil fuel source does it not? 

So little time and so many opportunities.

[Jay McKinsey + 1,490]

13 minutes ago, Eyes Wide Open said:

As in cooler heads will prevail? After all the EU does need a new fossil fuel source does it not? 

So little time and so many opportunities.

The US can only replace about a tenth of their imports from Russia. Most importantly we will support rapid growth in renewables. At least according to this communist web site https://www.voanews.com/a/us-aid-will-help-europe-replace-russian-lng-but-not-pipeline-gas-/6502472.html

Edited March 29, 2022 by Jay McKinsey

[Eyes Wide Open + 3,552]

6 hours ago, Jay McKinsey said:

The US can only replace about a tenth of their imports from Russia. Most importantly we will support rapid growth in renewables. At least according to this communist web site https://www.voanews.com/a/us-aid-will-help-europe-replace-russian-lng-but-not-pipeline-gas-/6502472.html

Great post... 

There Is No Short Term Solution To Europe’s Oil Addiction

https://oilprice.com/Energy/Crude-Oil/There-Is-No-Short-Term-Solution-To-Europes-Oil-Addiction.html

[nsdp + 449]

No because Wall Street  MBA"s and Ronald Reagan's tax cuts  allowed companies to ship work overseas and not pay taxes on the profits until the profits were returned to the US.   IT corporations were the worst. Apple in Ireland is the classic.  But it hit the  steel supply companies as  well.   In 1971 USSteel Baytown  was a state of the art pipe mill that could produce  1100mm ID seamless pipe.  There is one remaining plant  in the  US that can do that grade of work and it is contracted  by the US Navy until the USNS Doris Miller is launched. Well heads, drill pipe, casing  are all the same  You have a six to 9 month wait  for forgings. There are about 2700 DUC's that cannot be completed because of tariffs on  steel for casing and wellheads are not on the shelf. China is your quickest source.   Thanks to the  taxation  on profits , it is more profitable for steel to be made in Italy, France and Germany than the US.

[notsonice + 1,243]

what is holding back new well sites and drill rigs?????

Landmen and Permits.....It takes time to get big enough parcels together to make it worth while and then it takes up to 6 months to get a permit to drill......

Rome was not built in a day

[notsonice + 1,243]

3 minutes ago, nsdp said:

No because Wall Street  MBA"s and Ronald Reagan's tax cuts  allowed companies to ship work overseas and not pay taxes on the profits until the profits were returned to the US.   IT corporations were the worst. Apple in Ireland is the classic.  But it hit the  steel supply companies as  well.   In 1971 USSteel Baytown  was a state of the art pipe mill that could produce  1100mm ID seamless pipe.  There is one remaining plant  in the  US that can do that grade of work and it is contracted  by the US Navy until the USNS Doris Miller is launched. Well heads, drill pipe, casing  are all the same  You have a six to 9 month wait  for forgings. There are about 2700 DUC's that cannot be completed because of tariffs on  steel for casing and wellheads are not on the shelf. China is your quickest source.   Thanks to the  taxation  on profits , it is more profitable for steel to be made in Italy, France and Germany than the US.

babbling again I see..........US that can do that grade of work and it is contracted  by the US Navy until the USNS Doris Miller is launched....Do you actually think one Navy ship needs a complete rolling mill for months on end???? How many tons of seamless pipe does one ship need of 1100mm id????? maybe a few hundred at most.  oh boy, Let me guess you have never worked in a mill, machine shop or forge shop.........

[nsdp + 449]

16 hours ago, Eyes Wide Open said:

Great post... 

There Is No Short Term Solution To Europe’s Oil Addiction

https://oilprice.com/Energy/Crude-Oil/There-Is-No-Short-Term-Solution-To-Europes-Oil-Addiction.html

Yes there is. If you were around in the 1973-74 oil embargo you would  know .  Eyes, you demonstrate that you  are a prime example of Jorge Santayana's dictum"

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it. In the first stage of life the mind is frivolous and easily distracted; it misses progress by failing in consecutiveness and persistence. This is the condition of children and barbarians, in whom instinct has learned nothing from experience.

[nsdp + 449]

7 minutes ago, notsonice said:

babbling again I see..........US that can do that grade of work and it is contracted  by the US Navy until the USNS Doris Miller is launched....Do you actually think one Navy ship needs a complete rolling mill for months on end???? How many tons of seamless pipe does one ship need of 1100mm id????? maybe a few hundred at most.  oh boy, Let me guess you have never worked in a mill, machine shop or forge shop.........

No stupid. They have  finishing work for the USNS John F Kennedy  and the USNS Enterprise to complete BEFORE they cut steel on the Miller. While I worked at Tenneco Inc which owned Newport News  Ship Yard at that time, The USNS Teddy Roosevelt was laid down in September 1980 and Launched 49 months later in October 1984. Since I  was in compliance  I knew the status of construction.   JFK  On 25 February 2011, the Navy conducted the First Cut of Steel ceremony at Northrop Grumman in Newport News, signalling the formal start of construction for John F. Kennedy. Launched in 2019. Does that give you clue on how long a steel mill is tied up under the Defense Production Act?  It isn't 1100 mm pipe that  is needed, it is N=stamp quality and 100,000 tons  of it for each ship. That is some 350,000 tons total still to be milled.

Oil companies require API stamp steel for tubulars and forgings.  There are three plants that produce up to 405mm 10,000 psig test pipe and only one for >1/2% H2S. The largest pipe that mill can produce is 420mm. they have to produce the armor plate for US Army and Marine Corps vehicles. they are all subject to preemptive call under the Defense Production Act.  that means your order gets pushed back until DOD is through.   If you haven't paid attention the news recently your supply chain is BROKEN.

[Eyes Wide Open + 3,552]

15 hours ago, nsdp said:

Yes there is. If you were around in the 1973-74 oil embargo you would  know .  Eyes, you demonstrate that you  are a prime example of Jorge Santayana's dictum"

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it. In the first stage of life the mind is frivolous and easily distracted; it misses progress by failing in consecutiveness and persistence. This is the condition of children and barbarians, in whom instinct has learned nothing from experience.

Interesting comments, I go fishing for a whopper..Well kinda and catch a tadpole.

Ok tadpole what was the real cause of the 73 oil debacle. One issue now...you see it was only one issue and perhaps one of the greatest stories left untold.

 

Edited March 30, 2022 by Eyes Wide Open

[Ron Wagner + 702]

On 3/28/2022 at 7:35 PM, Mark Sloan said:

Oil prices are sitting well above the $100 mark and show no sign of falling back any time soon, but that doesn’t mean that a wave of new production will come online. U.S. oil producers are struggling with rising costs caused by inflation, a labor shortage, and investor sentiment, all of which impact their ability to boost production. In a recent survey of oil and gas firms by the Dallas Fed, nearly a third of respondents said growth would not be dependent on the price of oil.

https://oilprice.com/Energy/Energy-General/What-Is-Holding-US-Oil-Production-Back.html

 

 

 

Inflation, greed at the retail level, lack of investment due to the Biden administration discouraging it and large oil companies balking at selling at lower prices because they need capital to invest in their own operations. Gasoline is about 40 cents overpriced at retail. Ethanol blends would lower the price even more. 

Allowing needed pipelines, fewer controls on leases, etc. 

[Starschy + 211]

On 3/29/2022 at 2:35 AM, Mark Sloan said:

Oil prices are sitting well above the $100 mark and show no sign of falling back any time soon, but that doesn’t mean that a wave of new production will come online. U.S. oil producers are struggling with rising costs caused by inflation, a labor shortage, and investor sentiment, all of which impact their ability to boost production. In a recent survey of oil and gas firms by the Dallas Fed, nearly a third of respondents said growth would not be dependent on the price of oil.

https://oilprice.com/Energy/Energy-General/What-Is-Holding-US-Oil-Production-Back.html

 

Companies which where put out of Business a year ago - they don't have the resources and credits for a real investing in productions.