Oil Slide Worries Traders. *relax* This Should Get Sorted by Year End.

[D Coyne + 305]

On ‎12‎/‎24‎/‎2018 at 6:10 PM, William Edwards said:

The cost of Permian production has NOTHING to do with the price-setting mechanism for oil.

William,

Since the Permian basin started ramping up production in 2010, it has been responsible for about 30% of the increase in World C+C and all US tight oil has contributed about 67% of the World increase in C+C output since 2010.  I chose the Permian Basin because it has been the fastest growing and most profitable US tight oil producing region since 2015.

You may think that the price of oil is not related to the cost to produce it and in the short term you might be correct.  In the long run the cost to produce the marginal (most costly) barrel of oil will influence the price of oil. 

Eventually the cost of production does matter despite what you believe.  World demand for oil will not be satisfied at a price per barrel of $40 in 2017$ until perhaps 2035 to 2040, if the production of alternative land transport (BEVs, plugin hybrids, rail, light rail, etc) ramps up.  World C+C output is likely to peak by 2025 and oil prices will rise as demand outruns supply at lower oil prices.

The current "glut" of oil is imaginary.  Oil prices will rise until 2030 and might remain level until 2040 and will decline as demand for oil falls as ICEVs will no longer be competitive after 2040.

OECD stocks of Petroleum have fallen 200 million barrels from Sept 2016 to Sept 2018 (Nov2018 IEA Oil Market Report).

[Enthalpic + 1,496]

8 hours ago, Dan Warnick said:

@Illurion said Trump is already a Billionaire.  I assume it is beyond comprehension that Trump could have run for president in order to make real change for Americans?  I'm with Illurion in that I believe it is possible.  History will be the judge, and no, I'm not making any bets at this point.  But I am happy that we have a president that is shaking the hell out of the status quo, and 2 years is hardly enough time to see the end results of his policies.

For some baseline on Trump's actual net worth, let's use the Forbes article below:

The Definitive Net Worth of Donald Trump

Just for a bit of perspective, is there anyone here on the forum that is within a $100 million of Trump's net worth?  $200 million?  Half a Billion?  Does anyone on here know of an active politician that is anywhere close to Trump's net worth?

So aside from your personal assertion that Trump would like to have his name on the "list of Americans by net worth", is it possible that @Illurion is right?

 

My point was it doesn't matter how much money people have - they can still be bought because they want even more money (aka power / family legacy / ego).  He need lots of power to compensate for those tiny "hands."

No doubt Trump is causing change for Americans / the world but not much good.  Anyone who can't see he is a compulsive liar by now is delusional.

But carry on; I'm a university educated Canadian liberal with financial stability - obviously I'm what's wrong with the world! 🍺🍺 Cheers

[Illurion + 894]

9 hours ago, Dan Warnick said:

I'm pretty sure @Illurion was being sarcastic, and the poor refugee thing was not directed at you personally; more at the tone of the various threads these days.  I hope so anyway, because that was why I "up-voted" his comment.

My apologies.

I was not trying to be sarcastic at all.

I was trying to be funny.

Guess the joke is on me.

But he really did show great timing on the sale.

[Illurion + 894]

6 hours ago, jaycee said:

I guessed that my answer though now I re read it does not really reflect that I am still little hungover from Xmas festivities lol. I know he is retired.

The investment bit was really a follow on from my earlier stuff about buying and selling.

My apologies.

I was just joking.

I was not trying to be sarcastic at all.

[William Edwards + 708]

37 minutes ago, D Coyne said:

William,

Since the Permian basin started ramping up production in 2010, it has been responsible for about 30% of the increase in World C+C and all US tight oil has contributed about 67% of the World increase in C+C output since 2010.  I chose the Permian Basin because it has been the fastest growing and most profitable US tight oil producing region since 2015.

You may think that the price of oil is not related to the cost to produce it and in the short term you might be correct.  In the long run the cost to produce the marginal (most costly) barrel of oil will influence the price of oil. 

Eventually the cost of production does matter despite what you believe.  World demand for oil will not be satisfied at a price per barrel of $40 in 2017$ until perhaps 2035 to 2040, if the production of alternative land transport (BEVs, plugin hybrids, rail, light rail, etc) ramps up.  World C+C output is likely to peak by 2025 and oil prices will rise as demand outruns supply at lower oil prices.

The current "glut" of oil is imaginary.  Oil prices will rise until 2030 and might remain level until 2040 and will decline as demand for oil falls as ICEVs will no longer be competitive after 2040.

OECD stocks of Petroleum have fallen 200 million barrels from Sept 2016 to Sept 2018 (Nov2018 IEA Oil Market Report).

I am unable to find any historical support relating the cost of the marginal barrel to the price. Please provide me with the data that I have missed. I realize that one line of reasoning suggests that that should be the case, but so far it hasn't been implemented. Of course, it is possible that economic theory diverges from reality.

[Illurion + 894]

39 minutes ago, Enthalpic said:

My point was it doesn't matter how much money people have - they can still be bought because they want even more money (aka power / family legacy / ego).  He need lots of power to compensate for those tiny "hands."

No doubt Trump is causing change for Americans / the world but not much good.  Anyone who can't see he is a compulsive liar by now is delusional.

But carry on; I'm a university educated Canadian liberal with financial stability - obviously I'm what's wrong with the world! 🍺🍺 Cheers

Well,  i guess i am delusional,  as i do not believe Trump is a compulsive liar.

And if Trump is compensating for his tiny hands,   THEN WHAT ARE YOU COMPENSATING FOR ?

By saying "they can still be bought",  is what you are really saying is that  YOU can be bought....?

As for myself,   i like to think that i cannot be bought.

BUT,  no one has ever tried to buy me,  so i do not really know.

In any case,   if i do decide to let myself be bought in the future,   i am sure my Wife will have fun spending the money..!

As for you being a "university educated Canadian liberal",    well howdy doo,  as i am a "university educated American conservative,   AND YOU ARE RIGHT.........   OBVIOUSLY YOU ARE WHATS WRONG WITH THE WORLD....  

 

In conclusion,   it is the day after Christmas,   and i am thinking about all of the resulting bills i have to pay off over the next month or so,   

PLEASE,   I WOULD LIKE SOMEONE OUT THERE TO OFFER TO "BUY" ME,  SO MY WIFE CAN USE THE MONEY TO PAY OFF OUR CHRISTMAS PRESENT BILLS....

Belated Merry Christmas.

[Enthalpic + 1,496]

1 hour ago, Illurion said:

 

As for myself,   i like to think that i cannot be bought.

Well you do suffer from delusions.

I was a wage slave for many years - I'll admit I can be bought.  Offer me enough money and I will give you my time even if you are exploiting my labour for personal gain.

[Tom Kirkman + 8,860]

3 hours ago, Enthalpic said:

No doubt Trump is causing change for Americans / the world but not much good.  Anyone who can't see he is a compulsive liar by now is delusional.

I disagree.  Guess you consider me delusional them.  Trump is a master troll who drives his detractors to rage with his headfakes.

Fun game of "where in the world is Trump" currently going.  He and FLOTUS arrived in Iraq, and are currently en route to an undisclosed location in Germany. 

This week should be interesting.  POTUS is overseas, insulated, while U.S. government is in partial shutdown.  Stock markets roller coaster.  Fed crazy.  Enjoy the show.

[Jan van Eck + 7,558]

On 12/25/2018 at 12:16 PM, Meredith Poor said:

Read up on the elemental constituents and crystal structure of feldspar. This rock makes up 60% of the earth's crust. Now assume it is broken down by carbonic acid, or other acids that result from the decay of plant matter. Hint: this tells you where the sand on beaches comes from. It also explains why bauxite is found in tropical forests.

More generically, it would explain why high volume sand extraction in Idaho/Wyoming for transport to the east coast is unlikely.

Meredith, you know far more about all this than I could ever hope to even read the executive summary version.  I remain humbled by your grasp of the technical details. 

My point of view is strictly that of the businessman.  Here you have this sand which is essentially free-issue at the extraction plant.  It comes pouring out of the cyclonic reactor, down a chute.  The refiner has paid nothing for the sand, plus he has paid nothing for ti coming out of the chute; those costs are all absorbed in the oil-extraction machinery.  Now the refiner has two approaches: he can pay good money to use a payloader to scoop it up, put that sand into a dump truck, drive it back to the original extraction point, dump the sand, then pay more money for scrapers and draglines to reposition the sand into a thick payer, then replace the overburden.  

Or, our entrepreneur can position a gondola car underneath that chute and let gravity fill it.  

What does it cost to haul a train of 150 gondola cars down hill from Idaho to the shore at New Jersey (for example)?  Whatever that number is, you subtract from that cost the displaced costs of putting the sand back into the Idaho landscape with the dump trucks and the graders, etc. That final number then becomes your "cost of product delivery," which might be positive or negative. Let's assume that it costs a net of $5/ton to have the sand on-site at the Jersey Shore.  What is the alternative cost of nourishment sand to the Army Corps of Engineers today?

The Corps is dredging sand from  a glacial sandbar some sixty miles offshore.  The bar is at depth, figure 80 feet.  The extraction method is by suction hose, which is effectively an airlift, where air is compressed in huge volumes and injected into the intake end of the big hose.  The air makes the water column inside the hose "lighter" by displacing some of the water mass; the result is that outside water rushes into the hose opening.  As it rushes in, it creates this turbulent flow that entrains the grains of sand from that sandbar.  The mix of water and sand then is carried upward by the suction and deposited into a big hopper on the dredge.  The water sucked up is allowed to run back off into the ocean, and the displaced sand settles into the hopper area.  Tugs tow the suction dredge back to shore, it is hooked up to a discharge pipe, and big pumps start sucking in vast gobs of water to again pick up the sand and push it through the discharge pipe, then to expel onto the beach.  The water again runs off, taking some sand with it back into the ocean, and most of the sand then piles up on the beach, where it is mechanically dragged via draglines into the final contour on the replenished beach.

As you can imagine, a huge amount of water is being pumped, and all that requires a huge amount of diesel fuel to accomplish. And when it is all done, you are moving wet sand around, which is heavy and costly.  

In the alternative, nice dry sand shows up from the rail gondola car. There is no water, so no water weight.  The dry sand is easily distributed where you want it, at low energy cost, and low labor cost. 

The acquisition cost of wet sand from the ocean bottom is enormous; figure around $17/cu.yd.  Can the rail sand come it at less than that?  I would hazard a guess that it can, likely for $3-$4 per cu.yard.  

Just because sand is available locally does not mean it is going to be cheaper than imported sand.  I would not write off Idaho sand as beach replenishment material just yet.  Or as feedstock for making cement, or anything else.  Likely to be really good stuff.  Hve to see how the numbers work. 

[Illurion + 894]

28 minutes ago, Tom Kirkman said:

I disagree.  Guess you consider me delusional them.  Trump is a master troll who drives his detractors to rage with his headfakes.

Fun game of "where in the world is Trump" currently going.  He and FLOTUS arrived in Iraq, and are currently en route to an undisclosed location in Germany. 

This week should be interesting.  POTUS is overseas, insulated, while U.S. government is in partial shutdown.  Stock markets roller coaster.  Fed crazy.  Enjoy the show.

What is also funny is that some 6 hours after Trump was airborne on Air Force One toward Iraq,   NBC news was posting on their website an article cutting him down claiming that Trump was the first President in recent history to not visit our troops overseas for Christmas.

The NBC article was picked up and reposted by a dozen other liberal rags.   And all of this was going on while he was already in Iraq.

NBC is so fickle.  They hate our troops when Trump is for them,  and love our troops when they think Trump is slighting them.

[Jan van Eck + 7,558]

x

Edited December 27, 2018 by Jan van Eck

[Enthalpic + 1,496]

36 minutes ago, Jan van Eck said:

 

My point of view is strictly that of the businessman.  Here you have this sand which is essentially free-issue at the extraction plant.  It comes pouring out of the cyclonic reactor, down a chute.  The refiner has paid nothing for the sand, plus he has paid nothing for ti coming out of the chute; those costs are all absorbed in the oil-extraction machinery.  Now the refiner has two approaches: he can pay good money to use a payloader to scoop it up, put that sand into a dump truck, drive it back to the original extraction point, dump the sand, then pay more money for scrapers and draglines to reposition the sand into a thick payer, then replace the overburden. 

Several issues

Mining companies now have to have a reclamation plan in place before the mine will be approved.  In addition to what you said they will also have to replant some native plants and minimize invasive species invasion of the disturbed land.

Secondly, I highly doubt the processed sand would ever get clean enough to be put on a shoreline / beach.  They use nasty water to extract the bitumen from the oilsands and the dirty water is reused as much a possible so the final wash of your sand is with filthy water.

Lastly, many oilsand operations just leave the sand in place SAGD

Edited December 26, 2018 by Enthalpic

[Tom Kirkman + 8,860]

20 minutes ago, Illurion said:

What is also funny is that some 6 hours after Trump was airborne on Air Force One toward Iraq,   NBC news was posting on their website an article cutting him down claiming that Trump was the first President in recent history to not visit our troops overseas for Christmas.

The NBC article was picked up and reposted by a dozen other liberal rags.   And all of this was going on while he was already in Iraq.

NBC is so fickle.  They hate our troops when Trump is for them,  and love our troops when they think Trump is slighting them.

Part 1 (Mainstream Media)

============================

Part 2 (copied from a chan board)

"Think about this for a second. People on the [chan] boards knew AF1 took off early morning and were tracking it over the Atlantic Ocean under the call signal RCH358 and followed it on to Europe. Their people who were on the board confirmed it was AF1 from England to Iraq. All this happening while the Lame Street Media had no clue. Photo’s started popping up on the board before they even hit the LSM. I guess when all you do is report fake news you never get what is really going on. Some are in for a rude awakening."

 

[Enthalpic + 1,496]

53 minutes ago, Tom Kirkman said:

I disagree.  Guess you consider me delusional them.  Trump is a master troll who drives his detractors to rage with his headfakes.

Fun game of "where in the world is Trump" currently going.  He and FLOTUS arrived in Iraq, and are currently en route to an undisclosed location in Germany.

He is either drastically misinformed or being deceitful.  A lie told for a purpose is still a lie.  You know this deep down... "master troll" and "headfakes"  - a headfake is a lie.

[Tom Kirkman + 8,860]

Just now, Enthalpic said:

He is either drastically misinformed or being deceitful.  A lie told for a purpose is still a lie.  You know this deep down... "master troll" and "headfakes"  - a headfake is a lie.

Disinformation can be useful in keeping opponents off balance and guessing.

[Enthalpic + 1,496]

2 minutes ago, Tom Kirkman said:

Disinformation can be useful in keeping opponents off balance and guessing.

QFT - you admit he lies.

You aren't delusional you are manipulative.

Edited December 26, 2018 by Enthalpic

[Jan van Eck + 7,558]

50 minutes ago, Enthalpic said:

Several issues

Mining companies now have to have a reclamation plan in place before the mine will be approved.  In addition to what you said they will also have to replant some native plants and minimize invasive species invasion of the disturbed land.

Secondly, I highly doubt the processed sand would ever get clean enough to be put on a shoreline / beach.  They use nasty water to extract the bitumen from the oilsands and the dirty water is reused as much a possible so the final wash of your sand is with filthy water.

Mr. Sorensen, it would be helpful if you actually kept up with the thread before posting opinions. 

This thread describes a novel method of extraction developed in Idaho, not your current Athabasca Oil Sands pits.  The Idaho technique uses two proprietary solvents, which are totally removed prior to the discharge of the sand from the reactor vessel.  The solvents are citrus-acid based, thus harmless to the environment, and are fully recycled. There is no "dirty water," as water is not even introduced into the separation reactor.  That is what makes the novel Idaho process so appealing. 

After eighteen years in Canada, I developed the following for Canadians:  "Put brain into gear before engaging mouth."  

Now, as to your comment on "reclamation plans:"  those Plans involve the replacement of the overburden soil.  But the processor is doing that whether or not he puts the sand back underneath.  So keeping the sand and selling it does not impact the Reclamation Plan. 

Everybody in Canada always knows more than everybody else.  It remains the primary reason that Parliament is unworkable.  

Edited December 27, 2018 by Jan van Eck

[Meredith Poor + 894]

32 minutes ago, Jan van Eck said:

My point of view is strictly that of the businessman.  Here you have this sand which is essentially free-issue at the extraction plant.  It comes pouring out of the cyclonic reactor, down a chute.  The refiner has paid nothing for the sand, plus he has paid nothing for ti coming out of the chute; those costs are all absorbed in the oil-extraction machinery.  Now the refiner has two approaches: he can pay good money to use a payloader to scoop it up, put that sand into a dump truck, drive it back to the original extraction point, dump the sand, then pay more money for scrapers and draglines to reposition the sand into a thick payer, then replace the overburden.  

Or, our entrepreneur can position a gondola car underneath that chute and let gravity fill it...

 

If bulk shipping costs are $5 per ton, then a freight car load of sand would cost $250 to transport (5 x 50 tons). A train of 100 cars (x 60 feet, or slightly longer than a mile) would therefore earn the railroad $25,000. Somehow this money looks a bit lower than breakeven, but it probably is in the ballpark.

Desirable frac sand is as spherical as possible - no sharp edges if at all possible. I'm imagining that if something is basically sedimentary, it's probably been worn smooth as it flowed downstream. I'm guessing smoothly rounded sand particles are easier on the feet than anything recent that's sharp and jagged. Ocean sand has probably been worn smooth by wave and current action.

All the options are expensive. I suspect that the least-cost outcome depends on luck more than any hard and fast numbers.

[Tom Kirkman + 8,860]

25 minutes ago, Enthalpic said:

QFT - you admit he lies.

You aren't delusional you are manipulative.

Thanks for making me laugh this morning  : )

Hey @Rodent I'd like to collect my manipulative award please.  It would be an amusing award to get   : )   : )

 

[Jan van Eck + 7,558]

2 minutes ago, Meredith Poor said:

If bulk shipping costs are $5 per ton, then a freight car load of sand would cost $250 to transport (5 x 50 tons). A train of 100 cars (x 60 feet, or slightly longer than a mile) would therefore earn the railroad $25,000. Somehow this money looks a bit lower than breakeven, but it probably is in the ballpark.

Desirable frac sand is as spherical as possible - no sharp edges if at all possible. I'm imagining that if something is basically sedimentary, it's probably been worn smooth as it flowed downstream. I'm guessing smoothly rounded sand particles are easier on the feet than anything recent that's sharp and jagged. Ocean sand has probably been worn smooth by wave and current action.

All the options are expensive. I suspect that the least-cost outcome depends on luck more than any hard and fast numbers.

Meredith, freight cars are rail-rated at maximum of 315,000 lbs, with 286,000 lbs of that for the payload.  Some rail structure cannot handle that design weight, and require loadings of no more that 268,000 lbs, or figure 130 tons.  At five bucks, it would yield the RR a gross receipt of $650/car, or $65,000 for your 100-car pull.  I think your unit train can roll at 12,000 tons, using power of 4 locomotives rated at 3,500 hp each, so it would be a 90-car train.  If you loaded gondolas at a lesser weight (which is what I had figured on) then the 4-unit power could pull 140-150 cars, as long as total weight was kept below 12,000 tons.  A little over one ton per hp. sounds about right  (not counting helper engines over the Appalachians).  If the RR salesman decides to whore the project then these numbers go out the window, but that is the way that game is played. 

Interestingly, rounded sand is not preferred for beach nourishment.  It would seem the sand particles need some sharp edges in order to hold together and not be rapidly swept out to sea in the next big storm.  One of the big problems with mining offshore legacy sandbar sand is that it is so smooth, and gets removed by wave action from the beach.  So a premium might well be paid by the Army Corps for oil sands.  My guess is that oilsand sand has some angular points, the oil itself inhibiting rounding actions.  Hey, could be.  Cheers.  

[Jan van Eck + 7,558]

On 12/23/2018 at 8:17 AM, Rodent said:

things have certainly changed since then, haven't they? we are coming to a close on the great oil price challenge! I clearly am not even remotely a contender any longer, barring some unforeseen natural disaster in at least two of the five top oil producers of the world. 😁

It's a Brave New World out there, Rodi!

[TXPower + 643]

1 hour ago, Enthalpic said:

QFT - you admit he lies.

You aren't delusional you are manipulative.

Although I offer no defense for any of President Trump’s lies, real or perceived, honesty and rationality require the truth be admitted. President Trump certainly isn’t the first and damn sure will not be the last president or world leader to lie and manipulate the truth.  

This particular president does enjoy tweeting just to watch the talking heads of the MSM and leftist/globalists explode.  Unorthodox, yes.  But silly little shills fall for it every time and feign righteous indignation.  Not sure which is more childish.

[Enthalpic + 1,496]

31 minutes ago, TXPower said:

  But silly little shills fall for it every time and feign righteous indignation.  Not sure which is more childish.

 

The president isn't supposed to be childish at all... it's like he really has tantrums.

[Enthalpic + 1,496]

1 hour ago, Jan van Eck said:

Mr. S

Stalker don't use my name; thanks. 

Novel methods don't always work out better than proven methods.

[Tom Kirkman + 8,860]

12 minutes ago, Enthalpic said:

The president isn't supposed to be childish at all... it's like he really has tantrums.

 

1 hour ago, Enthalpic said:

He is either drastically misinformed or being deceitful.  A lie told for a purpose is still a lie.  You know this deep down... "master troll" and "headfakes"  - a headfake is a lie.

It is the Mainstrean Media that is repeatedly lying.  Please re-read my earlier comment:

2 hours ago, Tom Kirkman said:

Part 1 (Mainstream Media)

============================

Part 2 (copied from a chan board)

"Think about this for a second. People on the [chan] boards knew AF1 took off early morning and were tracking it over the Atlantic Ocean under the call signal RCH358 and followed it on to Europe. Their people who were on the board confirmed it was AF1 from England to Iraq. All this happening while the Lame Street Media had no clue. Photo’s started popping up on the board before they even hit the LSM. I guess when all you do is report fake news you never get what is really going on. Some are in for a rude awakening."

 

 

===============================

I had noticed this last night on a chan board, before it was confirmed later to be Air Force 1.  Anons were already tracking it.  Later Twitter picked up on it.  Mainstream Media was clueless, as usual.

Screencaps + pics: