opec
Read: OPEC THREATENED TO KILL US SHALE

(edited)

OPEC threatening US Banks and Oil Co's SHOWS JUST HOW DESPARATE THEY ARE !

 

Read the article in OILPRICE that describes the meeting at IHS Ceraweek. Where UAE oil minister threatened to destroy US shale if Trump signs NOPEC bill in Congress. 

We WILL BE AT THE MERCY OF SAUDI PRICE FIXING  > > > > >  UNTIL THE  PIPELINE BOTTLENECKS ARE RELIEVED Q4 2019 Thru Q2 2020. CACTUS II, GREY OAKS, EPIC  . . . . .  more to follow.  

US was at OPECs mercy for the longest time.  OPEC tried to kill US oil in the '70s(it worked) , in 1985 to 1986 (it worked), in 1998 to 1999 (it worked) and . . . . .   then again recently 1914 to 1915 and IT DID NOT WORK ! ! !  That is because of the US oil resurgence.  

IT DID NOT WORK OUT VERY WELL FOR THEM. The Saudi cash reserves were cut in half dropping $450 Billion. .  Brilliant ! They tried to kill US shale then by flooding market with cheap oil. I remember the Saudi oil minister in 2013 saying to a reporter, "We need $100 a barrel oil to fund our social benefit  budget.  That's a fair price". Excuse me   . . .  you need ?  The tables have turned on these arrogant OPEC National Oil Companies. .

He said in 2014 that " US SHALE costs over $70 a barrel to produce." The oil power of the world Saudi Arabia was clueless.  The cost was nowhere near $70.   Just like some US naysayers believe all shale operator costs are $50 to $60 today.  

Usually laws and regulations protect the consumer.  US outdated laws protecting Nation States national oil companies oil cartels is shameful.  Of course US oil co's want high oil prices. Hess CEO wants to force US shale to cut production.  Hess makes 55% return on $50 bbl oil on 2018 wells. Imagine what the return will be at $70 oil ? ? ? Sec of Energy Rick Perry is a lap dog of big oil. Trump is "comfortable" at $65 oil.

What has the Saudi's ever done for US ?  They have tried to cripple US oil production. Trump did sign a $200 Billion agreement with Saudi's to buy US goods.  How much of the $200 Billion has US seen ?  None.  It made a nice headline but unfortunately it was only a headline.  We saved their butt when Sadham was send Scud Missles over the border.  Many European Countries actually contributed back the actual dollar amounts.  The Saudi's repaid US  . . . .  but not really the US Govt but gave US Oil Companies rebates on oil they bought from them.  Did the Oil Co's pass those Billions onto consumer's ?  NO ! ! ! 

We do not need there oil any more. The Saudi's are not our friends.  

Trump is using it as a bargaining chip.  As Senator Graham said, "Saudi Arabia wouldn't last two weeks without the US"

Why not let the market determine price.  When US OIL Co's had Congressman Ryan sneak  the oil export bill thru Congress they argued that US was a Free Market economy.

President Trump are you gonna cave to OPEC THREATS ? ! ?  

The OPEC threat is a non-starter.  They would hurt themselves more than US shale. Many small/midsize firms will be bought out or go under.  It's all part of natural industry cycle super charged by new technology. 

There oil markets will be very volatile going forward.  

There is a lot of uncertainty   out there.

ONE THING IS CERTAIN. ___________  Starting the end of this year (1) three additional pipelines finished (2) 4 upgraded or new oil export terminals completed Q4 thru Q1 2020 (3) operators will start tracking the 9,000+  drilled but uncompleted oil wells.

No OPEC THREATS WILL STOP THE MILLIONS OF NEW BARRELS OF OIL FROM HITTING THE WORLD MARKET.

Apparently the dinner where the threats were made was attended by Big Oil and Wall Street boys.  OPEC figures they can influence Trump. After all who finances the Presidential Elections.  Trump reneged on campaign promise to do away with the largest Wall Street tax loophole " Carried Interest".

Prez Trump don't sell us out again.

Prez Trump are you going to let OPEC threat go unanswered ?

A boldfaced direct THEAT like this is all the more reason Prez Trump must sign NOPEC BILL. He campaigned on it. 

But TRUMP also campaigned on ending the biggest Wall Street tax loophole ever "Carried Interest" and reneged.

Edited by JJCar
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1 hour ago, JJCar said:

Read the article in OILPRICE that describes the meeting at IHS Ceraweek. Where UAE oil minister threatened to destroy US shale if Trump signs NOPEC bill in Congress. 

 

Prez Trump don't sell us out again.

Prez Trump are you going to let OPEC threat go unanswered ?

Good question..............

Hope he doesn't........

But his staff is filled with swamp creatures.........

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If the US passes anti-trust laws against OPEC, then 'price fixing' by the cartel will be punished by the US. This pretty much means 'free-for-all' pricing among OPEC nations (and Russia to the extent they coordinate production and pricing). Something to consider - another actor in all this is Brazil. They're ramping up production as well.

If the Saudi's (and other OPEC members) try to run down the US oil patch, they're own societies are going to come unglued (to the extent that there is any glue left). This is basically a formula for 'regime change' in various parts of the world, some of whom are American 'friends' and some of whom are at best neutral, if not actively hostile.

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I believe the market will resolve the supply and demand issue.  Probably settle around $50.00 bbl.

With Saudi B/E at $4.00 bbl that is over a 10X profit.

Technology eventually will change every industry.  It's Oil Industry turn.  It's not like OPEC will not make great returns at $50 oil. .. .. .. but nut what they want.  Not our problem.  The only way they will get $85 oil is if they start a Mideast war.  I wouldnt put it past them.

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More political nonsense. The LTO play will drown itself in debt before too long and be unable to find financing. The Saudis know this.

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2 minutes ago, JJCar said:

With Saudi B/E at $4.00 bbl that is over a 10X profit.

You are not including the mandatory social costs (money to rank and file to prevent a revolt), money to the huge, extended Royal family, etc.

Factor all those required costs in and the Saudis actually need somewhere around $80 oil to break even.

Why do you think the Saudi royals keep pushing for $80 oil?

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2 minutes ago, Tom Kirkman said:

You are not including the mandatory social costs (money to rank and file to prevent a revolt), money to the huge, extended Royal family, etc.

Factor all those required costs in and the Saudis actually need somewhere around $80 oil to break even.

Why do you think the Saudi royals keep pushing for $80 oil?

I believe the market will resolve the supply and demand issue.  Probably settle around $50.00 bbl.

With Saudi B/E at $4.00 bbl that is over a 10X profit.

Technology eventually will change every industry.  It's Oil Industry turn.  It's not like OPEC will not make great returns at $50 oil. .. .. .. but nut what they want.  Not our problem.  The only way they will get $85 oil is if they start a Mideast war.  I wouldnt put it past them.

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(edited)

I agree Saudi's want/need $85 oil. 

I want a new Mercedes, 65' Hatteras yacht, and a Palm Beach waterfront villa. . . . . but you can't always get what you want. . . . . 

 

 

Edited by JJCar
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(edited)

On 3/14/2019 at 11:10 PM, Douglas Buckland said:

More political nonsense. The LTO play will drown itself in debt before too long and be unable to find financing. The Saudis know this.

You are giving the Saudi's a lot more credit than they deserve. Their oil cash machine is ending. 

As I just stated the Saudi's just tried to destroy US shale 2014 to 2015.  They destroyed their national cash reserves instead. Their reserves were cut in half  . . .  LOSING $450 Billion.  Brilliant .  Who's calling the shots over there ?.  

I agree with you that some (small/midsize operators) are overburdened with debt. They thought oil was going to stay at $100 bbl.  That all changed.  They will sell out or go out of business anyway.

Saudi Arabia   . . . .  Say goodbye to your ARAMCO IPO.  Say Goodbye to your "Vision 2030"  Say goodbye to your "Invest Saudi Arabia" program.  All the cheerleading by Goldman Sachs will not save them.  Saudi Arabia is going to have to learn to live within their means.  To live with $50 bbl oil.

Please Saudi Arabia start pumping more oil.   But before you start I recommend transferring your wealth to an European Bank and buy a nice villa in Zurich or you may get Khashoogied. One bad turn deserves another.

Edited by JJCar
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55 minutes ago, Meredith Poor said:

another actor in all this is Brazil. They're ramping up production as well.

 

I agree.  Brazil said increasing production by 2 million bbls by 2024 and additional 6 to 7  million bbls by 2030.

Plus Exxon new oil found in Guyana to deliver 2 million bbls by 2023.

I could go on and on.  Too much oil.  

Saudi's have a real problem.  Glad it's not US problem.  

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19 minutes ago, JJCar said:

I agree.  Brazil said increasing production by 2 million bbls by 2024 and additional 6 to 7  million bbls by 2030.

Plus Exxon new oil found in Guyana to deliver 2 million bbls by 2023.

I could go on and on.  Too much oil.  

Saudi's have a real problem.  Glad it's not US problem.  

JJ, You hit it on the head. State of the art technology will be used all over the world in the next decade. Oil and natural gas will be a low priced commodity in almost all areas. 

My hope is that natural gas is used for base electrical production, and as many large vehicles as possible, trucks, ships, locomotives, etc. Bye bye pollution problems as we know them. 

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3 hours ago, JJCar said:

Read the article in OILPRICE that describes the meeting at IHS Ceraweek. Where UAE oil minister threatened to destroy US shale if Trump signs NOPEC bill in Congress. 

US was at OPECs mercy for the longest time.  OPEC tried to kill US oil in the '70s(it worked) , in 1985 to 1986 (it worked), in 1998 to 1999 (it worked) and . . . . .   then again recent 1914 to 1915 and IT DID NOT WORK ! ! !  That is because of the US oil resurgence.  

It did not work out very well for them .The Saudi cash reserves was cut in half dropping $450 Billion. .  They tried to kill US shale already by flooding market with cheap oil. The Saudi oil minister in 2013 said to a reporter, "We need $100 a barrel oil to fund our social benefit  budget.  That's are fair price.  He said in 2014 that " US SHALE costs over $70 a barrel to produce." The oil power of the world was clueless.  The cost was nowhere near $70.   Just like some US naysayers believe all shale operator costs are $50 to $60 today.  

Usually laws and regulations protect the consumer.  US outdated laws protecting Nation States national oil companies oil cartels is shameful.  Of course US oil co's want high oil prices. Hess CEO wants to force US shale to cut production.  Hess makes 55% return on $50 bbl oil on 2018 wells. Imagine what the return will be at $70 oil ? ? ? Sec of Energy Rick Perry is a lap dog of big oil. Trump is "comfortable" at $65 oil.

Trump signed a $200 Billion agreement with Saudi's to buy US goods.  How much of the $200 Billion has US seen ?  None.

We do not need there oil any more. The Saudi's are not our friends.   Trump is using it as a bargaining chip.  As Senator Graham said, "Saudi Arabia wouldn't last two weeks without the US"

Why not let the market determine price.  When US OIL Co's had Congressman Ryan sneak  the oil export bill thru Congress they argued that US was a Free Market economy.

President Trump are you gonna cave to OPEC THREATS ? ! ?  

The OPEC threat is a non-starter.  They would hurt themselves more than US shale. Many small/missile firms will be bought out or go under.  It's all part of natural industry cycle super charged by new technology. 

There oil markets will be very volatile going forward.  

There is a lot of uncertainty   out there.

ONE THING IS CERTSIN.  Starting the end of this year (1) three additional pipelines finished (2) 4 upgraded or new oil export terminals completed Q4 thru Q1 2020 (3) operators will start tracking the 9,000+  drilled but uncompleted oil wells.

No OPEC THREATS WILL STOP THE MILLIONS OF NEW BARRELS OF OIL FROM HITTING THE MARKET.

Apparently the dinner where the threats were made was attended by Big Oil and Wall Street boys.  OPEC figures they can influence Trump. After all who finances the Presidential Elections.  Trump reneged on campaign promise to do away with the largest Wall Street tax loophole " Carried Interest".

Prez Trump don't sell us out again.

Prez Trump are you going to let OPEC threat go unanswered ?

A bold direct THEAT like this is all the more reason Prez Trump must sign NOPEC BILL.

Trump won't sign the bill.

It is easier for Washington to manipulate the oil market using a united OPEC (controlled by the Saudis) than when every member decides to produce what they can.

America controls Saudi Arabia and Saudi Arabia controls OPEC. Life is easier in Washington that way.

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@Uduak You do realize that even with the 'shale oil miracle', that the US still imports roughly twice what they export (EIA numbers), don't you?

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5 hours ago, ronwagn said:

I agree.  Brazil said increasing production by 2 million bbls by 2024 and additional 6 to 7  million bbls by 2030

Brazil is increasing production.  Big oil companies are investing, paying big money to get into deep water, deep reservoir fields.  Break even costs above $60.  With the massive investments involved they wont be interested unless the oil price is around $80.  So these companies are expecting that price.

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(edited)

5 hours ago, Douglas Buckland said:

@Uduak You do realize that even with the 'shale oil miracle', that the US still imports roughly twice what they export (EIA numbers), don't you?

Only a little more than half is used domestically .. . .  the rest is refined for export.

Big Oil uses tax tricks and transfer pricing to take advantage of US.  For example Exxon will sell their cheap foreign oil to Exxon Trading Corp at cost who's World Headquarters is a P.O. Box in Bermuda.  Exxon trading will sell it to Exxon US at highly inflated price.  After refining Exxon US shows no US profits.  The Exxon Trading in some tax free domicile shows all the profit and receives no tax burden. 

Edited by JJCar
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10 hours ago, Tom Kirkman said:

You are not including the mandatory social costs (money to rank and file to prevent a revolt), money to the huge, extended Royal family, etc.

Factor all those required costs in and the Saudis actually need somewhere around $80 oil to break even.

Why do you think the Saudi royals keep pushing for $80 oil?

Tom good points but I think what we would see in a knee jerk reaction from the Kingdom and in reality that the US Shale market is not consolidated, it’s walking on thin ice just as a business model let alone the actual long term physical dynamics of working these fields. It might only take a short term measure and it may be enough to prove how fragile US Shale is. The Kingdom can weather a storm for an extended period, I don’t believe Shale would recover and it would certainly kill off the debt  ridden minor players. 🤔🤔

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...,.............

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11 hours ago, JJCar said:

I agree.  Brazil said increasing production by 2 million bbls by 2024 and additional 6 to 7  million bbls by 2030.

Plus Exxon new oil found in Guyana to deliver 2 million bbls by 2023.

I could go on and on.  Too much oil.  

Saudi's have a real problem.  Glad it's not US problem.  

If I remember correctly, Exxon is having some serious conflicts about Guyana offshore operations.  I know Venezuela stopped Exxon's seismic operations for a disputed claim with who holds the rights to the area where Exxon was shooting offshore.   Also, like many other countries where the Majors explore and are successful the wells will be nationalized and like Venezuela, go down the drain.   

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13 hours ago, Tom Kirkman said:

You are not including the mandatory social costs (money to rank and file to prevent a revolt), money to the huge, extended Royal family, etc.

Factor all those required costs in and the Saudis actually need somewhere around $80 oil to break even.

Why do you think the Saudi royals keep pushing for $80 oil?

Tom,

So something like $4 Opex and $46 in bribes ?

I believe only some of the Saudi fields can produce at the $4 cost I think I remember reading some where at $12 Opex.

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(edited)

11 hours ago, JoMack said:

If I remember correctly, Exxon is having some serious conflicts about Guyana offshore operations.  I know Venezuela stopped Exxon's seismic operations for a disputed claim with who holds the rights to the area where Exxon was shooting offshore.   Also, like many other countries where the Majors explore and are successful the wells will be nationalized and like Venezuela, go down the drain

EXXON encroached on some disputed area btw Guhyana and Venezuela.  They moved.

EXXON and partner Hess have already found 5 Billion Barrels of oil. 

All the oil will be processed , pumped and transported to tankers on Floating Processing Ships offshore.. None of the facilities or oil recovered will hit Guhyana's shores.

Good luck if Guhyana wants to nationalize and manage the oil.

Maybe Maduro will be exiled to Guhyana after he gets booted from Venezuela.  He can nationalize EXXON's assets there  like he did to them (and Conoco) in Venezuela.  

Edited by JJCar
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9 hours ago, Douglas Buckland said:

@Uduak You do realize that even with the 'shale oil miracle', that the US still imports roughly twice what they export (EIA numbers), don't you?

Doesn't matter. We only need produce and export enough to keep oil prices honest. If anyone is being killed it's OPEC. By shale. IMF said Saudi needed 80/85 to balance their budget. That probably means they need at least 100 to balance, which matches up with all their PR lately about doing whatever it takes...they're desperate.

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(edited)

19 hours ago, JJCar said:

Saudi Arabia   . . . .  Say goodbye to your ARAMCO IPO.  Say Goodbye to your "Vision 2030"  Say goodbye to your Invest Saudi Arabia program.  All the cheerleading by Goldman Sachs will not save them.  They are going to have to learn within their means.  

Please Saudi Arabia start pumping more oil.   But before you start I recommend transferring your wealth to an European Bank and buy a nice villa in Zurich or you may get Khashoogied. One bad turn deserves another.

The IPO will always be unlikely for an absolute need to avoid transparency, and the fact the operating systems and management in Aramco are not evenly remotely GAAP capable. Of course they can't tell the King, or MBS how it's really run, so the last person to know it's impossible will be someone in the House of Saud.

Vision 2030, the direction has to happen or things will get seriously ugly, but 2030 as written and sold. Never a chance in Hades. The rate or return forecasted based on investing the monies from IPO would have been the best ever, better than Singapore or Norway, two countries with sizable national investment funds. The danger IK is they use the investment funds for vanity mega projects and spreading the dole, instead of properly investing and acknowledging the need for market based actions, not "they will be done" as anointed by MBS.

The money has been leaving at quite the clip, though now they have to be more careful to slide it out or an extended stay at whatever passes for the Ritz now. So you launch a big project, have an overseas entity get overpaid, that gets the money out, and you get a clip of it, and best of all, had the government funded it. That cycle must quit. The great losers are the run of the mill citizens.

Edited by John Foote
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(edited)

Yes, I agree 100X over.

RE: Vision 2030. . . . what are they going to diversify the economy to that is not related to oil ? 

You are spot on re IPO.  Goldman Ssch's bankers are not stupid ?  Are they ? What is their end game ?

My personal view is that things will not end well for the Kingdom.  

The ordinary citizens will get screwed. The population is young with over 60% under 30 years old and many unemployed. 

Could get very volatile. Would you put good money into their economy ?

They say desperate people do desperate things.  Prince MBS was  so concerned about a Saudi journalist working in Virginia that they cut him up when he went to a Saudi consulate to pick up his marriage authorization.  What happens when/if oil settles under $50 a bbl. and the dissidents in the east are not receiving their checks.

I seriously wonder if the Middle East will ever stabilize. 

Trump wants to use Saudi prince MBS to broker an Israeli/Palestinian deal.  What does Trump have to give Saudi's for there efforts to close that deal.

It's hard to keep track.  The  Rusians and Chinese are getting more and more involved beyond what they were previously. 

The more stakeholders may be beneficial . . . or maybe not.

Edited by JJCar
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(edited)

16 hours ago, NWMan said:

Brazil is increasing production.  Big oil companies are investing, paying big money to get into deep water, deep reservoir fields.  Break even costs above $60.  With the massive investments involved they wont be interested unless the oil price is around $80.  So these companies are expecting that price.

Read Shell Oil's latest 10K . . .  New technology is not limited to shale oil alone.  Shell said Deep water oil now and going forward produced at sub $30 bbl. 

Your $60 bbl number is 2010 vintage.  

We are only in 2nd inning of both shale and deep water technology deployment.  

 

Edited by JJCar
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22 hours ago, ronwagn said:

JJ, You hit it on the head. State of the art technology will be used all over the world in the next decade. Oil and natural gas will be a low priced commodity in almost all areas. 

My hope is that natural gas is used for base electrical production, and as many large vehicles as possible, trucks, ships, locomotives, etc. Bye bye pollution problems as we know them. 

I can see more power-plants coming online when more pipeline capacity to the east gets built. That's a good thing. Semi-trucks I not so sure about. As long as diesel stay under 3.00 a gallon probly not much investment to switch. I am also in favor of more nuke power. More bang for the buck.

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