Is $60/Bbl WTI still considered a break even for Shale Oil

[James Regan + 1,776]

11 minutes ago, ceo_energemsier said:

Big oil has been in deepwater plus they are also going big into the shale, Shell states that their driving force is shale.

But being diversified is a very good strategy.

Having spent my life in Deepwater I beg to differ Brasil had 50+ units four years ago now we have 18.

I am talking about the dynamics of Deepwater over the past five years.

The returns from offshore plays leaves tight oil a thing of child’s play , it only suits the current lobbyists and political agenda once it’s gone it’s gone.

Being big into shale is not the same ball park.

Total respect to your position and I agree that  diversity is the key, spread the work and wealth for the whole oilfield.

[Falcon + 222]

13 minutes ago, ceo_energemsier said:

Big oil has been in deepwater plus they are also going big into the shale, Shell states that their driving force is shale.

But being diversified is a very good strategy.

Yes Shell for shale, that's shale gas. Shell wants to buy into Permian oil shale via buyout of Endeavor, but Endeavor wants too much.  Shell is not foolish.

AGREE, majors prioritize on shale.  Even today Chevron return on capital in shale betters any other investment.  Continued cost reduction in offshore is catching up

[D Coyne + 305]

22 hours ago, James Regan said:

Using the data above how many wells will need to be drilled using the production decline of typical TIght Wells declining production rates of 74, 47 & 19% for the first three years respectively?

Roughly 1500 wells completed per month in the US in 2019 and 2020.

[Falcon + 222]

28 minutes ago, James Regan said:

@Falcon After this week of meetings I am happy to agree with you. Based on Capex budgets for E&P in Brasil and Malaysia we will be seeing a high Deepwater rig intake for these regions.

Which gives me confidence that the US Tight Oil will peak sooner than most think.

Fairly loose info but just the high level view shows that big oil is heading back to Deepwater.

Before New Horizon gulf blow out ocean drilling rig rented for $500,000 day.  After went as low as $180,000 day.  Then shale oil took off.  Offshore was given up for dead. But new technology dropped costs.  Per Shell and Chevron going forward offshore breakdown now sub $30 bbl.  Gulf of Mexico coming alive. Brazil wants to double production in pre salt in 5 years.

Phoenix rising 

 

[D Coyne + 305]

19 hours ago, Wastral said:

Actually it is far greater as the expected recovery rate assumed was vastly lower by several HUNDRED percent than what is actually being obtained and the whole passel of techniques are still being discovered.  Take the Bakken for instance.  There is ~350 Billion barrels of oil in the formation and way back in 2007 timeframe it was stated as ~10% recovery.  Well, that is off by well over 200% currently and the percentage keeps increasing every year so...   Want another?  Tar sands: Assumed ~7% recovery and it currently sits at well over 20% for even the worse patch and several are hitting over 30% and moving ever upwards. 

Yea yea, tar sands are different than shale, but it proves a point.  Everyone assumed that unconventional had piss poor recovery rates.  Well initially they were correct.  Current production on the other hand is 100% proving them and you wrong. 

PS: keep your eye on CO2 replacement for water during FRACKING increasing reservoir capture another 20%+++  See thread on this forum

Wastral,

The model is based on the USGS TRR estimates and actual output data from shaleprofile .com.  The model matches actual historical output very closely, don't believe investor presentation hype, check out shaleprofile for actual data, rather than wishful thinking.

[James Regan + 1,776]

6 minutes ago, Falcon said:

Before New Horizon gulf blow out ocean drilling rig rented for $500,000 day.  After went as low as $180,000 day.  Then shale oil took off.  Offshore was given up for dead. But new technology dropped costs.  Per Shell and Chevron going forward offshore breakdown now sub $30 bbl.  Gulf of Mexico coming alive. Brazil wants to double production in pre salt in 5 years.

Phoenix rising 

 

@Falcon You Quoted “Before New Horizon gulf blow out ocean drilling rig rented for $500,000 day.  After went as low as $180,000 day.  Then shale oil took off. “

After Macondo The Deepwater market took off with day rates well above 500k/Day, More Deepwater units were ordered and built than pré Macondo 

sorry to differ but your info is incorrect.

Edited June 7, 2019 by James Regan

[D Coyne + 305]

16 hours ago, ronwagn said:

I have to disagree with all of your resources. They seem very old and very conservative. They do not consider many new offshore natural gas finds and areas that have not even been touched yet for natural gas. Nor do they consider biogas.  I appreciate your opinion and outlook. I definitely disagree that solar or wind can really compete with CNG or LNG. I do think they have a good foothold due to green support they have been given. I think that natural gas will be shown to be the best answer to the need for clean energy along with renewables which definitely are not the best answer to massive energy needs worldwide. Do not dismiss methane hydrates either.  I think that the world will come to see my point of view. You are, of course, very welcome to yours. We can both enjoy watching what happens in the future of energy. One thing is for sure, there is no worldwide energy crisis as was portrayed just nine short years ago. 

https://oilprice.com/Energy/Natural-Gas/Chinas-Demand-For-Gas-Almost-Infinite.html

https://www.lngworldnews.com/south-koreas-2018-lng-imports-hit-record-44-million-tonnes/

https://www.ogj.com/articles/print/volume-98/issue-25/special-report/indian-lng-projects-boom-in-full-swing.html

https://oilprice.com/Energy/Natural-Gas/Japan-Moves-To-Take-Over-The-Worlds-Largest-LNG-Market.html

 

Update to Mohr's analysis

https://www.researchgate.net/publication/267870440_Projection_of_world_fossil_fuels_by_country

[Falcon + 222]

23 minutes ago, James Regan said:

@Falcon You Quoted “Before New Horizon gulf blow out ocean drilling rig rented for $500,000 day.  After went as low as $180,000 day.  Then shale oil took off. “

After Macondo The Deepwater market took off with day rates well above 500k/Day, More Deepwater units were ordered and built than pré Macondo 

sorry to differ but your info is incorrect.

James Regan is wrong. 

Edited June 7, 2019 by Falcon

[ronwagn + 6,290]

10 minutes ago, D Coyne said:

Update to Mohr's analysis

https://www.researchgate.net/publication/267870440_Projection_of_world_fossil_fuels_by_country

Sorry, I am retired so have no access due to no institutional e-mail. Maybe you can give me the gist.

[Ward Smith + 6,615]

42 minutes ago, D Coyne said:

Roughly 1500 wells completed per month in the US in 2019 and 2020.

When you say "completed" do you mean drilled and cased, or fractured also? My understanding was that wells are being partially completed then fracked later. 

[James Regan + 1,776]

21 minutes ago, Falcon said:

James Regan is wrong. 

Great reply, one of my best yet. Thanks for the appointment I will book you in again for next week.

Please let me know where I was wrong as I was signing contracts and was never so busy post Macondo, I was part of the initial team to fly to the intervention of Macondo the day after it blew out.

Your statement implied that rig rates dropped because of Macondo in fact it was the opposite as the rigs being built had to be modified and/or made fit for purpose.

If rigs would have been at 180k/day after Macondo no one would have built more rigs for the next five years. 2010 - 2014 were the most profitable years for the drilling contractors.

@Falcon Don’t know what you do or where you get your info from, but you could easily google it and you will be better informed to debate a subject with someone who actually Was involved.

🤔🤔🤔🤔🤔 

[ceo_energemsier + 1,818]

1 hour ago, James Regan said:

Having spent my life in Deepwater I beg to differ Brasil had 50+ units four years ago now we have 18.

I am talking about the dynamics of Deepwater over the past five years.

The returns from offshore plays leaves tight oil a thing of child’s play , it only suits the current lobbyists and political agenda once it’s gone it’s gone.

Being big into shale is not the same ball park.

Total respect to your position and I agree that  diversity is the key, spread the work and wealth for the whole oilfield.

Before there was shale, there was deep water and ultra deepwater, with big payouts and massive reserves but also required massive upfront capital investments and took more than a decade to start paying off. I have nothing against deepwater and ultradeepwater.

I have played in both of those games and still do, putting down a billion $ for an investment to payoff in 5-10 years works well if you can sustain it as an independent and a private investor, shale offers short cycle investment and payoff. Managing a portfolio that consists of a mix of all of the above is a good strategy.

People start having oilgasms when their shale wells start hitting 1000bpd IPs, but that is nothing compared to 75,000-150,000bpd from a single offshore setup. I dont get excited for shale wells unless they record IPs of 5,000bpd and more. We have seen pads produce 12,000-18,000bpd but still doesnt beat the offshore  volumes, granted again that shale will tie up my 100mil$ with a short cycle drilling and production time versus tying up a bil$ for 5-10 years. Both have their merits if done right and for the right person and the right set of techs being deployed from start to finish. I have had  wells in Australia produce 25,000-68,000bpd and similarly in the Mid East at exponentially much lower costs than onshore US shales or elsewhere. Only set back  is , in most of the Mid East with these giant onshore wells (conventional/unconventional) you dont own the oil in most cases, unless you have a very specific JV that the Gov sees an extreme merit in giving such a JV.

Edited June 7, 2019 by ceo_energemsier
edit

[ceo_energemsier + 1,818]

12 minutes ago, James Regan said:

Great reply, one of my best yet. Thanks for the appointment I will book you in again for next week.

Please let me know where I was wrong as I was signing contracts and was never so busy post Macondo, I was part of the initial team to fly to the intervention of Macondo the day after it blew out.

Your statement implied that rig rates dropped because of Macondo in fact it was the opposite as the rigs being built had to be modified and/or made fit for purpose.

If rigs would have been at 180k/day after Macondo no one would have built more rigs for the next five years. 2010 - 2014 were the most profitable years for the drilling contractors.

@Falcon Don’t know what you do or where you get your info from, but you could easily google it and you will be better informed to debate a subject with someone who actually Was involved.

🤔🤔🤔🤔🤔 

There is a lot of lead time to get rigs and infrastructure in place for offshore. Post Macondo, with the offshore drilling ban imposed by the then regime, even though a court ruled against it, led a lot of offshore companies to go bankrupt, however there was a massive rebound within a few years. It was also a good time to be an investor looking to buy good assets at bargain prices and also out in new orders for new rigs at good prices given the uncertainty about the offshore regulations.

https://www.maritime-executive.com/article/bankruptcy-plagues-offshore-drilling-market

https://www.nola.com/news/gulf-oil-spill/2014/04/oil_and_gas_activity_in_full_r.html

 

Edited June 7, 2019 by ceo_energemsier
add

[James Regan + 1,776]

57 minutes ago, Falcon said:

James Regan is wrong. 

https://youtu.be/VPRuL9ACZeM

[footeab@yahoo.com + 2,129]

7 hours ago, D Coyne said:

Wastral,

The model is based on the USGS TRR estimates and actual output data from shaleprofile .com.  The model matches actual historical output very closely, don't believe investor presentation hype, check out shaleprofile for actual data, rather than wishful thinking.

 USGS/EIA assume basic total and recovery % and they have been horrifically wrong as they are always 5 years out of date and no their data prediction does not shadow actual production.  Picking your "prediction" after the fact is not prediction....   Mike Shellman already gave a MUCH superior rebuttal to my point regarding water cut percentage.  My only rebuttal to that is that the resource is being wasted in that too much gas is being pulled from the formation dropping URR except for those companies who are not doing so.

[Old-Ruffneck + 1,177]

5 hours ago, Wastral said:

 USGS/EIA assume basic total and recovery % and they have been horrifically wrong as they are always 5 years out of date and no their data prediction does not shadow actual production.

Say it isn't so!!! USGS and EIA both incorrect? They were wrong 30 years ago and still miscalculate reserves. EIA can't even get a weekly tab along with API. Or is manipulation? 

[Mike Shellman + 548]

5 hours ago, Wastral said:

My only rebuttal to that is that the resource is being wasted in that too much gas is being pulled from the formation dropping URR except for those companies who are not doing so.

Yours is a comment rooted in an understanding of reservoir drive (gas depletion) in shale containers; GOR is increasing rapidly in North Dakota, a sure indication of over drilling sweet spots and depletion. In other words, this situation there, and in the Permian, is similar to the situation we were in the 1920's and early 30's. The NDIC and the TRRC MUST step in in and regulate this waste of natural gas for conservation reasons. The shale oil industry must be put on a leash. The number of wells per acre of land and the distance between wells MUST be increased. The only way this can be done is thru increased regulations. People afraid of increased regulations are only after a short term buck.

@James ReganI don't believe floater rig rates went down after the Macondo incident either and it infuriates me that as monumental as that incident was, with the loss of lives, somebody can't even remember the name of the rig, or the well. I think there are a lot of folks here that  buy and sell stock's and therefore claim they "own" thousands of wells, companies and VLCC's, that sort of stuff. Day traders spend all day on the computer, its how the "learn" about the oil business. Its sort of an ego trip.

@BillKidd I hope you will follow up on API numbers for some of those ridiculous shale oil wells with 4MM BO EUR's that were mentioned. 

[James Regan + 1,776]

28 minutes ago, Mike Shellman said:

Yours is a comment rooted in an understanding of reservoir drive (gas depletion) in shale containers; GOR is increasing rapidly in North Dakota, a sure indication of over drilling sweet spots and depletion. In other words, this situation there, and in the Permian, is similar to the situation we were in the 1920's and early 30's. The NDIC and the TRRC MUST step in in and regulate this waste of natural gas for conservation reasons. The shale oil industry must be put on a leash. The number of wells per acre of land and the distance between wells MUST be increased. The only way this can be done is thru increased regulations. People afraid of increased regulations are only after a short term buck.

@James ReganI don't believe floater rig rates went down after the Macondo incident either and it infuriates me that as monumental as that incident was, with the loss of lives, somebody can't even remember the name of the rig, or the well. I think there are a lot of folks here that  buy and sell stock's and therefore claim they "own" thousands of wells, companies and VLCC's, that sort of stuff. Day traders spend all day on the computer, its how the "learn" about the oil business. Its sort of an ego trip.

@BillKidd I hope you will follow up on API numbers for some of those ridiculous shale oil wells with 4MM BO EUR's that were mentioned. 

@Mike Shellman I think the report attached explains what happened to the drilling fleets post Macondo.

https://www.hartenergy.com/exclusives/post-macondo-world-drives-new-rig-demand-18479

It was the name of the rig that @Falcon didn’t seem to know the name which spurred me on, being directly involved in the initial well kill let me see first hand what happened it was unbelievable. Maybe these people are not worth the effort but as a forum we should try to educate, I’m educated every day on this forum, lots of very intelligent people no doubts.

i don’t own Rigs or land or blocks if I did I probably wouldn’t be on this forum, I would be too busy. 👍🏻

[Tom Kirkman + 8,860]

12 hours ago, Mike Shellman said:

@James ReganI don't believe floater rig rates went down after the Macondo incident either and it infuriates me that as monumental as that incident was, with the loss of lives, somebody can't even remember the name of the rig, or the well.

Agreed.

[Tom Kirkman + 8,860]

12 hours ago, James Regan said:

@Mike Shellman I think the report attached explains what happened to the drilling fleets post Macondo.

https://www.hartenergy.com/exclusives/post-macondo-world-drives-new-rig-demand-18479

Interesting reading this article from 2011 now, with the hindsight of almost a decade.

[James Regan + 1,776]

On 6/7/2019 at 8:01 PM, ceo_energemsier said:

There is a lot of lead time to get rigs and infrastructure in place for offshore. Post Macondo, with the offshore drilling ban imposed by the then regime, even though a court ruled against it, led a lot of offshore companies to go bankrupt, however there was a massive rebound within a few years. It was also a good time to be an investor looking to buy good assets at bargain prices and also out in new orders for new rigs at good prices given the uncertainty about the offshore regulations.

https://www.maritime-executive.com/article/bankruptcy-plagues-offshore-drilling-market

https://www.nola.com/news/gulf-oil-spill/2014/04/oil_and_gas_activity_in_full_r.html

 

@ceo_energemsier I agree with you but the main brunt of the slowdown was in GOM. Worldwide Macondo didn’t shut down rigs working outside US waters. Sure we had to take a step back and most BOPs were pulled and inspected and serviced purely as DD. No one knew for months what caused the BOP to fail. There were many factors other than the BOP that caused the initial blowout.

Secondary systems became the focus and by default older units were either upgraded or sent to places in the world where they could drill without the GOM regulations.

Many items recommended by API took over a year to appear.

Unfortunately today you will find rigs drilling which “comply” to RP53 etc but you never see a reference to the actual incident.

i have read your links but in reality we did more work and built more rigs post Macondo.

Sometimes the reality is different from what we read, as I’m sure your aware whatever agenda suits the publishers agenda is often purveyed.

A lot of rigs around 2011 that were almost 30 years old were being refitted, the backlog and lead time for a new rig or BOP was very long, so anything with a Hull was being considered to retrofit.

My take away would be that more rigs and more contracts were awarded at higher day rates post Macondo.

[ceo_energemsier + 1,818]

2 hours ago, James Regan said:

@ceo_energemsier I agree with you but the main brunt of the slowdown was in GOM. Worldwide Macondo didn’t shut down rigs working outside US waters. Sure we had to take a step back and most BOPs were pulled and inspected and serviced purely as DD. No one knew for months what caused the BOP to fail. There were many factors other than the BOP that caused the initial blowout.

Secondary systems became the focus and by default older units were either upgraded or sent to places in the world where they could drill without the GOM regulations.

Many items recommended by API took over a year to appear.

Unfortunately today you will find rigs drilling which “comply” to RP53 etc but you never see a reference to the actual incident.

i have read your links but in reality we did more work and built more rigs post Macondo.

Sometimes the reality is different from what we read, as I’m sure your aware whatever agenda suits the publishers agenda is often purveyed.

A lot of rigs around 2011 that were almost 30 years old were being refitted, the backlog and lead time for a new rig or BOP was very long, so anything with a Hull was being considered to retrofit.

My take away would be that more rigs and more contracts were awarded at higher day rates post Macondo.

There was hardly any  slowdown in the global offshore oil and gas investments and or drilling because of DWH.

I know there was a lot of work on updating and upgrading/retrofitting existing rigs, modifying new rigs for the new regulations, however major offshore companies did go bankrupt and a lot of stable, good paying jobs were lost during that time period.

And in the aftermath of Macondo and the moratorium drilling was shut down and projects that had been given the green light to proceed were stalled and delayed which resulted in loss of jobs and revenues for companies and put the development of the approved projects on hold and therefore delayed the resources being produced and brought to the market. We had 3 deepwater and ultra deepwater projects on hold during that entire time and I know of dozens of GoM focused investment companies that essentially had to return all their funds to the investors during that time. But at the end they all came back and the business moved right along.

 

Edited June 9, 2019 by ceo_energemsier

[ceo_energemsier + 1,818]

15 hours ago, Mike Shellman said:

Yours is a comment rooted in an understanding of reservoir drive (gas depletion) in shale containers; GOR is increasing rapidly in North Dakota, a sure indication of over drilling sweet spots and depletion. In other words, this situation there, and in the Permian, is similar to the situation we were in the 1920's and early 30's. The NDIC and the TRRC MUST step in in and regulate this waste of natural gas for conservation reasons. The shale oil industry must be put on a leash. The number of wells per acre of land and the distance between wells MUST be increased. The only way this can be done is thru increased regulations. People afraid of increased regulations are only after a short term buck.

@James ReganI don't believe floater rig rates went down after the Macondo incident either and it infuriates me that as monumental as that incident was, with the loss of lives, somebody can't even remember the name of the rig, or the well. I think there are a lot of folks here that  buy and sell stock's and therefore claim they "own" thousands of wells, companies and VLCC's, that sort of stuff. Day traders spend all day on the computer, its how the "learn" about the oil business. Its sort of an ego trip.

@BillKidd I hope you will follow up on API numbers for some of those ridiculous shale oil wells with 4MM BO EUR's that were mentioned. 

The only way it appears you will be happy is if shale gets shut down, the oil and gas industry is regulated enough, I agree there has to a set of standards for proper use of natres, prevention of loss and waste of natres, specially when it is not replaceable and causes environmental damage. I want there to be regulations based on a scientific basis and supported by existing technologies which can prevent such waste and wilful environmental pollution, technologies that exist to manage and handle and minimise flaring, waste of clean and freshwater for all drilling operations, prevention of produced water/frac water injection wells, minimizing surface impacts to lands and habitats for natres development and extraction. Your accusations about people in general being in the oil industry to make a quick buck are pretty wide ranging, yes there are some people and companies, as there have been some in the past and will be in the future, just like any other business sector.

[James Regan + 1,776]

Interesting how Shale seems to be the driver for many big flips and ludicrous bonuses in a debt ridden part of the industry 

https://www.houstonchronicle.com/business/energy/article/Romancing-the-shale-How-Oxy-won-over-Anadarko-13961500.php

https://www.linkedin.com/feed/update/urn:li:activity:6542851337720254464

Im sure that at some point this side of the industry will stop looking like a pyramid scheme, but the actions we are seeing only help in making it look like short term flipping.

[James Regan + 1,776]

On 6/7/2019 at 7:03 PM, D Coyne said:

Roughly 1500 wells completed per month in the US in 2019 and 2020.

That’s a considerable amount of wells, I’m guessing that most are producers and by default could be considered appraisals, as the geology is well known very few wild cats or exploration?

What is the legal distance allowed between pads?

The distance Between well head won’t really matter when drilling directional although I’m sure there are rules and data to stop wells from collision or break through into and existing well.

At some point there will be a physical land mass issue and with a rate of almost 2000 wells a month 24000 a year surely this can’t continue to be a long term solution using the info above and fast depreciation of a typical Tight oil well of 74,47 & 19% losses in production at Eagle Ford for instance. ( not implying all Wells are drilled  at EF).

Im trying to visualize the view in 5 years of the amount of wells that will need to be drilled and completed to keep the net export levels currently in place, the footprint will be massive in comparison to offshore.

Can this be considered sustainable in our industry which is based on recovery of unsustainable resources?