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

[ceo_energemsier + 1,818]

6 minutes ago, William Edwards said:

Quantities still must match. Producers and traders usually ignore that fact.

There is ever growing demand for new streams of petchem feedstock, which will not slow down, globally new petchem demand will keep growing , there maybe some matching issues but they will be resolved over time. For me as long as I have 600kbpd+ of ultra lights and condensates , I will be vacationing in Monaco

The supply may exceed the demand for a while but I believe it will stabilise. With the construction of several new ultra clean fuels refineries along the USGC, and elsewhere in TX , and a few more planned around strategic locations around the globe, their feedstock of choice is the ultralight/condensate hydrocarbons streams.

[William Edwards + 708]

4 hours ago, ceo_energemsier said:

There is ever growing demand for new streams of petchem feedstock, which will not slow down, globally new petchem demand will keep growing , there maybe some matching issues but they will be resolved over time. For me as long as I have 600kbpd+ of ultra lights and condensates , I will be vacationing in Monaco

The supply may exceed the demand for a while but I believe it will stabilise. With the construction of several new ultra clean fuels refineries along the USGC, and elsewhere in TX , and a few more planned around strategic locations around the globe, their feedstock of choice is the ultralight/condensate hydrocarbons streams.

Of course the supply and consumption will match, eventually, as allowed by inventory accumulation/drawdown. The fun is in the path getting there. And as the Canadian producers can tell you, that path can be miserable. Your "head in the sand" approach on a timely match, common for producers, seems reflective of that in the 1930's when the US producers ,who could not get $0.10/B for their oil, pumped it into drainage ditches. No revenue, but they produced!!!

I am merely suggesting a possible severe price impact caused by a global industry who, apparently, believes that if you monkey with price, quality, specs and hold your mouth just right you can put ten gallons of oil in a five gallon bucket. So far that has not been possible.

[ceo_energemsier + 1,818]

55 minutes ago, William Edwards said:

Of course the supply and consumption will match, eventually, as allowed by inventory accumulation/drawdown. The fun is in the path getting there. And as the Canadian producers can tell you, that path can be miserable. Your "head in the sand" approach on a timely match, common for producers, seems reflective of that in the 1930's when the US producers ,who could not get $0.10/B for their oil, pumped it into drainage ditches. No revenue, but they produced!!!

I am merely suggesting a possible severe price impact caused by a global industry who, apparently, believes that if you monkey with price, quality, specs and hold your mouth just right you can put ten gallons of oil in a five gallon bucket. So far that has not been possible.

In that event, we will see shut ins, and company shut downs!!! but the producers/traders who have secured a good pipeline for their products (consumers) will be satisfy their volumetric obligations, anything extra they place is a bonus and when there is an "extreme" oversupply, crack open the storage tanks if enough is available, if mot that "bonus" gravy profit is gone, and companies shut in and shut down. However, the demand for petchem feedstocks now and into the future exceeds the surplus in the coming years and with new mega petchem projects that will be coming online , I think the 200,000-500,000bpd of WTL and condensates have hungry mouths waiting.

[William Edwards + 708]

1 hour ago, ceo_energemsier said:

In that event, we will see shut ins, and company shut downs!!! but the producers/traders who have secured a good pipeline for their products (consumers) will be satisfy their volumetric obligations, anything extra they place is a bonus and when there is an "extreme" oversupply, crack open the storage tanks if enough is available, if mot that "bonus" gravy profit is gone, and companies shut in and shut down. However, the demand for petchem feedstocks now and into the future exceeds the surplus in the coming years and with new mega petchem projects that will be coming online , I think the 200,000-500,000bpd of WTL and condensates have hungry mouths waiting.

Watching the next year or two will be interesting, to say the least. Let us stay tuned!

[ceo_energemsier + 1,818]

5 minutes ago, William Edwards said:

Watching the next year or two will be interesting, to say the least. Let us stay tuned!

Make some $$$$ on these new hydrocarbons streams while staying tuned!!!

[Ward Smith + 6,615]

12 hours ago, ceo_energemsier said:

There is ever growing demand for new streams of petchem feedstock, which will not slow down, globally new petchem demand will keep growing , there maybe some matching issues but they will be resolved over time. For me as long as I have 600kbpd+ of ultra lights and condensates , I will be vacationing in Monaco

The supply may exceed the demand for a while but I believe it will stabilise. With the construction of several new ultra clean fuels refineries along the USGC, and elsewhere in TX , and a few more planned around strategic locations around the globe, their feedstock of choice is the ultralight/condensate hydrocarbons streams.

Let's not forget naptha

[ceo_energemsier + 1,818]

7 hours ago, Ward Smith said:

Let's not forget naptha

Dont you just love the smell of Naptha in the morning? LOL

[David Jones + 84]

My guess is that they should hope it's the breakeven. As I've said before, if prices go beyond $100 for any serious timeframe it'll be very hard on demand and even $80 seems like a lot these days (Brent for both). Either way, I give the oil industry another 20 years, maybe 30. Then the gravy train will be coming to an end one way or another. If we are unlucky the industry will go out with a bang dragging the world into a depression as it goes, my hope is for a whimper. I would urge people here to move to alternatives now but I know most of you won't listen so I'll just sit back and watch the show while occasionally reminding you all how this will likely turn out.

[Refman + 207]

Remember that WTI should increase in price substantially next year when more pipelines come online. We should see price parity with Brent crude soon after take away constraints are removed.

[Ward Smith + 6,615]

2 hours ago, David Jones said:

My guess is that they should hope it's the breakeven. As I've said before, if prices go beyond $100 for any serious timeframe it'll be very hard on demand and even $80 seems like a lot these days (Brent for both). Either way, I give the oil industry another 20 years, maybe 30. Then the gravy train will be coming to an end one way or another. If we are unlucky the industry will go out with a bang dragging the world into a depression as it goes, my hope is for a whimper. I would urge people here to move to alternatives now but I know most of you won't listen so I'll just sit back and watch the show while occasionally reminding you all how this will likely turn out.

Not to worry. According to Occasional Cortex, we're all doomed in 12 years tops, so why worry about peak oil? Remember, according to all those geniuses like you at the Oildrum, the situation was hopeless when the US was producing 4 million bbls/day, and it was All downhill from there. Never mind that we're at 12 million BOE bbls/day now. It's all an illusion. 

[canadas canadas + 136]

Since crude oil is derived from oil shale under heat, pressure, time, etc., naturally in the earth, is this shale oil derived from heaters placed into oil shale formations to heat/cook the oil shale to release crude oil or is the oil shale mined and then heated/cooked to get the crude oil out of it?  

[ceo_energemsier + 1,818]

1 hour ago, canadas canadas said:

Since crude oil is derived from oil shale under heat, pressure, time, etc., naturally in the earth, is this shale oil derived from heaters placed into oil shale formations to heat/cook the oil shale to release crude oil or is the oil shale mined and then heated/cooked to get the crude oil out of it?  

https://www.streetwisereports.com/article/2010/11/08/the-difference-between-oil-shale-and-shale-oil.html

[William Edwards + 708]

8 hours ago, Refman said:

Remember that WTI should increase in price substantially next year when more pipelines come online. We should see price parity with Brent crude soon after take away constraints are removed.

Yes, and with Brent at parity with Arab Light at $25/B.

[Itsover In2020 + 1]

Where/s Rathman?  He seems to be the expert on everything....

[David Jones + 84]

10 hours ago, Ward Smith said:

Not to worry. According to Occasional Cortex, we're all doomed in 12 years tops, so why worry about peak oil? Remember, according to all those geniuses like you at the Oildrum, the situation was hopeless when the US was producing 4 million bbls/day, and it was All downhill from there. Never mind that we're at 12 million BOE bbls/day now. It's all an illusion. 

Apparently you don't understand that an insult is not an argument, very common amongst people with similar opinions. No need to be a genius to understand this issue but obviously if your head is stuck in the ground digging for goodies your view might be obscured. Like a mole that's in someone's backyard unaware of the fact that a granny with a shovel is about to separate it into two parts. I've seen it happen, it's not pretty. As I said, 20-30 years and see if you get 100 bucks per barrel ever again or even if you do if that juicy price point doesn't turn sower within a few years.

[Auson + 123]

On 5/24/2019 at 1:26 AM, William Edwards said:

Was the market crazy when it jumped 15% in January? Or is it just crazy when the direction does not conform to your wishes?

William,

With respect thats not the way the chart reads there was no 15% jump in January but a 15% sharp drop in December, which was crazy hence the rapid 15% bounce back to whence it came.

If you remember the world was falling apart just after Christmas with a broad sell off in the markets and Trump duping OPEC with the Iran sanctions wavers.

[James Regan + 1,776]

5 hours ago, David Jones said:

Apparently you don't understand that an insult is not an argument, very common amongst people with similar opinions. No need to be a genius to understand this issue but obviously if your head is stuck in the ground digging for goodies your view might be obscured. Like a mole that's in someone's backyard unaware of the fact that a granny with a shovel is about to separate it into two parts. I've seen it happen, it's not pretty. As I said, 20-30 years and see if you get 100 bucks per barrel ever again or even if you do if that juicy price point doesn't turn sower within a few years.

I think there is some truth that we have definitely hit the peak. In my lifetime in the E&P sector working all corners of the globe for US Companies with US Hardware we would constantly ask the question WTF are we doing here, be it deepest darkest Africa, Arctic East, Arctic West, Baku or Patagonia. The common denominator was the fact we were working for US IOCs and the reason was that in order to protect the USAs regional oil reserves for a later date, how much later we did not know “ never in your life time son” I was told, I’m now 52 at 20 you believe anything! So after seeing convoys of VLCCs round tripping from Offshore Angola to Galveston and oil wells being produced at negligent and reckless rates in order to rob as much oil as possible as fast as possible, I have come to the conclusion that we have reached that time and the plan seems to be working that plan to take the worlds oil and then fall back on untapped regional oil (Shale) and try to exact world domination. 

I just thought it would never be in my lifetime.....🤔

Edited May 26, 2019 by James Regan

[Auson + 123]

7 minutes ago, James Regan said:

I think there is some truth that we have definitely hit the peak. In my lifetime in the E&P sector working all corners of the globe for US Companies with US Hardware we would constantly ask the question WTF are we doing here, be it deepest darkest Africa, Arctic East, Arctic West, Baku or Patagonia. The common denominator was the fact we were working for US IOCs and the reason was that in order to protect the USAs regional oil reserves for a later date, how much later we did not know “ never in your life time son” I was told, I’m now 52 at 20 you believe anything! So after seeing convoys of VLCCs round tripping from Offshore Angola to Galveston and oil wells be produced reckless rates in order to rob as much oil as possible as fast as possible, I have come to the conclusion that we have reached that time and the plan seems to be working that plan to take the worlds oil and then fall back on untapped regional oil (Shale) and try to exact world domination. 

I just thought it would never be in my lifetime.....🤔

James Regan,

Interesting thoughts there, are we calling peak oil as peak oil production or peak oil demand. I notice they are often conflated ?

[James Regan + 1,776]

19 minutes ago, Auson said:

James Regan,

Interesting thoughts there, are we calling peak oil as peak oil production or peak oil demand. I notice they are often conflated ?

Auson, yep the use of these buzz words etc always attract the trolls so I’m glad you brought it up (by the way not calling you a troll) 🙏🏻 . The Peak I am referring to is based on my lifetime of experience which this industry has passed through it all. We have always had ups and downs in the market but never like this time. This is the worst position the E&P sector has ever seen. So my Peak comment would be that we have reached the Peak of Mass Exploration and plateaued then fallen off and I don’t ever see it returning to how it was 5 years ago. Demand and production will continue but nothing like it was. IMHO

[Auson + 123]

4 minutes ago, James Regan said:

Auson, yep the use of these buzz words etc always attract the trolls so I’m glad you brought it up (by the way not calling you a troll) 🙏🏻 . The Peak I am referring to is based on my lifetime of experience which this industry has passed through it all. We have always had ups and downs in the market but never like this time. This is the worst position the E&P sector has ever seen. So my Peak comment would be that we have reached the Peak of Mass Exploration and plateaued then fallen off and I don’t ever see it returning to how it was 5 years ago. Demand and production will continue but nothing like it was. IMHO

James,

Well I find that very interesting as it is contrary to the narrative. It seems only as much as 10 years ago we were being told Oil is going to run out soon. Now we are being told we have more Oil than we know what to do with.

Can I ask your view on the finds in Mexico, Argentina, Falklands, and Chinese Fracking ? 

[James Regan + 1,776]

1 minute ago, Auson said:

James,

Well I find that very interesting as it is contrary to the narrative. It seems only as much as 10 years ago we were being told Oil is going to run out soon. Now we are being told we have more Oil than we know what to do with.

Can I ask your view on the finds in Mexico, Argentina, Falklands, and Chinese Fracking ? 

Auson, in my humble opinion! Mexico is a mirror of the US GOM it has huge reserves but bad infrastructure caused by any typical government ran third world oil company, lots of opportunities for both Mexico and US investment.

Argentina Brasil is a mirror of West Africa oil reserves from north to south of the continent. Argentina is appearing to open up more and will become a player at what point I’m not sure.

The Falkland Islands has reserves but no one knows how much, well it’s not in the public domain, every well I have been involved with was a “tight hole” meaning no information is divulged even to the point of onboard when drilling we had minimal communication with the outside world. Margaret Thatcher went to war for this little island with a few sheep on it, I think there was more to it.

Chinese fracking I have no idea to be honest with you.

We still need oil and will do for some time I don’t see any other commodity being able to replace the miríade of wonders the black stuff provides and has provided.

[William Edwards + 708]

2 hours ago, Auson said:

William,

With respect thats not the way the chart reads there was no 15% jump in January but a 15% sharp drop in December, which was crazy hence the rapid 15% bounce back to whence it came.

If you remember the world was falling apart just after Christmas with a broad sell off in the markets and Trump duping OPEC with the Iran sanctions wavers.

Apparently I try to be more objective than you, Auson. The chart does not read -- we do. The numbers are what they are and the spin is what we make it to be. Ofttimes that spin merely reflects the pre-conceived notions of the spinner. 

My reading continues to be that we are still declining, based upon a 30-year cycle, from the 2012-14 bubble. My assessment is supported by both historical data and logic. Can you make a similar case for your "spin"?

I might also caution that reactions to daily, hourly or weekly "world falling apart" attitudes are probably not reliable.

Edited May 26, 2019 by William Edwards

[Ward Smith + 6,615]

11 hours ago, David Jones said:

Apparently you don't understand that an insult is not an argument, very common amongst people with similar opinions. No need to be a genius to understand this issue but obviously if your head is stuck in the ground digging for goodies your view might be obscured. Like a mole that's in someone's backyard unaware of the fact that a granny with a shovel is about to separate it into two parts. I've seen it happen, it's not pretty. As I said, 20-30 years and see if you get 100 bucks per barrel ever again or even if you do if that juicy price point doesn't turn sower within a few years.

I'll admit I called a congresswoman Occasional Cortex. That might be an insult and it's certainly amusing (at least to me), but the reality is probably closer to Rare-if-ever Cortex. You I called a genius, perhaps that was an insult? Were you really there on oildrum, beating the drumbeat of Hubbert's Peak? The oil is there, the will to produce it? Who knows? 

Will we see $100 oil again? Absolutely, guaranteed. But does that indicate Greater value? Or will it indicate a devaluation of our currency? Could be a bit of both. 

[Refman + 207]

19 hours ago, William Edwards said:

Yes, and with Brent at parity with Arab Light at $25/B.

You really think crude will drop to $25? If so, why?

[Mike Shellman + 548]

A hypothetical break'even oil price is the worse metric ever invented to analyze the future of US shale oil. It discounts completely the cost of paying back long term debt and all those tens of thousands of shale oil wells that were drilled in America 5-6 years ago that now can never be paid back. It implies that nobody entering into their 2nd marriage has baggage. Every shale oil company in America is racked with debt. 

Break'even changes regularly with regard to product prices, hedging, debt maturities, interest rates, slowing production and associated decline in revenue streams, market availability, market deductions, the quality of LTO and where, and if, it can be utilized, the value of the dollar, American energy policy, unrest in the Middle East and a host of other issues; the longer legacy debt is deferred, the harder it gets to pay it back and the higher "break'even" prices get.

Break'even was invented by the shale oil industry just a few years ago for a reason...it implies that any price over break'even means the shale oil industry is kicking ass. Its good news and no body in America likes bad news; the US shale oil industry is a master of deceit. The truth about shale oil profitability is in the current financial condition of the US shale oil industry and the SEC filings it must lawfully make, every quarter;  whether it is profitable, or not, and how fast it can get out of long term debt before its assets no longer cover its liabilities. Everything else is essentially just...bullshit. Don't be conned by break'even. Its meaningless. The MSM loves it because it is not capable of understanding well economics or doing its SEC homework.  

 

Edited May 27, 2019 by Mike Shellman