Will We Ever See 100$+ OIL?

[Boat + 1,324]

Let’s play Captain Obvious and say flaring is stupid. Period. When the price for oil and nat gas are high enough to support pipelines and the necessary equipment for the successful clean capture and transportation of these products the wells will be successful and drilled.

To pollute the air and environment for petroleum products  because flaring the only way to be economically viable should be looked on as criminally stupid. Lock-em-up. Lol

[Old-Ruffneck + 1,246]

5 hours ago, Gerry Maddoux said:

$100 oil? I would like to see it, and I'm about as conservative as they get. I make my living from oil and gas. The price of crude oil has been insufficient to support various and sundry needs of producers for several years now. Saudi Arabia needs at least $85 oil in order to support their welfare state, which is growing. Many OPEC countries needs higher prices to allow them to emerge from Third World status. The US needs oil close to $100 to support shale oil drilling, since nine of ten drillers are currently losing money. Would $100 oil wreck the market? Sure, it would lead to another glut, another crash, then a rash of bankruptcies, and so on.

You didn't explain how you make your living from oil and gas. I would assume your a heavy investor (maybe owner on which is being drilled), but at any rate one that invests in oil takes a risk. Been that way since time began. Oil is extremely erratic an volatile and one that counts on making money from oil is playing Russian roulette. If your land owner and was blessed with black goo under your property, consider yourself a lucky fellow and take what ya can get. 100$ oil is too greedy and will self check itself and crash as you mentioned and could drop below the magic comfort 55$ area where most are still making money. If it dropped to 38$ which it did when KSA tried to kill the Frackin' but only made it stronger. So be very careful what you wish for. Shale doesn't need 100$ oil to make it. That is pure fallacy. Somewhere in this thread is cost break-even and there are plenty of rigs making money with oil at $55.

[J.mo + 165]

You upstream guys are a hoot man. Lol. 

No one else in the chain of business gets to pick their price, volume/production or their returns like you guys. Yet its constantly you guys that piss and moan lmao

Edited July 22, 2019 by J.mo

[Gerry Maddoux + 3,627]

Companies that were prescient (three or four, among them Pioneer), and those able and willing to pay up to $40,000/Acre for minerals in the absolute sweet spot of the Delaware Basin can break even at a very low price point--maybe as low as $40/bll. There aren't many of those sweet spots with one thick layer of shale atop another, sometimes five layers in all. Those ultra-sweet spots are being drilled frenetically. Wood-Mackenzie said the other day, "Everything is accelerating in the Permian, including decline rates." It turns out that relative permeability goes along with ease of fracking shale. If a child well--an infill--is drilled too close to the parent well--basically a wildcat, at least for that tract--then the pressure sumps off and not only is the child well much less productive than the parent well but it may also damage its powerful parent. The Encana cubical system, trying to put a whole bunch of wells 330 feet apart, was a debacle because of this parent-child problem. That means the ones that can afford to--Chevron, Exxon--will spread out. The proper spacing is variable, but up to 1,000 feet one from the other in order to avoid interference. The decline rate is variable too but is generally close to 70% the first year. I wasn't trying to be either negative about shale oil, which I like, or nasty about the overall situation. However, the title of this thread is, "Will we ever see $100+ oil?" I made the point--perhaps badly--that we need higher prices than we currently have, but that $100 oil would probably come under only two potential circumstances: chaos in the Middle East or a Democrat regime. I'd like very much to see Brent at about $80: that would keep the Saudis happy, and would also allow the army of shale drillers a little breathing room. I don't wish to see--once again--a world held hostage by Big Oil and the Saudis. Not to pick on Exxon but they have been business partners with the Saudis for ninety years, and just recently announced a joint venture with the Saudis in a petrochemical plant in San Patricio. Maybe I'm being a softie but the Shale Revolution was begun by a bunch of small drillers chasing a dream; I'd be sad to see all of them fall victim to Exxon. 

As to me, my paternal grandfather claimed our land in the Oklahoma Land Rush. He lived hardscrabble for years, many of them in a half-dugout, and buried some family nearby. My family, like many from Ireland and Wales, was mired in poverty. Through the Dust Bowl my grandfather and father stuck it out. Finally, we got a few wells drilled by Tom Ward and Aubrey McClendon of Chesapeake fame. They were young and carefree, drilled into the Granite Wash in places where no one else would. The granite slabs had been uplifted partially by a violent upheaval: North of the Red River they were at odd angles but still below the surface. South of the Red River granite was brought to the surface by that upheaval. North of the river, those granite slabs served as the perfect stratigraphic trap, holding pools of mature oil under great pressure. We didn't get rich but we didn't get poorer either.

Call me stupid but I own small interests in a large number of wells, along with overrides, in four different states. In good years, I share in as many as 80 wells. In poor years, almost none. You're right, it's not a smart way to live--safer to invest in municipal bonds. But I'm 75 years old and possibly demented by all the years watching this. At age six, for example, I watched my maternal grandfather's well blow out an old Ram blowout preventer, then shoot a steady plume for thirty days, when it stopped, never to be a commercial well. I couldn't get the sight of that crude hitting the windshield of his '52 Chevy out of my head. By age 16, I was a mule carrying drilling mud on a drilling site. I saw pretty well everything imaginable--the good, the bad, and the very ugly. I'm far from an expert on the subject of oil and gas, but if the definition "Russian roulette" applies to a man like me, it similarly applies to drilling companies. I'm sure you know this but to make mature oil, organic humus has to be held at perfect temperature (about the same as a good hot cup of coffee) for roughly a million years--too cool and it stops at kerogen and too hot it "cooks' just like coffee. It is nonrenewable. To expand the coffee analogy, beans are easy to grow and are renewable, baristas are easily trained and yet a cup of coffee is high. Indeed, if you rolled an oil barrel into Starbucks and had them fill it up with vanilla latte, the cost would be about $5,000. So what should the price of a barrel of oil be? Oh, I don't know, but probably somewhere north of $5,000 a barrel. Since volatility is a constant, say between $1,000 and $5,000, depending on whether we have a $200 million-dollar drone shot down at taxpayers' expense. Not to put too fine a point on this, but given how much money we've spent on the Saudis over the years, and how much Iraq cost us, I'd say $5,000--hands down. 

[Old-Ruffneck + 1,246]

14 minutes ago, Gerry Maddoux said:

Call me stupid but I own small interests in a large number of wells, along with overrides, in four different states. In good years, I share in as many as 80 wells. In poor years, almost none.

Well, sometimes we think we are making right choices with our money, and as you have known over the years, it's ups and downs are what makes oil risky. But oil is a commodity, and say just Permian holds 75bbl's I would say its worth what you can sell it for. Markets go wild if Middle East sneezes and price can get to 70$ a barrel. With more and more oil coming online in the next two years my guess is steady 55$.

[Rasmus Jorgensen + 1,169]

On 7/19/2019 at 9:28 PM, Old-Ruffneck said:

Does my statement above not make sense? The water in said area of the Permian is worth more than the gas. You want Government to get involved in flaring and fine them on a product that is not cost effective to build the infrastructure for? You seriously should go down there and try and sell them your idea!! It's damn easy to suggest what others should do when your not footing the bill. Pipelines cost lots of money and each well has its own flare longevity. So a well 50 miles from a pipeline, what do you do with the gas? Even 30 miles?  As I said before, if there was a need for the byproduct (NG) they wouldn't just flare it off. It's real easy to lecture others from the pulpit, when you have no real life experience in the flaring issue. West Texas is a vast expanse and what NG lines are available are at capacity, hence last years negative market on the stuff. 

In several other countries around the world, even some considered backward, flaring is not allowed on a new field development. If flaring was banned modular solutions would be developed. Sometimes once you create a market, the market will find solutions. Would it slow production a little? In the short-term probably yes. Would it be good for the industry longterm - I think so. 

[Old-Ruffneck + 1,246]

48 minutes ago, Rasmus Jorgensen said:

In several other countries around the world, even some considered backward, flaring is not allowed on a new field development. If flaring was banned modular solutions would be developed. Sometimes once you create a market, the market will find solutions. Would it slow production a little? In the short-term probably yes. Would it be good for the industry longterm - I think so. 

Then there would be no drilling in the western Permian (S.E. New Mexico, A lot of West Texas) which is not new field development as I worked there 40 years ago. A lot of crying over spilled milk in my opinion. Oil is what is profitable, gas is the byproduct and not worth much on the market to justify capture and get to a viable market. All the gas lines even remotely close are at capacity. 

Would it slow production a little you ask? Stop it dead in it's tracks if a ban on flaring was issued. Like I mentioned before, one should go out to said area, drive and then come back and give a solution. Be prepared for a long journey. Big area.

Edited July 22, 2019 by Old-Ruffneck

[Rasmus Jorgensen + 1,169]

2 minutes ago, Old-Ruffneck said:

Would it slow production a little you ask? Stop it dead in it's tracks if a ban on flaring was issued. Like I mentioned before, one should go out to said area, drive and then come back and give a solution. Be prepared for a long journey. Big area.

I am not saying that I have a solution. I am saying that if flaring wasn't allowed then solutions would be developed. 

3 minutes ago, Old-Ruffneck said:

All the gas lines even remotely close are at capacity. 

This also means that the drillers that have gas line allocations wouldm keep drilling. 

-------------------------------

When I said that it would be good longterm I meant that it would result in shale being developed in slower pace. This would mean lower costs due to fewer bottle-necks. This is not the same as not being developed. 

Short term loss for longterm gain. Look at Norway, their O&G history and where they are today. 

[Old-Ruffneck + 1,246]

2 minutes ago, Rasmus Jorgensen said:

I am not saying that I have a solution. I am saying that if flaring wasn't allowed then solutions would be developed. 

I rest my case. I see a lot on this site wanting to ban flaring, but much smarter people than us haven't came up with a viable option. Thus, the flaring continues. Greenhouse gases? The Semi-trucks in the US put thousands times more pollutants than flares. Like I have said yet again, get to the area where flaring is going on and drive. You'll need 2 to 3 days as the area is almost size of Norway and Sweden. Not trying to disrespect anyone's opinion but is easy to preach and not know the difficulties getting NG flares stopped. Next September I will photo what I can so people can see. 

[Rasmus Jorgensen + 1,169]

1 minute ago, Old-Ruffneck said:

I rest my case. I see a lot on this site wanting to ban flaring, but much smarter people than us haven't came up with a viable option. Thus, the flaring continues

You are working on the assumption that Oil must be fracked ASAP. Why? It is not going away it is just being developed at a slower pace. 

Longterm planning is not bad - look at Norway. The US of A would be far richer in 15 years if you would embrace longterm planning.  I believe this is what @Mike Shellman is trying to say.

[Old-Ruffneck + 1,246]

34 minutes ago, Rasmus Jorgensen said:

You are working on the assumption that Oil must be fracked ASAP. Why? It is not going away it is just being developed at a slower pace. 

Longterm planning is not bad - look at Norway. The US of A would be far richer in 15 years if you would embrace longterm planning.  I believe this is what @Mike Shellman is trying to say.

US consumes how much per day??? Mid-East oil is unreliable, expensive and supporting terrorism. I feel it's in our best interest to use our own resources. Mike is very thoughtful what he says, I don't agree, or disagree with what he is saying. The less we consume from other nations the better. Next we need refineries to help crack and keep in our own market. 

I am a very heavy user of crude, and if we can keep prices in check and stable around 55$ for WTI, helps me in my business and pocketbook.

[Gerry Maddoux + 3,627]

“It’s a black eye for the Permian basin,” Pioneer Natural Resources Chief Executive Officer Scott Sheffield said at Wednesday at an energy conference at Columbia University in New York. “The state, the pipeline companies and the producers -- we all need to come together to figure out a way to stop the flaring.”

In my small microcosm, Scott Sheffield is the Gold Standard on all matters having to do with the Permian Basin. According to geology, the world has experienced global climate change many times during the last 250 million years, so flaring isn't causing this one. However, the world is watching. More importantly, the Democrats are watching. Flaring now, percentage-wise, is no worse than under Obama; however, if a Democrat claims the Oval, and if he or she is supported by a Democrat Congress, flaring has caught enough attention (with news that enough flaring is going on in the Permian to power 400,000 vehicles, or 40 cities, things like this) that it will indeed be shut down in its tracks. Along with that, incentives will be handed out like candy to EV-makers, solar and wind. It will be impossible to get a pipeline built. Some sort of Iran agreement will once again be put in place. $100 oil? Think $200. I agree with the old ruffneck that the price of WTI will likely hover around $55-65 . . . . . UNLESS a Democratic administration complete with a majority in Congress occurs. Can this happen? Of course. Politically, this country has the same problem as oil: Volatility. A swing to the right with its attendant populism may satisfy a great number of old white people but it's not going down well with the younger voters. Politics is a pendulum: A wild erratic swing to the right is followed by a wild erratic swing to the left. A Democratic power grab? That'll get you $100 oil . . . . for about a day. Then we'll see 150, 200, maybe 300. Right now cheap energy and a Republican administration are exposing the several follies and foibles of wind and solar, not to mention batteries; however, with enough taxpayer money behind renewables, along with a surge in fossil fuel cost, we'll see that hundred-dollar oil real fast. And all those bright flaring spots on the vast expanse of land between Carlsbad, New Mexico and Midland, Texas? They'll go out. I don't mean to preach and I don't even mean to use this as some sort of political platform (as I hate the flaring and think it's somewhat irresponsible), but the above is how I see it. I'll quit now. Thanks for letting me vent. I'm content to sit back and read what you people are writing. My take is that you're well-intentioned folks with a common interest and divergent views enough to make what you say interesting and relevant.  

[D Coyne + 305]

On 7/21/2019 at 6:16 PM, Old-Ruffneck said:

You didn't explain how you make your living from oil and gas. I would assume your a heavy investor (maybe owner on which is being drilled), but at any rate one that invests in oil takes a risk. Been that way since time began. Oil is extremely erratic an volatile and one that counts on making money from oil is playing Russian roulette. If your land owner and was blessed with black goo under your property, consider yourself a lucky fellow and take what ya can get. 100$ oil is too greedy and will self check itself and crash as you mentioned and could drop below the magic comfort 55$ area where most are still making money. If it dropped to 38$ which it did when KSA tried to kill the Frackin' but only made it stronger. So be very careful what you wish for. Shale doesn't need 100$ oil to make it. That is pure fallacy. Somewhere in this thread is cost break-even and there are plenty of rigs making money with oil at $55.

Oldruffneck,

Can you explain why when oil was around $55/b most independent tight oil focused oil producers that are publicly traded were losing money?  

My analysis of breakeven that includes full cycle costs for the average Permian basin horizontal oil well completed in 2017 suggests a wellhead breakeven oil price of about $61/b, if we assume transport costs to the refinery of about $4/b that would be roughly a WTI of $65/b.  

Sure there are a some wells that are better than average and just as many (probably more as the distribution is lognormal) that are below average.  A few companies that hold better than average leases have positive earnings, but the industry as a whole will fail at $55/bo.

Tom Kirkman's "hoped for" oil price of $70/b (Brent I think) might get the job done, but even that is equivalent to $62/bo for WTI and still leaves a lot of wells losing money, especially considering all the accumulated debt and the interest costs that need to be covered.  Probably $73/b for Brent oil price would get the job done, we probably wont see $100/bo until 2025 or so, when oil output peaks.

[D Coyne + 305]

On 7/22/2019 at 10:08 AM, Old-Ruffneck said:

US consumes how much per day??? Mid-East oil is unreliable, expensive and supporting terrorism. I feel it's in our best interest to use our own resources. Mike is very thoughtful what he says, I don't agree, or disagree with what he is saying. The less we consume from other nations the better. Next we need refineries to help crack and keep in our own market. 

I am a very heavy user of crude, and if we can keep prices in check and stable around 55$ for WTI, helps me in my business and pocketbook.

Oldruffneck,

Much of the oil being produced is being exported, the refineries don't need to crack the light stuff, that is what we do for heavy crude and have plenty of capacity for heavy crude.  We do not have refinery capacity for lighter crude, and it is not likely that it will be built.

Wishing that oil is $55/bo does not make it profitable to produce at that price.  The US input of crude to refineries is 16 to 17 Mb/d, it is unlikely that the US will ever produce that much C+C, though we might for a brief time in 2024 to 2026 before tight oil starts to decline.

[D Coyne + 305]

On 7/22/2019 at 9:16 AM, Old-Ruffneck said:

I rest my case. I see a lot on this site wanting to ban flaring, but much smarter people than us haven't came up with a viable option. Thus, the flaring continues. Greenhouse gases? The Semi-trucks in the US put thousands times more pollutants than flares. Like I have said yet again, get to the area where flaring is going on and drive. You'll need 2 to 3 days as the area is almost size of Norway and Sweden. Not trying to disrespect anyone's opinion but is easy to preach and not know the difficulties getting NG flares stopped. Next September I will photo what I can so people can see. 

Old Ruffneck,

Raising the price of a flaring permit is not "banning" flaring any more than a town or county raising property taxes on property to pay for education and other services (police, fire, etc) means that one is "banned" from owning property.

Also it seems in some states producers are exempt from paying royalties and taxes on natural gas that is flared, seems to me those should have to be paid and it would be an incentive for the 6% of natural gas that is flared or vented to be reduced.

That is a market solution to the problem and an added incentive not to waste the resource.  Fairly standard practice for pollution.

[D Coyne + 305]

On 7/22/2019 at 8:56 AM, Old-Ruffneck said:

Then there would be no drilling in the western Permian (S.E. New Mexico, A lot of West Texas) which is not new field development as I worked there 40 years ago. A lot of crying over spilled milk in my opinion. Oil is what is profitable, gas is the byproduct and not worth much on the market to justify capture and get to a viable market. All the gas lines even remotely close are at capacity. 

Would it slow production a little you ask? Stop it dead in it's tracks if a ban on flaring was issued. Like I mentioned before, one should go out to said area, drive and then come back and give a solution. Be prepared for a long journey. Big area.

I have said several times, just put a price on it, there are certain counties where the percentage of gas flared is very high.  If there was a high price for a flaring permit, those areas would be developed after natural gas gathering lines were developed.

Texas does a much better job at this than North Dakota (percentage of natural gas flared is much lower) and North Dakota may be  better than New Mexico.

[D Coyne + 305]

On 7/21/2019 at 12:59 PM, Gerry Maddoux said:

$100 oil? I would like to see it, and I'm about as conservative as they get. I make my living from oil and gas. The price of crude oil has been insufficient to support various and sundry needs of producers for several years now. Saudi Arabia needs at least $85 oil in order to support their welfare state, which is growing. Many OPEC countries needs higher prices to allow them to emerge from Third World status. The US needs oil close to $100 to support shale oil drilling, since nine of ten drillers are currently losing money. Would $100 oil wreck the market? Sure, it would lead to another glut, another crash, then a rash of bankruptcies, and so on.

The problem is that the US still has no true energy policy. We have a Secretary of Energy who, when he was running for president, didn't really understand what the Department of Energy did. CEO's of major oil companies have been dragged before Senate subcommitties for years, where they have been hollered at to "make the US energy-independent." Shale oil has done that . . . almost. The refineries have needed a gentle nudge to convert their ancient equipment to light, sweet that comes from shale, but that would take billions of dollars. Two new refineries--one in North Dakota (the Davis) and the other in the Permian (can't think of the name)--are going to be very low carbon-emitting and capable of refining light, sweet shale oil without additions of heavy crude from Canada or OPEC.

The current situation--OPEC+ trying to set the global price of oil--is doomed, mainly because of all the shale oil from the multiple layers of the Permian. Technology and luck, the latter having to do with companies that happened to buy minerals low (Pioneer, for example), and in the sweet spot at that, will favor a few companies. Occidental, Exxon and Chevron bought their way into the Permian. They don't need higher prices so much, since they make their money at the refinery and, increasingly, at petrochemical plants. This sets the stage for stagnant global oil prices for light, sweet shale oil but, ironically, desperation prices for heavy stuff--to blend at the refineries, especially Aramco.

$100 oil? I think we'll see it only with massive disruptions in the flow of oil through the Strait of Hormuz, the likes of which occur only if Iran begins to go bankrupt and lashes out in desperation, or if the entire Middle East goes up in flames. The situation is a mess! I suppose this is the way of a free market system: to generate winners and losers based on cunning, luck, technology, and the cold-blooded business model that comes from all that.

We're going to see the dark side of all this unhampered growth, however, if the Democrats get back in power. For example, I looked at that satellite image of flaring of wells, especially in the Permian. This is a practice that is so indifferent to the concerns about global climate change and greenhouse gases that it is just pathetic! And the Democrats would slap that down immediately, to the point where drilling would pause by 50%. They would also put a moratorium on pipelines. What would happen then? $100 oil! Then $200 oil! Then $300 oil! Is there a lesson in here? HaHa, it's pretty convoluted, so much so that I almost can't follow it, but I am strongly of the belief that we need $100 oil but some governance in terms of limits on flaring. We need pipelines, but also reduced carbon emissions.

In short, the oil and gas industry is--now as in the past--its own worst enemy, so eager to keep drilling and pumping and grab-it-while-you-can that it doesn't seem to realize it is shooting itself in the foot. As they say, be careful what you wish for, because $100 oil and up is probably going to happen only under two possible scenarios: A) Total chaos in the Middle East, or, B) A Democratic power grab. Vis a vis the above writer's opinion that the Left will do anything to bring about $100 oil so as to derail Trump's bid for reelection, there is really nothing they can do while he's president and supported by a Republican Senate. The only way we can, as a nation, bring about $100 oil is by shifting to a Democrat power, throwing vast sums at renewables, placing restraints on hydrocarbons. It's just a matter of time until unfettered flaring catches the attention of the world, fanning the flames of indignation--because that satellite image is damning.

The US needs an energy policy--just as it has needed one since 1950. We are energy-independent, if we had more pipelines, clean refineries, conversion of antique refineries to handle our homegrown shale oil, and if we can develop carbon capture techniques. That takes $100 oil. But we're more apt to put the pedal to the metal, gun and run, pump and dump . . . and stay mired in barely-profitable economic circumstances.

Gerry,

Yes we need an energy policy, and the energy industry needs some regulation, that is the reason that the RRC and other state agencies exist.  US and World output are likely to peak by 2024 to 2026, and probably by 2027 we will see $100/bo, by 2037 demand for oil will fall below supply as high oil prices lead to a switch to EVs and NGVs.  At that point oil prices will start falling from $150/bo to $100/bo and eventually to $55/bo.

[Old-Ruffneck + 1,246]

2 hours ago, D Coyne said:

Oldruffneck,

Can you explain why when oil was around $55/b most independent tight oil focused oil producers that are publicly traded were losing money?  

My analysis of breakeven that includes full cycle costs for the average Permian basin horizontal oil well completed in 2017 suggests a wellhead breakeven oil price of about $61/b, if we assume transport costs to the refinery of about $4/b that would be roughly a WTI of $65/b.  

Your analysis is incorrect. Wellhead is much lower now the in 17. Some wells are in mid 20's to low 30's. I am not sure where your getting your numbers? There is a couple rough-necks on this site that will vouch cost now. 

[Old-Ruffneck + 1,246]

1 hour ago, D Coyne said:

Oldruffneck,

Much of the oil being produced is being exported, the refineries don't need to crack the light stuff, that is what we do for heavy crude and have plenty of capacity for heavy crude.  We do not have refinery capacity for lighter crude, and it is not likely that it will be built. 

Wishing that oil is $55/bo does not make it profitable to produce at that price.  The US input of crude to refineries is 16 to 17 Mb/d, it is unlikely that the US will ever produce that much C+C, though we might for a brief time in 2024 to 2026 before tight oil starts to decline.

Well, something we almost agree upon. EPA wont let us build new refineries. But if you looked at Satellite views from the 70's of the Houston refineries, and compare to today, doubled in size. Almost all US refineries added on to keep up with demand. There was talk 2 weeks ago about building refinery for some of out own light crude. 

[Old-Ruffneck + 1,246]

2 hours ago, D Coyne said:

Old Ruffneck,

Raising the price of a flaring permit is not "banning" flaring any more than a town or county raising property taxes on property to pay for education and other services (police, fire, etc) means that one is "banned" from owning property.

Also it seems in some states producers are exempt from paying royalties and taxes on natural gas that is flared, seems to me those should have to be paid and it would be an incentive for the 6% of natural gas that is flared or vented to be reduced.

That is a market solution to the problem and an added incentive not to waste the resource.  Fairly standard practice for pollution.

Just another tax you say? You sounding like a liberal. Taxation will raise of any said product. Just like here in Illinois todays gallon of gas is 2.95 and in Missouri 2.33. Just say no to Taxxxxxx

Edited July 23, 2019 by Old-Ruffneck

[Old-Ruffneck + 1,246]

1 hour ago, D Coyne said:

I have said several times, just put a price on it, there are certain counties where the percentage of gas flared is very high.  If there was a high price for a flaring permit, those areas would be developed after natural gas gathering lines were developed.

Texas does a much better job at this than North Dakota (percentage of natural gas flared is much lower) and North Dakota may be  better than New Mexico.

You just don't get it. I suggested you get in your car and go to area of Hobbs,NM to Carlsbad,NM, down to Balmorhea,TX and over to Iraan,TX. Then go back to Ft. Stockton,TX catch 285 north and tell me what you see. And how many miles you just racked up on you car. Now, figure out the logistics of every FLARE you can see from the road, and up by Orla,TX at night look all around you. That vantage point you can see roughly 40 miles around. Tell my how your going to get every one of those wells to stop flaring. Shut them in? I think not. See, you can preach a good tax story on 1.00 wellhead gas, which consists of liquids and several bad gases. To come at me with taxing gas that isn't profitable tells a lot about a man. 

So I am proposing that you go down to West Texas and make Pecos, your home base and drive. If anything you can get a serious education. I don't care if you have a degree from Villanova, you will get educated if you listen to people there.

[MaxNix + 12]

If we ever do, sales of electric vehicles are really going to take off.  

[D Coyne + 305]

12 hours ago, Old-Ruffneck said:

You just don't get it. I suggested you get in your car and go to area of Hobbs,NM to Carlsbad,NM, down to Balmorhea,TX and over to Iraan,TX. Then go back to Ft. Stockton,TX catch 285 north and tell me what you see. And how many miles you just racked up on you car. Now, figure out the logistics of every FLARE you can see from the road, and up by Orla,TX at night look all around you. That vantage point you can see roughly 40 miles around. Tell my how your going to get every one of those wells to stop flaring. Shut them in? I think not. See, you can preach a good tax story on 1.00 wellhead gas, which consists of liquids and several bad gases. To come at me with taxing gas that isn't profitable tells a lot about a man. 

So I am proposing that you go down to West Texas and make Pecos, your home base and drive. If anything you can get a serious education. I don't care if you have a degree from Villanova, you will get educated if you listen to people there.

Old Ruffneck,

95% of natural gas produced in Texas is not vented or flared, it is gathered and sent to a natural gas processing plant.

It is not rocket science,  has Texas gotten bigger since 2010?  It has always been a big state, and there was a time when the RRC did a great job regulating the industry.  Just a matter of the RRC doing its job in what ever way it thinks best.

If one believes wasting valuable resources is a bad idea their are two choices to reduce the waste, larger fees for flaring permits or "banning" long term flaring.  That is just the way it is.

The breakeven price is based on a discounted cash flow analysis where it is assumed that natural gas is not flared, For wells that have their natural gas flared, the breakeven increases by $3/b.  In 2018 WTI averaged $65/bo and the top 5 producers in the Permian basin all made money and even at 2017 WTI prices of $51/bo 4 of the 5 top producers made money.

Note that I define breakeven as earning at least a 10% annual rate of return on the original capital investment as it is not worth the high risk in oil and gas investing to earn a lower rate of return, on could simply park capital in an S and P 500 mutual fund and earn an average of 6% per year, so one would expect at least a 4% premium over a large cap stock investment for an oil and gas investment to be worthwhile.

[Old-Ruffneck + 1,246]

1 hour ago, D Coyne said:

If one believes wasting valuable resources is a bad idea their are two choices to reduce the waste, larger fees for flaring permits or "banning" long term flaring.  That is just the way it is.

I am going to leave it here, it's a judgement if it valuable resource. Look at value of said well-head price of NG and liquids from the fracked wells. Can you not understand it's fairly worthless low pressure by product. Most wells the flares are short term. From someone who has been down in West Texas, Southeast New Mexico to quite an extent I speak from experience and understand "flares" as do others on this site. I concluded you've just "read" experience and no real life experience and suggested a trip down there and talk to people. A lot of people will show you the how's and why's since you DON'T seem to believe me.

[Gerry Maddoux + 3,627]

Thought I'd stay out of it, but this flaring is just one more example of the utter self-destruction of the shale oil project by drillers. Taken as a whole, they have absolutely no governance, or reckoning, or common sense about where the market is currently, or is headed. Many of them have CEO's at the helm who are paid for production growth, not growth of the bottom line. As I've said, my Gold Standard has been, and is, Pioneer. Here's a recent excerpt from an analyst who actually likes Pioneer:

 One of the largest shale players in the Permian, Pioneer Resources, suffered its eighth consecutive year of negative free cash flow.  In 2018, Pioneer spent $541 million more on capital expenditures than it made from cash from operations and if we add up all the eight years, it’s a grand total of $6.8 billion in negative free cash flow.

Years ago, a carbon tax was floated. I'm a big fan of oil and gas but also a fan of making money, and that has to do with salvation of the shale industry. If we had a carbon tax, do you really think all those flares would be burning so bright? Here's the baseline hypothesis: If a person drives 20,000 miles per year in the freeway maze of Los Angeles, should he not pay a carbon tax proportionate to his contribution to the health hazard smog, as compared to a person who drives say 2,000 miles a year. With a carbon tax, a market would soon develop. If Business A needs to use more carbon to grow its business, it could buy from Business B, which is in little need of carbon. 

In essence, shale drilling is the only business I've ever seen that is destroying itself by its own hand. If you go into the vast expanse of desert of the Delaware Basin--Artesia, Carlsbad, Roswell, Hobbs, New Mexico, over to Pecos, Texas, you'll absolutely be impressed with the "need" for flaring--providing we were in a world war and needed as much shale oil as we could possibly produce and as soon as possible. But we're not. In fact, while I still avow that a price of $75 is needed, worldwide, the shale industry is destroying itself--they are finding it hard to float bonds on Wall Street. Driving that vast expanse of land, you'll immediately be struck by the fact that traffic is frenetic. Indeed, everything is frenetic. Frenetic! Not just speeded up, but absolutely moving at a mind-boggling pace . . . the likes of which none of us see in absence of an emergency. Yet the only emergency is a race to see which company can go broke fastest. I realize that Chevron, Exxon and Occidental are showing profits, but what about the rest? They're largely going broke. As long as CEO's are paid $5M a year to run a company, with a $2M bonus if they grow production, these companies will work at a frenetic pace to do just that. They are incapable of self-regulation!

So, regulation has to be done extrinsically. I think a flaring tax would be met with great resistance, especially under this administration. But a carbon tax, the same one that applies to a taxi fleet or a trucking company, would pretty much stop flaring in its tracks. Would that destroy the shale industry? No, contrariwise, I think it might just save it . . . . from itself.