Dave Farber
2018-07-20 03:42:06 UTC
Date: July 20, 2018 at 1:57:43 AM GMT+9
Subject: Re: [IP] Is The Oil Industry Repeating A Critical Error | OilPrice.com
Oil profitability is measured by "Operating Netback", which is a non-GAAP measure of oil and gas sales revenue net of royalties, production and transportation expenses. A well one mile from Cushing, Oklahoma will have a higher netback than a wellwith identical cost and production in the Yukon.
There is so much oil (and Natural Gas, and NGL) coming out of the ground in the Permian and Bakken that there are bottlenecks -- the pipelines are full.
This means that the excess oil can either stay in the ground or it travels to a pipe by truck or rail.
This additional transport cost adds environmental impact as well as cost. (Trains are far more likely to wreck than pipes are to break, and trucks are far more likely to wreck than trains.)
This additional transport cost cuts netback.
We need to build new pipelines (or add more pipes alongside existing pipes).
That said, the Eagle Ford, Permian and Bakken Shales of North America are being developed pretty well, but the rest of the planet is not.
There is shale petroleum pretty much everywhere, but it's only being fully exploited in those three places.
Operators are moving into Mexico.
https://www.ugcenter.com/chasing-shales-mexico-1707496#p=full
There is some shale oil activity starting in Argentina.
https://oilprice.com/Energy/Crude-Oil/Argentina-Is-On-The-Cusp-Of-A-Shale-Boom.html
IEA projects the US shale boom will squeeze OPEC.
https://www.investors.com/news/shale-boom-iea-sees-american-energy-dominance-squeezing-opec-into-2020s/
US sanctions complicate the picture in Russia
https://www.reuters.com/article/us-russia-usa-arms/days-after-helsinki-summit-russia-shows-off-putins-super-weapons-idUSKBN1K92HP
There's a jeezly bunch of "tight oil".
https://en.wikipedia.org/wiki/Countries_by_tight_oil_reserves
If West Texas Crude price is around $26/boe, most of that tight oil stays in the ground.
When the price goes above $50-60/boe, it becomes profitable to lift, assuming there are pipes to put it in.
-------------------------------------------Subject: Re: [IP] Is The Oil Industry Repeating A Critical Error | OilPrice.com
Is The Oil Industry Repeating A Critical Error | OilPrice.com
...This fact, however, was obscured by the fawning media coverage of increasing supplies of shale oil in the United States (properly called >tight oil) which did little to stem the price rise.
The Shale Oil boom of the last decade or so has brought vast wealth to the Permian Basin of Texas and the Bakken Formation of SD, ND, Manitoba and Saskatchewan.Oil profitability is measured by "Operating Netback", which is a non-GAAP measure of oil and gas sales revenue net of royalties, production and transportation expenses. A well one mile from Cushing, Oklahoma will have a higher netback than a wellwith identical cost and production in the Yukon.
There is so much oil (and Natural Gas, and NGL) coming out of the ground in the Permian and Bakken that there are bottlenecks -- the pipelines are full.
This means that the excess oil can either stay in the ground or it travels to a pipe by truck or rail.
This additional transport cost adds environmental impact as well as cost. (Trains are far more likely to wreck than pipes are to break, and trucks are far more likely to wreck than trains.)
This additional transport cost cuts netback.
We need to build new pipelines (or add more pipes alongside existing pipes).
That said, the Eagle Ford, Permian and Bakken Shales of North America are being developed pretty well, but the rest of the planet is not.
There is shale petroleum pretty much everywhere, but it's only being fully exploited in those three places.
Operators are moving into Mexico.
https://www.ugcenter.com/chasing-shales-mexico-1707496#p=full
There is some shale oil activity starting in Argentina.
https://oilprice.com/Energy/Crude-Oil/Argentina-Is-On-The-Cusp-Of-A-Shale-Boom.html
IEA projects the US shale boom will squeeze OPEC.
https://www.investors.com/news/shale-boom-iea-sees-american-energy-dominance-squeezing-opec-into-2020s/
US sanctions complicate the picture in Russia
https://www.reuters.com/article/us-russia-usa-arms/days-after-helsinki-summit-russia-shows-off-putins-super-weapons-idUSKBN1K92HP
There's a jeezly bunch of "tight oil".
https://en.wikipedia.org/wiki/Countries_by_tight_oil_reserves
If West Texas Crude price is around $26/boe, most of that tight oil stays in the ground.
When the price goes above $50-60/boe, it becomes profitable to lift, assuming there are pipes to put it in.
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