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Oil at $75 Means Patches of Texas Shale Turn Unprofitable

ocean515 said:
Thank you for the link. Unfortunately, an agenda driven website presenting a report covering a false premise doesn't get very far in my book. Shale and tight oil have never, to my knowledge, been considered an answer to a petroleum crisis. They have always been considered a viable addition to petroleum production and supplies.

As such, the "desmog.blog, and the "Post Carbon Institute" may want to rethink their spin if they intend to attract an audience beyond the cheerleaders already in their camp.
Click to expand...

The problem is a lot of people that are ignorant of the basic economics of oil production have thought that tight oil would lead to low prices at the pump when it actually the only way to reduce prices at the pump at this point is through greater vehicle efficiency that leads to reduced demand.
 
SouthernDemocrat said:
That new Camaro also gets far better mpg, is more reliable, more comfortable to drive, and would walk off and leave the equivalent 69 model. The fastest production Camaro in 1969 had a zero to 60 time of 5.9 seconds. The fastest production Camaro today has a zero to 60 time of 3.7 seconds.
Click to expand...

The 1/4 mile times are virtually identical. Improvements in HP to weight ratio do not come cheaply either; the inflation adjusted price of $4K for a 1969 Camaro Z-28 would be about $25K for a 2014 model but they actually now cost about $75K.

1969 CHEVROLET CAMARO Information Specifications Resources Pictures

2014 Chevy Camaro Z/28 priced At $75,000 | Fox News
 
ocean515 said:
Of course it's a dream solution. The cost of crude will return to levels that will allow shale derived oil to return to profitability.
Click to expand...

Praise the market! The market will provide! We must trust the market!
 
SouthernDemocrat said:
Here is another comparison. The Chevy Half ton pickup in 1970 which was the absolute pinnacle of performance in the pre-emission controls / pre-CAFE standards era had the following performance specs for the 350 small block:

255 HP and 355 Pounds of Torque. It achieved 10 mpg in town and 12 mpg on the highway.

Today, a Chevy Half ton equipped with a 5.3 liter engine (smaller than the 1970 5.7) has the following performance specs:

355 HP and 383 Pounds of Torque. It averages 24 mpg on the highway.

So despite those horrible CAFE regulations, Safety Standards, and Emission Controls, that truck gets twice the MPG, 100 more horsepower, and more torque.
Click to expand...


Yep, but at what cost?
 
SouthernDemocrat said:
The problem is a lot of people that are ignorant of the basic economics of oil production have thought that tight oil would lead to low prices at the pump when it actually the only way to reduce prices at the pump at this point is through greater vehicle efficiency that leads to reduced demand.
Click to expand...

Whether they are ignorant or not doesn't change the economics of additional sources of petroleum. Production from these sources has never been offered as an inexpensive process. These sources require the market support a high enough price to make the effort affordable. As global reserves continue to be impacted by politics and dwindling supply, developing alternative domestic sources is not only a reasonable reaction, but areasonable strategic one.

When gold mines in the west shut down, it was not for a lack of gold, but for a lack of profit in mining it. Had higher prices not evolved, current prices would be dramatically higher. This same thing holds true with oil.
 
DA60 said:
'With crude at $75 a barrel, the price Goldman Sachs Group Inc. says will be the average in the first three months of next year, 19 U.S. shale regions are no longer profitable, according to data compiled by Bloomberg New Energy Finance.'

Oil at $75 Means Patches of Texas Shale Turn Unprofitable - Bloomberg

Shale Profits at Risk - Bloomberg


I (and others) have said for a while that shale oil is not the dream solution that the media is making it out to be.
Click to expand...

Excellent news. And I can't say that I'm surprised; oil is such a boom-and-bust commodity. If shale oil does enter a bust cycle, then a lot of people are going to have to eat mountains of crow.

Meanwhile, Texas's wind energy market is as strong as ever. :)
 
ocean515 said:
Well it certainly makes more sense than trusting in Hatuey! :peace
Click to expand...

Well, at least you agree you have unmoving faith in a supposedly free system of supply and demand (that is actually controlled by an organization). :)
 
Hatuey said:
Well, at least you agree you have unmoving faith in a supposedly free system of supply and demand (that is actually controlled by an organization). :)
Click to expand...

I do have faith. Your invention of what you think that is, is of course, your own to believe.
 
ocean515 said:
I do have faith. Your invention of what you think that is, is of course, your own to believe.
Click to expand...

We know we know, the free market (controlled by an organization of countries) will prevail.
 
ocean515 said:
Thank you for the link. Unfortunately, an agenda driven website presenting a report covering a false premise doesn't get very far in my book. Shale and tight oil have never, to my knowledge, been considered an answer to a petroleum crisis. They have always been considered a viable addition to petroleum production and supplies.

As such, the "desmog.blog, and the "Post Carbon Institute" may want to rethink their spin if they intend to attract an audience beyond the cheerleaders already in their camp.
Click to expand...

Fair enough.

shale%20boom.png


As Fracking Enters A Bear Market, A Question Emerges: Is The Shale Boom Built On A Sea Of Lies? | Zero Hedge

20140813_shale.jpg


'KEY FINDINGS, TIGHT OIL (SHALE OIL)

More than 80 percent of tight oil production is from two unique plays: the Bakken and the Eagle Ford.
Well decline rates are steep – between 81 and 90 percent in the first 24 months.
Overall field decline rates are such that 40 percent of production must be replaced annually to maintain production.
Together the Bakken and Eagle Ford plays may yield a little over 5 billion barrels – less than 10 months of U.S. consumption.'

http://www.zerohedge.com/news/2014-08-13/wall-streets-shale-fraud-exposed

'Here are there are five main things to know about the shale plays.

They deplete very quickly. The typical shale, or tight rock, well production declines by 80% to 90% within three years.
They are expensive. All oil and gas coming form them is several times more expensive than what we got from conventional oil plays.
They are environmentally damaging because the fracking fluid is highly toxic and much of it escapes during the blowback process and sometimes water wells are contaminated.
Because each well has low flow and depletes quickly, massive numbers of wells must be drilled creating significant infrastructure damage to roads and bridges. Currently no state or municipal authorities are capturing anything close to the total cost of the infrastructure damage from the shale operators which means taxpayers are gong to be left paying those bills.
Not all shale plays are created equal – some are vastly superior to others. And even within a given play there are sweet spots and dry holes which can only be determined by punching a well in and seeing what comes out. Some call this the ‘mapping by braille’ approach.'

Shale Oil: Expensive, Over-Hyped, & Short-Lived | Zero Hedge

'Jim Rogers: I read the same things you do. But what I don’t read much about is the fact that the number of drilling rigs for shale gas has gone down 75 percent in the last 18 months or so. Because it turns out that these wells are very short-lived. They're great for the first 30 days. But by year three or four, they're very expensive to maintain.
Two things come to mind. One is that I presume human ingenuity will solve that problem somehow. But if it’s a geological problem and it cannot be solved, then the gas boom is not quite what we all thought it might be. And I’m told the same applies to the shale oil wells.'

Jim Rogers: Shale Gas Wells are very Expensive to Maintain | JIM ROGERS BLOG

The Coming Bust of the U.S. Shale Oil & Gas Ponzi


EIA Cuts Monterey Shale Estimates on Extraction Challenges - Bloomberg




I am not sure what sources you require?

Obviously the oil industry and the government won't frown on shale oil. I doubt the mainstream media or Wall St. will either. And the public LOVE the thought of oil self sufficiency.


I am not saying it's a bust. But it seems clear to me that the U.S. shale oil boom is overhyped...possibly greatly.
 
SouthernDemocrat said:
That new Camaro also gets far better mpg, is more reliable, more comfortable to drive, and would walk off and leave the equivalent 69 model. The fastest production Camaro in 1969 had a zero to 60 time of 5.9 seconds. The fastest production Camaro today has a zero to 60 time of 3.7 seconds.
Click to expand...

Motor technology is FAR better today then in 1969.

But, the 'pony' cars today have become Clydesdale's on steroids...they are ridiculously overweight.

Take the Challenger. A relatively sleek car in 1970. Now it's a bloated whale topping the scales at over two tons!

The motors under their hoods are fantastic. But the bodies desperately need to diet.

dodge-challenger-srt8-1970-1280x960.jpg



The same with the Camaro

2014-chevrolet-camaro-z28-and-1967-chevrolet-camaro-z28-side-view.jpg



And even the Mustang

2011-Shelby-GT350-1965-1970-MY-Shelby-GT350.jpg


What do you need all that extra sheet metal for?
 
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DA60 said:
Fair enough.

shale%20boom.png


As Fracking Enters A Bear Market, A Question Emerges: Is The Shale Boom Built On A Sea Of Lies? | Zero Hedge

20140813_shale.jpg


'KEY FINDINGS, TIGHT OIL (SHALE OIL)

More than 80 percent of tight oil production is from two unique plays: the Bakken and the Eagle Ford.
Well decline rates are steep – between 81 and 90 percent in the first 24 months.
Overall field decline rates are such that 40 percent of production must be replaced annually to maintain production.
Together the Bakken and Eagle Ford plays may yield a little over 5 billion barrels – less than 10 months of U.S. consumption.'

Wall Street's Shale 'Fraud' Exposed | Zero Hedge

'Here are there are five main things to know about the shale plays.

They deplete very quickly. The typical shale, or tight rock, well production declines by 80% to 90% within three years.
They are expensive. All oil and gas coming form them is several times more expensive than what we got from conventional oil plays.
They are environmentally damaging because the fracking fluid is highly toxic and much of it escapes during the blowback process and sometimes water wells are contaminated.
Because each well has low flow and depletes quickly, massive numbers of wells must be drilled creating significant infrastructure damage to roads and bridges. Currently no state or municipal authorities are capturing anything close to the total cost of the infrastructure damage from the shale operators which means taxpayers are gong to be left paying those bills.
Not all shale plays are created equal – some are vastly superior to others. And even within a given play there are sweet spots and dry holes which can only be determined by punching a well in and seeing what comes out. Some call this the ‘mapping by braille’ approach.'

Shale Oil: Expensive, Over-Hyped, & Short-Lived | Zero Hedge

'Jim Rogers: I read the same things you do. But what I don’t read much about is the fact that the number of drilling rigs for shale gas has gone down 75 percent in the last 18 months or so. Because it turns out that these wells are very short-lived. They're great for the first 30 days. But by year three or four, they're very expensive to maintain.
Two things come to mind. One is that I presume human ingenuity will solve that problem somehow. But if it’s a geological problem and it cannot be solved, then the gas boom is not quite what we all thought it might be. And I’m told the same applies to the shale oil wells.'

Jim Rogers: Shale Gas Wells are very Expensive to Maintain | JIM ROGERS BLOG

The Coming Bust of the U.S. Shale Oil & Gas Ponzi


EIA Cuts Monterey Shale Estimates on Extraction Challenges - Bloomberg




I am not sure what sources you require?

Obviously the oil industry and the government won't frown on shale oil. I doubt the mainstream media or Wall St. will either. And the public LOVE the thought of oil self sufficiency.


I am not saying it's a bust. But it seems clear to me that the U.S. shale oil boom is overhyped...possibly greatly.
Click to expand...

My goodness. You've certainly set aside all the connections for easy access. I'm not sure what the agenda is your presenting, but you've certainly assembled a boat load of information to paste at a moments notice.
 
SouthernDemocrat said:
Ok, I have presented highway safety statistics and pointed out the performance of modern vehicles. In response, you post a picture of one vehicle of out hundreds of different makes and models. Should post a video of a 70s Ford Pinto in a crash or a 60s Mini in a crash? The fact is, highway traffic fatalities are down to the lowest levels in the modern era, vehicles are safer across the board, vehicles are more efficient across the board, there is more choice today than ever before, and we have lower oil prices due to decreased demand. I do not understand why anyone would bitch about that.
Click to expand...

You could post a picture or video of a Pinto exploding but that doesn't adress the issue of just how dangerous these BRAND NEW and much smaller cars are.

Its not rocket science.
Lighter materials and less metal surrounding the occupants of a vehicle mean more people are going to lose their lives.

Cafe standards have led to safety issues.
 
ocean515 said:
My goodness. You've certainly set aside all the connections for easy access. I'm not sure what the agenda is your presenting, but you've certainly assembled a boat load of information to paste at a moments notice.
Click to expand...

The 'agenda' I am presenting is that people/the media should not get to doe-eyed about shale oil.

It's a good thing, but it has huge drawbacks that many people (not saying you are one) seem to be ignoring/are unaware of.


BTW...I did not have these 'assembled'...I searched at zerohedge and Google for them after I read your post and pasted them one at a time (though I had read/looked at some of them previously).
 
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ocean515 said:
Hmm. Of course that begs the question, who should control the market for oil?
Click to expand...

Is it relevant? You already believe the cost of crude will go up. However, if OPEC doesn't want it to, it won't. That makes your blind faith in the free market not only laughable, it makes it ignorant of how the oil markets work. The truth is that for the next 10 years, OPEC could decide to keep prices at low levels like they did from 1960 to the 1970s or it could decide to dramatically lower prices like it did from 1980 to 1999. Not only would the US be unable to do anything about it, we'd be stuck with their prices for a decade unless we somehow manage to 1) produce enough oil to put a dent on our foreign oil dependence and 2) we convince private corporations to not export our gasoline and diesel (which bypass federal law). As none of those things is likely to happen, all we have is your faith that Arabs will be nice enough to push up prices. Then when they do, you'll parade around the forum saying how this is the free market at work and it will be better if we let the market sort itself out. :shrug:
 
ocean515 said:
Whether they are ignorant or not doesn't change the economics of additional sources of petroleum. Production from these sources has never been offered as an inexpensive process. These sources require the market support a high enough price to make the effort affordable. As global reserves continue to be impacted by politics and dwindling supply, developing alternative domestic sources is not only a reasonable reaction, but areasonable strategic one.

When gold mines in the west shut down, it was not for a lack of gold, but for a lack of profit in mining it. Had higher prices not evolved, current prices would be dramatically higher. This same thing holds true with oil.
Click to expand...

I agree with all of that.
 
DA60 said:
The 'agenda' I am presenting is that people/the media should not get to doe-eyed about shale oil.

It's a good thing, but it has huge drawbacks that many people (not saying you are one) seem to be ignoring/are unaware of.


BTW...I did not have these 'assembled'...I searched at zerohedge and Google for them after I read your post and pasted them one at a time (though I had read/looked at some of them previously).
Click to expand...

I'm not sure how many are doe-eyed, but I'm sure there are some. The economic stimulus is certainly hard to keep out of the news.

As to the load of data you presented, I'm impressed.
 
Fenton said:
You could post a picture or video of a Pinto exploding but that doesn't adress the issue of just how dangerous these BRAND NEW and much smaller cars are.

Its not rocket science.
Lighter materials and less metal surrounding the occupants of a vehicle mean more people are going to lose their lives.

Cafe standards have led to safety issues.
Click to expand...

Well I get you believe that, but the fact is, the motor vehicle death rate is less than half today what it was prior to CAFE standards. Cars are statistically safer than ever before. So your contention does not match reality.

U.S._traffic_deaths_as_fraction_of_total_population_1900-2010.png
 
Hatuey said:
Is it relevant? You already believe the cost of crude will go up. However, if OPEC doesn't want it to, it won't. That makes your blind faith in the free market not only laughable, it makes it ignorant of how the oil markets work. The truth is that for the next 10 years, OPEC could decide to keep prices at low levels like they did from 1960 to the 1970s or it could decide to dramatically lower prices like it did from 1980 to 1999. Not only would the US be unable to do anything about it, we'd be stuck with their prices for a decade unless we somehow manage to 1) produce enough oil to put a dent on our foreign oil dependence and 2) we convince private corporations to not export our gasoline and diesel (which bypass federal law). As none of those things is likely to happen, all we have is your faith that Arabs will be nice enough to push up prices. Then when they do, you'll parade around the forum saying how this is the free market at work and it will be better if we let the market sort itself out. :shrug:
Click to expand...

Nice hyperbolic fantasm, but I was curious on who you thought should control the market for oil. Your diatribe of imagined verbiage missed that mark.
 
ocean515 said:
Nice hyperbolic fantasm, but I was curious on who you thought should control the market for oil. Your diatribe of imagined verbiage missed that mark.
Click to expand...

Well, I wouldn't expect you to have a coherent response other than, nuh-uh! Most people don't when the realities of the free market are scrutinized.
 
ocean515 said:
I'm not sure how many are doe-eyed, but I'm sure there are some. The economic stimulus is certainly hard to keep out of the news.

As to the load of data you presented, I'm impressed.
Click to expand...

Thanks.
 
KevinKohler said:
Is this a thread decrying the fact that oil companies control value, as opposed to supply and demand, or one that is supposed to be supporting the theory of supply and demand?
Click to expand...

No ****.

It is obvious that the price of gasoline is in-elastic when compared to the price of crude.

The drop in gas has not mirrored the drop in crude in any comparable percentage.
 
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