Author Topic: US vs OPEC "Oil War" (trade war)?  (Read 51741 times)

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Offline E.R. Campbell

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #50 on: April 11, 2015, 10:04:53 »
This could go in any number of threads, but, Ian Bremmer, a well known and respected academic, entrepreneur and strategist, has just posted this graphic ...
 


     ... with the comment: "Oh my, the Middle East is screwed."

It's not fracking that will give Australia, America, Canada, China and Europe energy security, it's a balanced approach; it (hydraulic fracturing) will release a lot of 'new' energy in a short time but it has a finite limit ~ maybe 15 to 25 years; Canada and the USA, and the world, in fact, also have access to Canada's abundant heavy oil and to several renewable technologies ~ Texas, amongst others states, has abundant land that is not terribly productive for anything much except collecting solar energy; and the Danes and Germans are demonstrating that wind energy can be reliable and cheap.

It is to be hoped that Dr Bremmer is right.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline recceguy

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #51 on: April 11, 2015, 10:45:03 »
............ and the Danes and Germans are demonstrating that wind energy can be reliable and cheap.


Not if you have the Ontario liberals in charge :facepalm:
“I am a Canadian, free to speak without fear, free to worship in my own way, free to stand for what I think right, free to oppose what I believe wrong, or free to choose those who shall govern my country. This heritage of freedom I pledge to uphold for myself and all mankind.”

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Offline TCBF

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #52 on: April 12, 2015, 01:43:30 »
Not if you have the Ontario liberals in charge :facepalm:

- Corruption is not limited to China, clearly. As well, we could certainly look at adopting their maximum penalty for it. It does cut down on repeat offences.
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Offline Robert0288

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #53 on: April 12, 2015, 04:53:44 »
But it's hard to hang a politician who has already left office and public life*


*For the most part

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #54 on: April 12, 2015, 05:14:12 »
But it's hard to hang a politician who has already left office and public life*


*For the most part

- In many ways, it is easier, as their security detail may have been pulled back or diminished.
"Disarming the Canadian public is part of the new humanitarian social agenda."   - Foreign Affairs Minister Lloyd Axeworthy at a Gun Control conference in Oslo, Norway in 1998.


"I didn’t feel that it was an act of violence; you know, I felt that it was an act of liberation, that’s how I felt you know." - Ann Hansen, Canadian 'Urban Guerrilla'(one of the "Squamish Five")

Online Colin P

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #55 on: April 13, 2015, 10:58:53 »
In 2004 I permitted a LNG import facility, because we had 10 years of domestic gas left. In 2008 we revised that permit to change it to a export facility because there was now 70 years worth of exportable gas, beyond domestic needs.

Solar and wind can help, but for Canada there are significant difficulties with both. Geothermal and hydro is the best bet for most of Canada. Smaller run of the river systems near towns is a big help. Atlin went from Diesel generators to small hydro and is saving money for BC Hydro who had to pay for fuel to be shipped in every week.

What I like best about Fracking is that it's broken the OPEC lock on oil supply, which will affect geopolitical thinking for generations to come.


 

Offline E.R. Campbell

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #56 on: April 13, 2015, 11:18:12 »
In 2004 I permitted a LNG import facility, because we had 10 years of domestic gas left. In 2008 we revised that permit to change it to a export facility because there was now 70 years worth of exportable gas, beyond domestic needs.

Solar and wind can help, but for Canada there are significant difficulties with both. Geothermal and hydro is the best bet for most of Canada. Smaller run of the river systems near towns is a big help. Atlin went from Diesel generators to small hydro and is saving money for BC Hydro who had to pay for fuel to be shipped in every week.

What I like best about Fracking is that it's broken the OPEC lock on oil supply, which will affect geopolitical thinking for generations to come.


I think we Canadians need to look at the global or, at the very least, regional energy supply and demand. To the degree that the Americans can, for example, build and integrate large scale solar power then our oil lasts longer; equally to the degree that we can harness and integrate wind power (and some people think it can be developed, on a large scale, in some regions) then, once again, oil can be focused on its best use - mobile applications where its power : size/weight ratio is unsurpassed - and it will last longer. We can buy solar energy from the USA and sell them oil.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Online Colin P

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #57 on: April 13, 2015, 11:42:45 »
Using oil and gas to provide anything but peak power is crazy. Developing cleaner burning of coal would be a better idea, but any work in that area is unsexy for the moment, the amount of coal we have in North America is staggering.

Offline E.R. Campbell

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #58 on: April 13, 2015, 11:56:35 »
Using oil and gas to provide anything but peak power is crazy. Developing cleaner burning of coal would be a better idea, but any work in that area is unsexy for the moment, the amount of coal we have in North America is staggering.


Is "clean* coal" achievable in the near term, say the next 25 years?

_____
* I guess the big question: is what's clean enough?
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Online Colin P

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #59 on: April 13, 2015, 12:51:35 »
pulverizing it and injecting it certainly ensure better burning at higher temps which reduces emissions, not a SME to really get into it. I did review one project where the power plant was to be built beside the coal seam and the front end loader takes a chunk out of the hillside and dumps it into the hopper which shortens the supply chain considerably. That project died on a change in regulations as I recall. interesting link  http://www.world-nuclear.org/info/Energy-and-Environment/-Clean-Coal--Technologies/
« Last Edit: April 13, 2015, 12:57:00 by Colin P »

Offline E.R. Campbell

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #60 on: April 13, 2015, 13:04:17 »
pulverizing it and injecting it certainly ensure better burning at higher temps which reduces emissions, not a SME to really get into it. I did review one project where the power plant was to be built beside the coal seam and the front end loader takes a chunk out of the hillside and dumps it into the hopper which shortens the supply chain considerably. That project died on a change in regulations as I recall. interesting link  http://www.world-nuclear.org/info/Energy-and-Environment/-Clean-Coal--Technologies/


Thanks, Colin, that's a useful article for we who are uninformed on energy matters.

I guess the point is that if this was all simple, as simple as oil extraction and refining, or as simple as the "experts" make out, then it would all be in place.

Reminds me, again, that Lao Tzu was right:


It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline Thucydides

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #61 on: April 14, 2015, 10:34:22 »
Wait a sec; who started this "pump everything you have to maintain market share" business?

http://www.opec.org/opec_web/en/press_room/2999.htm

Quote
Counting the cost ... for 100,000 energy workers
OPEC Bulletin Commentary March 2015

Looking back over the past half century or so of OPEC’s existence, one can easily understand why the global petroleum sector has earned the reputation of being a boom-bust industry, characterized by instability and sporadic volatility. At varying times, the international market for crude oil, perhaps the most complex, sensitive and unpredictable of all commodities traded today, has witnessed both high and low price extremes, bringing in their respective turns perceived yet perhaps misconceived advantages for the industry’s principal stakeholders — the producers and the consumers. Previous thinking was that when crude prices were low, it was the consumers who reaped the benefits; alternatively, when they exceeded a certain level, it was the turn of the producers to smile.
 
However, years of experience of operating at both ends of the spectrum have taught us that actually no one really gains from excessively high or low prices — there are just too many elements involved and knock-on effects to consider. OPEC recognized this from day one. In fact, its five Founding Members came together in September 1960 to defend their sovereign rights as a result of crude pricing issues. And since that day, the Organization, through its policies, has endeavored to establish and nurture a market that is stable, with prices that are fair and reasonable — for all the parties involved.

To the Organization, it makes perfect business sense to have a win-win situation for all the going concerns that have a vested interest in the global petroleum sector. Hence, its longstanding commitment to dialogue and cooperation with the industry’s principal stakeholders, aimed at bringing about a better understanding of the main issues involved.

Happily, a good deal of progress has been made on this front with many of today’s pressing issues up for discussion at various workshops and seminars organized under the umbrella of the International Energy Forum (IEF). There is little doubt that the Forum has managed to bring producers and consumers closer together.

However, looking at oil price developments over the past eight months, there is clearly still a lot to do. Whether one is a producer, consumer or investing oil major, planning for the future becomes a precarious, almost impossible task when having to factor in an oil reference price that is prone to wild fluctuations. The price of international crude has been halving since the summer of last year. This has been brought about by a combination of factors led by oversupply and exacerbated by the actions of speculators. The industry is already counting the cost. Projects worth billions of dollars have been cancelled and much-needed investments for future capacity additions put on hold. Worst of all, Bloomberg, quoting figures by Swift Worldwide Resources, has reported that more than 100,000 energy workers have lost their jobs. Oil service companies, panicking over what the future might hold, have quickly retrenched. And this at a time when the international oil sector is having to cope with the so-called ‘retirement tsunami’, where the industry already stands to lose many of its experienced personnel, especially engineers.

With its chequered history, some would say this is just typical behaviour of a market that is just entering another of its cycles. But in this instance, could it not have been avoided?

We are often reminded that in today’s multilateral world, where continents, regions and countries are increasingly becoming interconnected, there is little room for unilateral action, especially in the vast and intricate world of commodity trading. Today, operating purely through self-interest is quite simply frowned upon. As the old adage says, a problem shared, is a problem halved.

Yet, when it comes to the supply of petroleum, there is a stubborn willingness of some non-OPEC producers to adopt a go-it-alone attitude, with scant regard for the consequences. These parties consider producing to the maximum as being the norm. To them, rationalizing the development of one’s precious natural resources in keeping with market demands appears to be an alien concept.

This same self-interest and unilateral thinking could not be more apparent today with the advent of the ‘game-changing’ tight oil, which has taken the market by storm over the past few years. Make no mistake — this unconventional source is a great and welcome addition to the world’s potential oil wealth. But the timing of its exploitation is certainly questionable. The facts behind the market oversupply speak for themselves.

Fact: OPEC crude output has been stable over the last nine years. Production has averaged 30 million b/d, with zero growth.

Fact: Over the same period, non-OPEC production — led by the US and Canada — has surged by 6.3m b/d. In 2014 alone, growth was measured at over 2m b/d compared with 2013.

In the past, OPEC has often shouldered the burden of ensuring oil market stability alone. In the current situation, which should be of great concern to ALL, is it not time for this burden to be shared?
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Online Colin P

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #62 on: April 14, 2015, 12:28:42 »
That "stability" was for OPEC benefit, not ours. Most of those countries need a fairly high price per barrel to pay off political debts and to maintain loyalties. since much of that money was used by Saudi to destabilize the Islamic world with their nutbarism, I will take this new instability over the previous. 

Offline S.M.A.

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #63 on: April 27, 2015, 11:10:27 »
Gas prices to still be a US 2016 election issue...but for different reasons than before.

CNBC

Quote
Why the US won't have OPEC to kick around in 2016

As candidates for the 2016 U.S. general election gear up for a White House run, one villain of recent campaign cycles will be conspicuously absent: the cartel known as OPEC.

(....SNIPPED)

Now that the U.S. is producing much of its own energy supplies, and with gas prices tame, the Organization of the Petroleum Exporting Countries won't loom as the boogeyman it has in prior election years, when presidential contenders were forced to address how they'd confront petro-states over costly oil prices.

As benign as the politics of oil have become for the U.S., it has become an enormous source of social strain for OPEC countries, many of which are being deprived of the currency needed to maintain social stability. According to data from the International Monetary Fund , countries such as Iran need a price of around $122 per barrel of oil just to balance their budgets. Several others need a price of between $100 and $130 per barrel to come close to breaking even.

(...SNIPPED)



Quote
Vincent DeVito, a partner in Bowditch & Dewey and former U.S. assistant secretary of energy in the administration of former president George W. Bush, insists the issue of oil should still be of major importance to presidential candidates. Oil's place as a national security issue and a booming market mean candidates should continue to address the subject.

DeVito acknowledges that dependence on foreign oil has decreased, but he says the U.S. "has not been exercising its producer muscle" for geopolitical and national security purposes, most notably to counter Russia's ability to strong-arm its neighbors with its oil and natural gas riches.

(...SNIPPED)
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Offline Thucydides

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #64 on: May 16, 2015, 12:31:29 »
The American Interests suggests that the "oil war" could continue for many years to come. Low oil prices benefit ourselves (in most sectors of the economy) while hurting many nations who are depenent on oil revenues for their budgets (Saudi actions are not exclusively aimed at American oil shale producers). Saudi Arabia has something like $700 billion banked away, so they should be able to hold out for several years, I am curious as to how long Iran or Russia can weather the low oil prices. (Domestically, it should be interesting to see how the NDP deals with low oil roices now that they have gained access to the piggy bank in Alberta. Watching the rest of Canada suddenly be cut off from "equalization payments" should provide the incentive to truely reform a lot of how so called "public service" is defined and delivered here as well):

http://www.the-american-interest.com/2015/05/15/strap-in-for-a-long-oil-price-war/

Quote
Strap in for a Long Oil Price War

The trenches have been dug, the preparations (mostly) made, and now we’re in for a protracted price war between the entrenched petrostates of OPEC and the upstart producers fracking American shale. Both sides are pumping copious amounts of crude—some 1.5 million barrels per day more than what the market demands—and prices have subsequently crashed from a zenith of more than $110 per barrel last June to just above $65 per barrel today.

Saudi Arabia has strong-armed the rest of OPEC into going along with its strategy not to cut production in a bid to gain market share on U.S. shale firms, and ahead of the cartel’s semi-annual meeting next month there’s little sign that any dip in output is forthcoming. By abdicating the role of the global swing producer, OPEC believed it would put pressure on the relatively high-cost shale boom, forcing producers to trim production as certain plays became unprofitable.
But U.S. firms haven’t assumed that role as readily as the Saudis would have hoped. Rather, they’ve been hard at work innovating their way to profitability even at $65 per barrel. True, shale growth is expected to slow this year and the next, but it isn’t going away. Combine that with production growth from other non-OPEC producers, and what the cartel is left with is a longer-term price war than it likely bargained for. The WSJ reports:
 

Russia’s output jumped an unexpected 185,000 barrels a day year-on-year in April and Brazilian production was up 17% in the first quarter, the IEA said. Meanwhile, production in China, Vietnam and Malaysia has also shown persistently strong growth. The IEA expects Chinese oil production to increase by 100,000 barrels a day this year to 4.3 million barrels a day. A recent rally in oil prices could also give U.S. shale-oil producers a fresh lease on life.
“It would thus be premature to suggest that OPEC has won the battle for market share. The battle, rather, has just started,” the IEA said.

The Saudis have the funds to make up for the budget shortfalls cheap oil is foisting upon them, but the rest of OPEC isn’t anywhere near as well prepared. Nigeria, Iran, and Venezuela have all agitated for the cartel to take action, though none have volunteered to be the one to actually make the necessary cuts. Saudi Arabia is realistically the only member capable of meaningfully moving the market, but it no longer seems willing to take one for the team, as it were, and cut production. As the IEA pointed out, this price war is only just beginning.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline TCBF

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #65 on: May 17, 2015, 16:53:08 »
- Burning coal produces fly ash. Fly ash was ordered 'captured' years ago, which it was. What to do? Fly ash was used to diminish cement proportions in concrete (cement production is non-friendly), which it did well, and some fly ash types did better than others. Result: Alberta fly ash is used for concrete production and in some cases preferred all over North America and Hawaii. Meanwhile, the anti-coal activists have convinced the 'base' that all coal is bad. Resulting in the closing of a plant near a seam of coal that produced superb fly ash when burnt. Where will the fly ash now come from? Well, it is politically impossible to get a new coal plant approved (check out the history of Notwell's CoS), but: if one was to propose a fly-ash production facility that burned coal as cleanly as possible for the production of fly ash and used the resulting potential power production for co-gen, and sold the unexpected surplus on the open market...

:-)
"Disarming the Canadian public is part of the new humanitarian social agenda."   - Foreign Affairs Minister Lloyd Axeworthy at a Gun Control conference in Oslo, Norway in 1998.


"I didn’t feel that it was an act of violence; you know, I felt that it was an act of liberation, that’s how I felt you know." - Ann Hansen, Canadian 'Urban Guerrilla'(one of the "Squamish Five")

Offline Thucydides

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #66 on: May 29, 2015, 11:08:38 »
OPEC has shot itself in the foot, but can't seem to get themselves organized to fight the threat of American shale oil. I suspect that on factor the writers are overlooking is the Saudis are fighting several different battles using the oil weapon. Radical Islamists like ISIS don't get the benefit of being able to capture supplies of crude oil in Syria or northern Iraq (keeping them as a managable threat, but still available for the second goal). Arch enemies like Iran also have their actions constrained, since they must fight groups like ISIS to maintain their hold on Syria and Lebanon, continue their nuclear program and maintain a relatively large welfare state to keep the population pacified with much less money coming in. Supporters of Syria and Iran, like Russia, are also getting it in the neck, which supports Saudi Arabia's own long term goal to become the regional Hegemon of the Middle East.

For the Saudis, they belive they can assume the risk, since they have by far the largest amount of money in the bank (at @ $700 billion dollars, they could theoretically maintain their own welfare state for seven years even with no money at all coming in...). During this time, they can safely assume the Americans will become tired or impatient and leave the Middle East (or change their policy in ways which does not favour Iran), and their enemies will run out of resources first:

http://www.the-american-interest.com/2015/05/28/opecs-own-outlook-getting-grimmer/

Quote
OPEC’s Own Outlook Getting Grimmer

Every five years OPEC releases a long-term outlook, and a lot has changed since the last report in 2010. American shale has come on to the scene in a big way, contributing to a global oversupply that, coupled with weak demand, has helped depress prices more than 40 percent in barely a year. OPEC hasn’t acted to constrict production and set a floor to this price slide, consigning its petrostate members to market conditions that push regimes into the red. As Reuters reports, OPEC’s next long-term report suggests prices won’t be rebounding anytime soon:
 
A draft report of OPEC’s long-term strategy, seen by Reuters ahead of the cartel’s policy meeting in Vienna next week, forecast crude supply from rival non-OPEC producers would grow at least until 2017.

Sluggish global demand for oil means the call on OPEC’s crude will fall from 30 million barrels per day (bpd) in 2014 to 28.2 million in 2017, effectively leaving the group with two options – cut output from current levels of 31 million bpd or be prepared to tolerate depressed oil prices for much longer.

Saudi Arabia has pushed OPEC into its current strategy of competing with non-OPEC producers for market share in the hope that U.S. shale producers might assume the role of the market’s swing producer. While in the past OPEC had to cut production to buoy prices, the Saudis are hoping the high cost of fracking will force American producers to necessarily draw down operations when they can no longer stay profitable, allowing OPEC to produce at will without prices plunging as a result of oversupply.

But it’s not clear that the Saudis and OPEC can have their cake and eat it, too. The breakeven price of oil for most of the cartel’s regimes require is higher than the price most American shale operators need to turn a profit, meaning that even if U.S. shale takes the swing producer mantle, OPEC members will still be saddled with a global price too low to stay solvent. Moreover, shale firms are cutting their own costs through innovative new techniques, like drilling multiple horizontal wells per rig, allowing them to keep producing even in today’s bear market.

OPEC’s new draft report suggests the cartel is keenly aware of the growing threat they face from the rest of the world’s suppliers, and it should give members plenty to discuss at next week’s semiannual meetings.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline Thucydides

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #67 on: July 22, 2015, 15:58:25 »
American shale oil producers are becoming even more savvy and creative in the newly competative environment:

http://nextbigfuture.com/2015/07/us-shale-oil-finances-are-shaky-but.html

Quote
US Shale oil finances are shaky but doing better than deepwater oil and oilsands
 
Six months after the oil-price slump ($100 to $43 and today about $57) only five firms out of the hundreds in the US shale-drilling business have gone bankrupt.
 
The typical shale well costs just $10 million and can be producing within a matter of months. That means the industry can adapt fast. Since December shale firms have cut costs by 20-25%, according to Bob Brackett of Sanford C. Bernstein, a research firm. This has been achieved by brutally squeezing the oil-services firms that provide them with rigs, pumps and staff—big services companies such as Halliburton have fallen into losses and small ones are on life support.
 
The shale producers have also cherry-picked which wells they drill, concentrating on the best prospects and fine-tuning their engineering methods. As a result the number of rigs active in America has dropped by half since the start of the year.
 
All firms have slashed their capital-investment budgets for 2015—a reduction of a third is planned in aggregate.
 
Listed E and P firms owe $235 billion and during the first quarter debt rose, reflecting continued heavy spending. Assume a firm is in trouble if its net debt is more than eight times its annual cashflow from operations (based on the annualised first-quarter figures and excluding the benefit from derivatives). On the basis of this snapshot, 29 of the 62 firms are distressed, owing a total of $84 billion. Listed shale firms with distressed balance-sheets account for 1.1 million barrels a day of oil production, or 1.2% of global oil production.

NOTE- If the firms go bankrupt then their land (and reserves) will get sold to other firms at lower prices. The companies may not live but the US shale industry will.
 
Based on the first quarter (excluding derivative gains), their overall annualised return on capital was 8%, before any taxes or any capital investment. After deducting a rough guess at the capital investment required to keep production flat in the short term, returns on the historic capital invested fall to zero. Some 55 of the 62 firms, accounting for 4% of global oil production, are making inadequate returns, by our reckoning.
 
Most shale firms say that by being thriftier and more selective they can earn annualised returns of 25% or more on new wells at $60-a-barrel oil. Reinforcing their optimism, there is a buoyant secondary market for new wells once they are producing, with pension funds and tax-free investment vehicles the buyers. An E&P firm active in the Eagle Ford basin, in Texas, says it can sell newly drilled wells for 1.4 times their cost. Sceptics grumble that they have heard it all before.

 Oil capacity is being cut elsewhere, particularly in projects with high production costs, from deepwater drilling in places like the Arctic or Canada’s oil sands. Of the worldwide investment cuts by listed energy firms expected to happen by 2016, only about half are forecast to come from shale, according to Oswald Clint, also of Bernstein.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline S.M.A.

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Tough times for Saudi millionaires in oil glut
« Reply #68 on: July 30, 2015, 08:57:48 »
Ha! No more Ferraris or hiring of Malaysian Chinese prostitutes in trips to Kuala Lumpur for these sickos!  ;D

The hotels in Kuala Lumpur's Pentaling Jaya area will sure see a drop in the number of bookings for their bridal/executive suites.

CNBC

Quote
Tough times strike Saudi Arabia's millionaires
By Katy Barnato | CNBC – Mon, 27 Jul, 2015 10:35 AM EDT

Turmoil in the Middle East, an unimpressive international stock market debut and tumbling oil prices will hit the wealth of Saudi Arabia's richest in years to come, according to a new report from WealthInsight.
Over the next five years, more Saudis will become U.S. dollar-millionaires, but the rate of increase will slow to 12.4 percent, less than half the steep 25 percent rate seen between 2010 and 2015, said the research firm.
This means that by 2020, around 55,245 Saudis will be high-net-worth individuals, with over $1 million in net assets, excluding their primary residence. This is up from 49,150 in 2015, according to WealthInsight, when Saudi Arabia-one of the most populous countries in the Gulf-had a total population of around 29 million.
One-fifth of Saudi Arabian millionaires make their money from oil, said WealthInsight, but the 50 percent decline in the price of WTI crude oil (New York Mercantile Exchange: @CL.1) over the last 12 months is only one factor behind the upcoming slowdown

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Plus bad news for US oil producers:

Foreign Policy

Quote
Oil Glut Sends Crude Prices Tumbling and Hammers U.S. Producers
Supply is outstripping demand by more than 2 million barrels per day — and that's before Iran starts selling more crude in the wake of the landmark nuclear deal with Washington.

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Offline S.M.A.

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #69 on: August 07, 2015, 09:14:15 »
2 articles of interest:

CNBC

Quote
In the oil market, $30 is the new $50
By Patti Domm | CNBC – Tue, 4 Aug, 2015 4:00 PM EDT

Even as oil bounces back, analysts say market fundamentals are very bearish, and it would not be surprising to see crude take a temporary dive into the $30s per barrel in the next several months.
"There's no reason why oil won't go down to the $30s. That's the level that will really shut in current production and have a bigger edge than current capex (cuts) will have on the oversupply," said Edward Morse, global head of commodities research at Citigroup.
"I don't think it would stay there long but it can't be dismissed as a range for the fourth quarter of this year or first quarter of next year," he said in an interview. While Citigroup has said this previously, Morse made the comment while Brent crude traded around the key $50 level, which it broke below for the first time in seven months Monday.

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CNBC

Quote
Iran nuclear deal: This is what it means for oil
Arjun Kharpal   | @ArjunKharpal
Tuesday, 14 Jul 2015 | 12:48 PM ET
CNBC.com

Oil prices reversed themselves and moved higher despite a historic nuclear deal that traders feared could flood the market with Iranian crude.

Under the landmark agreement, economic sanctions on Iran would be lifted in exchange for restrictions on its nuclear program. As a result, Iran will now be able to rejoin the world economic stage and export its goods – including oil.

Brent crude fell as much as 2 percent to hit $56.67 a barrel early on Tuesday in response, but later changed directions to $58.42, a gain of about 1 percent. West Texas Intermediate was up more than 1 percent at $52.86. Natural gas was down 1.2 percent.

(...SNIPPED)

Our Country
--------------------------------
"A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: We did it ourselves."   - Lao Zi (老子)
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"Courage is going from failure to failure without losing enthusiasm."
- Winston Churchill

Offline Thucydides

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #70 on: August 16, 2015, 14:35:35 »
The "oil war" strategy is very complex; the Saudi's have the short and medium term goals of limiting Iranian revenues to cripple Iranian hegemonic ambitions, keep ISIS on a short leash, cripple Iranian allies who are in a position to strengthen Iran (or weaken the Saudis), as well as the long term goal of keeping American allies and trade partners dependent on imported oil through supply management and price manipulation. (America itself actually imports little oil from the Middle East, far more oil is/was imported from Mexico, Venezuela and Canada). This article suggests that while the Saudi strategy will work well in the Middle East and against Russia, their longer term goal is not achievable, and the Saudi's may end up consuming their $700 billion dragon's hoard to slay the Iranian threat without being able to quickly replenish their money supply through oil sales to US allies and trading partners (with negative long term consequences to their internal welfare state system as well):

http://nextbigfuture.com/2015/08/half-of-north-dakota-wells-return-over.html

Quote
Half of North Dakota Wells return over 10% even at $30 per barrel well below $70 breakeven estimate before oil price slump
 
Some parts of North Dakota’s Bakken shale play are profitable at less than $30 a barrel as companies tap bigger wells and benefit from lower drilling costs, according to a Bloomberg Intelligence analysis. That’s less than half the level of some estimates when the oil rout began last year.

The lower bar for profitability is one reason why U.S. oil production has remained near a 40-year high even as crude prices fell more than 50 percent over the past year to the lowest level since March 2009.

West Texas Intermediate crude for September delivery fell to $42.23 a barrel Thursday, the lowest settlement since March 2009. In North Dakota, where producers have to offer discounts to account for extra transportation costs, the price of Bakken oil reached $30.80 Wednesday, according to Royal Dutch Shell PLC.

In McKenzie County, North Dakota, one of the core areas of the Bakken, the median breakeven price is a little more than $29 a barrel, Foiles said. That’s about a third less than in nearby Williams County, and it’s less than half the average breakeven price for the Bakken that banks and research firms estimated last fall.

McKenzie County wells have shown the best returns amid the price drop. Drillers had 26 horizontal wells seeking oil in that county last week, the most in the state, according to Baker Hughes Inc.

Bakken oil production in North Dakota has fallen less than 2 percent from its peak in December, while the number of oil rigs in the state has fallen by 60 percent.

H/T Instapundit

EOG Resources Inc., the largest shale driller, says it can make a 30 percent after-tax return on $50 oil in its best plays. Whiting Petroleum Corp., the largest Bakken producer, said it’s preparing to be able to grow production at $40 to $50 prices.

At a realized oil price of $29.42, half of Bakken wells will generate returns exceeding 10%.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline suffolkowner

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #71 on: August 16, 2015, 22:44:31 »
Thucydides have you seen the actual production numbers? Last I looked I couldn't really see where the Saudis were actually overproducing it looked to me like they just weren't curtailing production

Offline cupper

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #72 on: August 16, 2015, 23:02:54 »
This is a good resource.

http://www.eia.gov/petroleum/
It's hard to win an argument against a smart person, it's damned near impossible against a stupid person.

There is no God, and life is just a myth.

"He who drinks, sleeps. He who sleeps, does not sin. He who does not sin, is holy. Therefore he who drinks, is holy."

Let's Go CAPS!

Offline suffolkowner

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #73 on: August 16, 2015, 23:11:02 »
Thanks cupper

The numbers pretty much look the same to me as the last time I saw them

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Re: US vs OPEC "Oil War" (trade war)?
« Reply #74 on: August 21, 2015, 08:02:56 »
Here (thanks to Ian Bremmer of the Eurasia Group) is an interesting graphic (with source information at the bottom):

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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