[dashster]

Saudi Arabia. According to this oilprice.com article Saudi Arabia is forecasting a 38.6 billion dollar deficit next year, its' first budget deficit since 2011 and largest ever.

However apparently they don't spell out what price they see for 2015, and in the article there are various people quoted for what Saudi Arabia actually is forecasting the price of oil to be in 2015:

Monica Malik, the chief economist at Abu Dhabi Commercial Bank: $55
Saudi investment bank Jadwa Investment: $56
National Commercial Bank: $61
Emad Mostaque, an oil strategist at Ecstrat: $63
John Sfakianakis, the former chief economic adviser to the Saudi Finance Ministry: $75

[Sixstrings]

And oil headed for the $40's:

Brent crude plunged below $57 per barrel briefly on Tuesday, marking a new five-and-a-half-year low as traders bet that the global oversupply of oil will continue deep into 2015.

The benchmark has fallen more than 45pc since June and is on track for its worst year since 2008, while oil traded in the US is now poised to crash through the $50 per barrel level.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11317216/Brent-oil-hits-new-low-as-Opec-price-war-deepens-slump.html

[ROCKMAN]

If oil stays between $55 to $60 per bbl thru 2015 the KSA revenue for the year will be the 6th highest yearly revenue they've taken in since they began exporting oil. It will also be 56% higher then their oil export revenue in 2009. And, adjusted for inflation, their 2015 revenue will still exceed revenue earned in the 37 years between 1970 and 2007. And that $39 billion deficit? The KSA has a reserve of over $700 billion sitting in secure paper and investments like US T-bills, etc.

I don't expect to see much change in day to day life for the average Saudi.

[Sixstrings]

If oil stays between $55 to $60 per bbl thru 2015..

Good facts and points in your post, but -- people are saying that oil will not stay at $55, and is headed lower.

This shale boom is only going to get bigger, no? My hunch is that eventually OPEC will cut production, but then their fear about that will come true and they'll just lose market share to shale. I don't know what I'm talking about, but that's my hunch! We'll find out!

[Subjectivist]

If oil stays between $55 to $60 per bbl thru 2015..

Good facts and points in your post, but -- people are saying that oil will not stay at $55, and is headed lower.

This shale boom is only going to get bigger, no? My hunch is that eventually OPEC will cut production, but then their fear about that will come true and they'll just lose market share to shale. I don't know what I'm talking about, but that's my hunch! We'll find out!

How do you reach this bizarre conclusion that the shale boom is "only going to get bigger"? Stock prices for the companies big on Fracking in America have dropped like hot potato's tossed around the campfire.

[BobInget]

A majority of Americans have been led to believe there are two scientifically valid sides to the issue of Anthropgenic Global Warming. Some, reading these pages at one time believed cigarettes may not be good for a person but still, relatively benign. Why? "Because smoking gives me great pleasure". By now experience may have changed minds.

I also believe almost no one here believes we, North Americans, are informally engaged along with Russia, China, Japan in deadly struggles for the world's remaining, rapidly diminishing #1 fossil fuel, oil. Some here obviously avert our eyes from disturbing new reports concerning World Wide Crude Oil Wars or struggles of poverty stricken victims of repressive monarchs and power crazed generals.

Can we predict future oil prices based on number and severity of Allied air strikes?

Here's a question for the board.. How much treasure--- How many American lives--- do you believe worth, siding with one of the most repressive regimes on the planet to obtain cheaper oil? How long should we 'protect' The House of Saud against their own people? Is $40/$50 oil worth the effort? How about $20? Are you prepared to put aside caution for $1.50 a gallon gasoline?

Let's look at just two troublesome, 'unintended consequences'.

#1) The US lost Venezuelan supply to China.. That's a huge loss, so far, largely ignored. More difficult to ignore will be oil shortages, higher prices. Venezuela is currently America's fourth biggest supplier.

#2) One million absent barrels p/d out of Libya, doubtless for more then a year.
I'm guessing destroying Libya's main ports was not unintentional. Deny a tenuous sitting government revenue to pay fighting men is hardly a new tactic.

The two examples sited above are not conjecture. I realize the strategy is to bankrupt Venezuela, forcing them back into US orbit. China however has been quicker off the mark. Venezuela's Orinoco "tar" sands, rich off shore, all now safely tucked away in China's fine hands.

[Shaved Monkey]

When the price does snap back, after Venezuela, Russia and Iran are sufficiently politically weakened.
The consumer and global economies will be shocked back into recession, with possibly lower prices than we had before this little game started.
and we will have a lot of political instability spread wide and far

[Sixstrings]

How do you reach this bizarre conclusion that the shale boom is "only going to get bigger"?.

Because trends are long term.

People on this very forum used to shale couldn't work out at all, at any price, that the EROEI was backwards, there's not enough water for fracking, on and on.

It worked out, Saudi Arabia is competing against it, Venezuela and Russia have budget problems because of it. Glut Oil is here, it's the reality regardless of how anyone feels about it.

(if shale stocks are down, then that's actually a better investment than depressed Russians stocks, but nobody listen to me I fully admit I just have hunches and do not know what I'm talking about )

EDIT: and another thing -- if nothing else, light crude will peak at some point if not already, but shale will still be there. There's a lot of it. Shale is not going away, and from what someone else posted I guess there's 30 years to go on the US shale boom.

After all these years, the peak oil story may wind up being a matter of peak *light sweet crude*. Alternatives came online, in time, to replace it and from the looks of things it's replacing it even before the OPEC nations were ready for it and there's still a lot of light sweet in the ground and now they've got a oil war on with US shale.

[Sixstrings]

Look at it this way..

If there's a competition between lighter crude and US shale going on, then who is going to win that ultimately?

What has to happen, for one side to win that? Answer: one side lowers production. So, what can lower production? Two things:

1. OPEC eventually cuts production in a desperate bid to get oil prices higher, but yet they know they can't do that because higher prices just makes shale more profitable, no?

2. Another way oil production may lower would be due to instability. The other oil producing nations are more vulnerable to instability. Whereas, there's never going to be any instability in the US that could stop shale oil.

I'm no oil expert, just doing a thought exercise here, am I wrong?

[dashster]

If oil stays between $55 to $60 per bbl thru 2015 the KSA revenue for the year will be the 6th highest yearly revenue they've taken in since they began exporting oil. It will also be 56% higher then their oil export revenue in 2009. And, adjusted for inflation, their 2015 revenue will still exceed revenue earned in the 37 years between 1970 and 2007.

I guess governments are like people - they tend to spend what they make.

I have thought, any time it is mentioned that lower oil prices are hurting country X, that these prices - even after the recent collapse - are still less than what the Cornucopians and mainstream foresaw back 2004. A 2004 IEA report showed production climbing linearly through 2030 to 120 million, and prices in the in the $30 to $50 range.

And that $39 billion deficit? The KSA has a reserve of over $700 billion sitting in secure paper and investments like US T-bills, etc.

I wonder what they are saving the 700 billion for? Maybe they don't see Saudi Oil lasting as long as they say.

[Sixstrings]

US dollar has best year in ten years:

Dollar has its best year since 2005



NEW YORK (MarketWatch) — The U.S. dollar ended its strongest year since 2005 with gains versus major rivals as investors penciled in further strength in the U.S. economy and diverging monetary policy paths between a more hawkish Federal Reserve and dovish European and Japanese central banks.

...

Overall analysts are bullish on the dollar going into 2015, as a strong improvement in the U.S. economy is seen as pushing the Federal Reserve closer toward raising interest rates.
http://www.marketwatch.com/story/dollar-index-on-track-for-best-year-since-2005-2014-12-31

American recovery, driven by shale oil and being #1 in energy again, and turmoil in the world with a flight to US dollars?

[Tanada]

Look at it this way..

If there's a competition between lighter crude and US shale going on, then who is going to win that ultimately?

What has to happen, for one side to win that? Answer: one side lowers production. So, what can lower production? Two things:

1. OPEC eventually cuts production in a desperate bid to get oil prices higher, but yet they know they can't do that because higher prices just makes shale more profitable, no?

2. Another way oil production may lower would be due to instability. The other oil producing nations are more vulnerable to instability. Whereas, there's never going to be any instability in the US that could stop shale oil.

I'm no oil expert, just doing a thought exercise here, am I wrong?

You forgot #3. The massive depletion rates in multifrack horizontal shale wells cuts US shale production by 40% within 12 months and the 'oil glut' proves to be an illusion driven by world economic recession. In November 2015 US shale oil produces about 3,600,000 bbl/d compared to the 6,000,000 bbl/d it produced in November 2014 . The 2,400,000 bbl/d drop wipes out the illusory glut while also bankrupting shale well companies because they can not pay their debt service at $55.00/bbl sale prices for WTI. In 2015-2020 people are afraid to invest heavily in Shale Oil Fracking in the USA because so many companies went out of business due to over production in 2014. It takes years of persistently high prices for people to be willing to risk investing in Shale Oil again. By the time they do depletion in conventional oil has progressed far enough that Shale can not make up the difference and world peak is recognized.

[Sixstrings]

You forgot #3. The massive depletion rates in multifrack horizontal shale wells cuts US shale production by 40% within 12 months and the 'oil glut' proves to be an illusion driven by world economic recession. In November 2015 US shale oil produces about 3,600,000 bbl/d compared to the 6,000,000 bbl/d it produced in November 2014 . The 2,400,000 bbl/d drop wipes out the illusory glut while also bankrupting shale well companies because they can not pay their debt service at $55.00/bbl sale prices for WTI. In 2015-2020 people are afraid to invest heavily in Shale Oil Fracking in the USA because so many companies went out of business due to over production in 2014. It takes years of persistently high prices for people to be willing to risk investing in Shale Oil again. By the time they do depletion in conventional oil has progressed far enough that Shale can not make up the difference and world peak is recognized.

I don't know what I'm talking about but I can tell when someone does, and that's a good line of reasoning there.

I'm just not an expert on this stuff, you say "multifrack horizontal shale depletion in 12 months" and okay that sounds scientific to me, but others say there's 30 years to go on shale.

I'm more of a trends person. My hunch tells me there wouldn't be all this buildup about US shale if you were right Tanada, and the Saudis wouldn't be worried about it if you were right.

So why are the Saudis so worried about it.

Personally I'd trust thinking and analysis coming from Saudis, on this. They may hide their true reserves, but otherwise they seem pretty straightforward when talking about the oil business.

We'll see how this goes, maybe you are right, maybe these low prices and "multifrack depletion" or whatever will slow down US shale in a year, then prices will rebound, and OPEC is the big game in town again.

[rockdoc123]

I'm just not an expert on this stuff, you say "multifrack horizontal shale depletion in 12 months" and okay that sounds scientific to me, but others say there's 30 years to go on shale.

new shale wells when brought on stream produce at a relatively high rate but then decrease in rate by as much as 80%/year and then generally remain flat at a certain level for decades. The reason for this is when the wells are first brought on stream production is coming from fractures which are filled with hydrocarbon. Fracture permeability is very high and hence the high flush production. But the permeability within shales is extremely low (nanodarcies versus darcies found in fractures) so it take a long time for gas/oil to flow from the shale porosity to the fractures and then into the wellbore. Once the fractures are depleted in the early phase of production the flat long life phase of production is determined by the rate at which gas/oil from the matrix and flow into the fractures.

It is very difficult to assess what the impact of not drilling wells will be without understanding how many wells have actually gone past the steep initial decline phase. If most of the existing production is coming from wells still in this decline phase or ones that have been newly drilled the impact will be much larger than if the vast majority of wells have already reached the flat decline phase.

[shallow sand]

Saw a chart on other board which showed just under 50% of ND oil production was from wells 9 months old or less.

Looks like the average per day for older Bakken wells is around 50 and for EFS is around 35. Harder to tell on Permian, but appears maybe closer to EFS number I'm citing, than Bakken in ND. I'm just taking this from info I've read, not anything I've calculated.

Concern I would have is the horizontal leg "clogging up" over time. Just a guess on my part and would appreciate input

To me a big deal if these 30,000+ new well will hold up at a strong rate long term. Apparently shale makes up about 5.2 of 9.1 million BOPD of us production. How these wells hold up will have a big impact.

[rockdoc123]

Concern I would have is the horizontal leg "clogging up" over time. Just a guess on my part and would appreciate input

To me a big deal if these 30,000+ new well will hold up at a strong rate long term. Apparently shale makes up about 5.2 of 9.1 million BOPD of us production. How these wells hold up will have a big impact.

It is kind of unknown territory given the shale production history really hasn't been long enough to tell what is going to happen. Many of these wells produce at a rate that is above operating costs but would not allow for much in the way of intervention, my guess being a full recompletion would be out of the question. That being the case there could be some early abandonments due to technical factors (fines migration, fracture collapse etc.).

The only long term example of similar reservoirs producing for long periods of time at low decline rate is in the Antrim shale. Not a great analog though as the lithology is somewhat different than most of the other shales.

Its a good question and certainly going to be what governs where we end up in a years time.

[Tanada]

I'm just not an expert on this stuff, you say "multifrack horizontal shale depletion in 12 months" and okay that sounds scientific to me, but others say there's 30 years to go on shale.

new shale wells when brought on stream produce at a relatively high rate but then decrease in rate by as much as 80%/year and then generally remain flat at a certain level for decades. The reason for this is when the wells are first brought on stream production is coming from fractures which are filled with hydrocarbon. Fracture permeability is very high and hence the high flush production. But the permeability within shales is extremely low (nanodarcies versus darcies found in fractures) so it take a long time for gas/oil to flow from the shale porosity to the fractures and then into the wellbore. Once the fractures are depleted in the early phase of production the flat long life phase of production is determined by the rate at which gas/oil from the matrix and flow into the fractures.

It is very difficult to assess what the impact of not drilling wells will be without understanding how many wells have actually gone past the steep initial decline phase. If most of the existing production is coming from wells still in this decline phase or ones that have been newly drilled the impact will be much larger than if the vast majority of wells have already reached the flat decline phase.

Rockdoc123, do the old fracked vertical wells like they used to drill into shale formations show the same kind of very high depletion rates as the horizontal multi completion wells?

[rockdoc123]

Rockdoc123, do the old fracked vertical wells like they used to drill into shale formations show the same kind of very high depletion rates as the horizontal multi completion wells?

generally no. The reason is that vertical well bore only intersects so many fractures. As a consequence the production drops extremely rapidly since you are usually only depleting one or two fractures. If there are enough natural fractures around that are somewhow connected to the fractures present in the vertical well you would see the flat production profile. The main point of the horizontal wells is to increase the amount of the reservoir (and in this case fractured reservoir) in communication with the well bore. This is oftern referred to as kH or permeability height. The higher the kH the better the flow rate in general.