[shortonoil]

In our report "Depletion: A determination for the world's petroleum reserve" in Section 8, page 43 there is a reference to Mayan Heavy, API 21°. It requires 28% more energy to refine it than API 37.5° crude. -$0.50 sounds about right.

http://www.thehillsgroup.org/

[Outcast_Searcher]

http://www.bloomberg.com/news/articles/2016-01-18/the-north-dakota-crude-oil-that-s-worth-less-than-nothing

>Flint Hills values North Dakota Sour crude at -$0.50 a barrel
>Crude prices based on sulfur content and transport costs

Oil is so plentiful and cheap in the U.S. that at least one buyer says it would need to be paid to take a certain type of low-quality crude.

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a list price posted on its website. That’s down from $13.50 a barrel a year ago and $47.60 in January 2014.

While the negative price is due to the lack of pipeline capacity for a particular variety of ultra low quality crude, it underscores how dire things are in the U.S. oil patch. U.S. benchmark oil prices have collapsed more than 70 percent in the past 18 months and West Texas Intermediate for February delivery fell as low as $28.36 a barrel on the New York Mercantile Exchange on Monday, the least in intraday trade since October 2003.

So what's the point of producing oil that no one wants?

If no one truly wants it, then no one will buy it, and that production will be shut in.

That's the way markets work. Since over time the demand for crude oil globally is still growing, at some point enough oil shut in will close the supply/demand gap. That will shrink the amount of oil in storage over time, and then the price of oil will rise accordingly. And when it get high enough, some of the shut in oil will be produced again, raising supply to meet demand.

Again, this is the way markets work, as long as there are many buyers and sellers competing. This is neither surprising, nor a problem.

[Synapsid]

We are now told on Bloomberg that the $-.50 price was an error. It has been corrected to $1.50 (not negative).

[ennui2]

That's the way markets work. Since over time the demand for crude oil globally is still growing, at some point enough oil shut in will close the supply/demand gap. That will shrink the amount of oil in storage over time, and then the price of oil will rise accordingly. And when it get high enough, some of the shut in oil will be produced again, raising supply to meet demand.

Again, this is the way markets work, as long as there are many buyers and sellers competing. This is neither surprising, nor a problem.

The logic here is so simple even a preschooler can understand it. It's tragic how some people here strain and struggle to understand this.

[shortonoil]

The logic here is so simple even a preschooler can understand it. It's tragic how some people here strain and struggle to understand this.

Very simple logic; it is completely useless black crud in a barrel that they ship from EastButFuck North Dakota using two slow mules, and it sells for absolutely nothing when it gets to market. Very simple! Same could be said of cat pee, and second hand toilet water. Once the million dollar's worth of lip stick was washed off this pig; something very interesting appeared: A Pig.

[ennui2]

Very simple logic; it is completely useless black crud in a barrel that they ship from EastButFuck North Dakota using two slow mules, and it sells for absolutely nothing when it gets to market. Very simple! Same could be said of cat pee, and second hand toilet water. Once the million dollar's worth of lip stick was washed off this pig; something very interesting appeared: A Pig.

That's not logic. It's hyperbole.

You want to do some George Carlin standup act, fine. But if you want to be taken seriously, stick to the facts and leave the colorful language and symbolism out of it.

[Pops]

Heavy sour crude was to be the last resort, next resort at least.

Refiners spent billions retrofitting for it.

Gotta imagine they are pissed off that now they have a but load of sweet light to contend with instead.

Don't worry tho, this too will get burned.

[ROCKMAN]

Syn - "We are now told on Bloomberg that the $-.50 price was an error. It has been corrected to $1.50 (not negative)." I suspected as much. Just didn’t have time to dig deeper. I also suspect the error came from not understand how oil is traded. I don't have time to research now but at some point in the exchange the "accounting value" may have been posted as negative value. What typically happens is Heavy Oil #1 is blended with Light Oil #2 which creates Blended Oil #3. The price of #3 is greater than the combined value per bbl of #1 + #2. Again back to what some still refuse to accept: the refineries crack BLENDED OIL...not condensate/light oil or heavy oil. The ND heavy sour oil has a value but only if it is blended with lighter oil. And there is a deduct typically added to any oil with a significant sulfur content. Maybe somewhere in the mix of those numbers Bloomberg understands so little about them they confused the sulfur deduct with the price of the oil.

Or maybe Bloomberg is so f*cked up we’ll never figure out how they developed that analysis in the first place. lol.

[shortonoil]

"That's not logic. It's hyperbole."

If you mean dumping a $trillion worth of useless junk on window, orphans, pension funds and unsuspecting investors by a bunch of unscrupulous crooks, you're right.

[Synapsid]

ROCKMAN,

Matter of fact it was Flint HIlls Resources that posted the $-0.50 price in error. They corrected it on Tuesday.

[ennui2]

"That's not logic. It's hyperbole."

If you mean dumping a $trillion worth of useless junk on window, orphans, pension funds and unsuspecting investors by a bunch of unscrupulous crooks, you're right.

I know you're out there as a social service to help the plebes. Tsk tsk. Such a shame those unsuspecting investors didn't pay for your report.

[shortonoil]

"I know you're out there as a social service to help the plebes. Tsk tsk. Such a shame those unsuspecting investors didn't pay for your report."

Its a shame that you didn't avail yourself to it when it was being given away to anyone who wanted to have it. Other wise you may have more than a one size fits all, myopic view of what is occurring. Tsk tsk, such a shame.

[Tanada]

I was reading the latest post over on peak oil barrel and came across this tidbit. It isn't just for the Bakken but rather for all shale wells across the USA, but these are some interesting numbers.

Data from Rystad Energy show the number of completed wells have by far outpaced the number of wells spudded (drilled) since 4Q14. Indeed, the number of well completions per month continued to increase several months after the rig count started to drop off, peaking at more than 1,600 wells in December 2014. The number of completions are still outpacing the number of new wells drilled, and as a result, the number of uncompleted wells, or the frack-log, has been cut down from its peak of around 4,600 wells hit at the end of 2014 to around 3,700 wells currently.

http://peakoilbarrel.com/the-ieas-oil-p ... more-11523

By my math that works out to a 24 percent reduction in the backlog of drilled but not fracked wells in the USA inventory across all of the shale formations. Of course the future is not set, but a reduction of 900 backlogged wells a year would bring us back to the 'normal' three month wait time by the end of the year, if I understood the implications of the rest of the article correctly. If ROCKMAN or Toolpush or one of you other oil pro's want to weigh in on this I would be thrilled to read your opinion on it.

[Subjectivist]

Sounds like all that earlier talk about a growing backlog turned out to be an error. If the completion rate peaked in December 2014 and has outpaced drilling since then the backlog has to have been shrinking for over a year now.

[Tanada]

Whiting Petroleum is mothballing everything, they plan to complete fracking of their existing wells by April 1, 2016 and then batten down the hatches for the remainder of 2016 unless oil prices recover significantly.

Feb 24 (Reuters) - Whiting Petroleum Corp, North Dakota's largest oil producer, slashed its 2016 budget by 80 percent on Wednesday, saying it will suspend all fracking operations and reduce output to wait for higher crude prices.

Shares jumped 7.7 percent to $4 per share in after-hours trading as investors cheered the decision to preserve capital. Whiting's cut marks one of the largest so far this year in an energy industry crippled by oil prices at 10-year lows.

Denver-based Whiting said it will stop fracking and completing wells as of April 1. Most of the $500 million budget will be spent to mothball drilling and fracking operations in the first half of the year. After June, Whiting said it plans to spend only $160 million, mostly on maintenance.

Rival producers Hess Corp and Continental Resources Inc have also slashed their budgets for the year, though neither has cut as much as Whiting.

"We believe this conservative strategy should help us to maintain our liquidity position and leave us well positioned to capitalize on a rebound in oil prices," Whiting Chief Executive Jim Volker said in a statement.

Whiting also on Wednesday posted a net loss of $98.7 million, or 48 cents per share, compared with a net loss of $353.7, or $2.68 per share in the year-ago period.

Excluding impairment charges, hedging gains and other one-time items, the company posted a loss of 43 cents per share.

By that measure, analysts expected a loss of 30 cents per share, according to Thomson Reuters I/B/E/S.

The year-ago quarter included impairment charges to write down the value of acreage throughout the United States.

Production rose about 18 percent to 155,210 barrels of oil equivalent per day (boe/d), the company said.

For the year, Whiting expects to pump 128,000 to 138,000 boe/d.

Whiting plans to hold a conference call with investors to discuss the results and budget on Thursday.

http://www.rigzone.com/news/oil_gas/a/1 ... et_Slashed

[PeakOiler]

I'll post an updated graph after the EIA releases the next report at the end of February.

[PeakOiler]

Here's the updated chart with data through Dec. 2015:



It will be interesting to see what it will look like at the end of the year.

[Tanada]

At some point the low drilling rate and low completion rate will start showing up in a bigger way. Whiting is mothballing the last of their operations April 1, 2016 and presumably they won't have many if any drilled but not fracked wells at that point as they are planning to go production only for cash flow reasons. From earlier pieces about other companies the vaunted overhang of drilled but not fracked wells has been sharply reduced in the second half of 2015.

If that is accurate I think it means production will enter a steep decline phase for the next year as new wells stop coming on stream but the wells drilled late 2014 and through 2015 are all in their steep decline phase.

[ennui2]

production DID NOT drop in Bakken due to SHUT IN wells. The production drop is 100% DEPLETION of existing wells.

How can he prove that?

The article itself says this:

Oil price weakness is the primary reason for the slow-down