GHung wrote: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?
Outcast_Searcher wrote: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.
shortonoil wrote: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.
shortonoil wrote:"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.
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.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Ernest Scheyder wrote: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.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
production DID NOT drop in Bakken due to SHUT IN wells. The production drop is 100% DEPLETION of existing wells.
Oil price weakness is the primary reason for the slow-down
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