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+++OIL/ GAS supply/demand WARNING+++

Discussions about the economic and financial ramifications of PEAK OIL

+++OIL/ GAS supply/demand WARNING+++

Unread postby M_B_S » Tue 02 Oct 2018, 02:47:53

Strong indications that oil demand > supply!

+++Oilprice will go >100$/b +++

=> Fuel riots and later food riots =>civil unrest and revolutions / war coming very soon.

The Peak Oil "hurricane center" ring the ALARM BELL


https://www.youtube.com/watch?v=Ie9XSiFJ_e0

PEAK OIL!

Background:

https://seekingalpha.com/article/420920 ... ces-rising

https://www.reuters.com/article/us-opec ... SKCN1LL0Z8

https://www.reuters.com/article/us-glob ... SKCN1MC058
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby Tanada » Tue 02 Oct 2018, 08:52:54

I think the key factor is the near total lack of investment for the three years 2015-2017 during the worst of the glut when world prices were down. Its not like those projects that take a decade to mature will still mature in a decade with a three year pause in the work needed. I am especially thinking of things like the Arctic drilling plan that was started in the North Slope Alaska, then put on hold because it was expensive and money was not pouring in hand over fist. The big Oil-Co's were all using funds to pay dividends and keep stockholders happy rather than paying the exploration and development budgets.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby GHung » Tue 02 Oct 2018, 09:10:03

Tanada wrote:I think the key factor is the near total lack of investment for the three years 2015-2017 during the worst of the glut when world prices were down. Its not like those projects that take a decade to mature will still mature in a decade with a three year pause in the work needed. I am especially thinking of things like the Arctic drilling plan that was started in the North Slope Alaska, then put on hold because it was expensive and money was not pouring in hand over fist. The big Oil-Co's were all using funds to pay dividends and keep stockholders happy rather than paying the exploration and development budgets.


.... or maybe there aren't enough good prospects left to invest in, at least while futures remain under $100, and I'm betting many companies are pretty sure the economy is due to take a downturn well before they could cover the costs of exploration and development. Rising interest rates have to make them nervous if that's their thinking.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby ROCKMAN » Tue 02 Oct 2018, 09:54:19

Ghung – “.... or maybe there aren't enough good prospects left to invest in” Exactly. If I had a REASONABLE 1 million bbl onshore conventional exploration project back when oil dropped to $30/bbl I would easily gotten the funds to drill it. A 100 million bbl target or even 10 million bbl…just 1 million bbl. And by reasonable I don’t mean a 100% chance of success but just a 25% chance. Using 250,000 bbls risked reserves (1 million bbls X 0.25) and a dry cost of $2 million that would be a 3.75 to 1 RISKED RETURN going in and a 15 to 1 actual return had it worked as mapped. And if it hit as mapped my owner probably would have tossed me a $100k bonus. Maybe more…he was a generous guy. LOL.

Think what that same prospect look like today with $65/bbl oil...not $100/bbl. And an 8% interest rate on a $2 million bond don't mean shit on a prospect making a 15 to 1 return. LOL.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby rockdoc123 » Tue 02 Oct 2018, 10:53:30

.... or maybe there aren't enough good prospects left to invest in, at least while futures remain under $100, and I'm betting many companies are pretty sure the economy is due to take a downturn well before they could cover the costs of exploration and development. Rising interest rates have to make them nervous if that's their thinking.


Having been there to partake in the discussions that oil company execs have when these decsions are made there are a few things to keep in mind.

1. If you are a publicly traded company as exec you work for the shareholders and every decision you make is in light of what is most beneficial to them. This is constantly discussed and shapes the decisions.
2. The oil and gas business runs on an average Return on Investment of around 6%. Some companies do better some do worse but what the average tells you is that there isn't a lot of room for waste
3. Opex is generally fixed to your production. It lowers somewhat a few months after oil prices lower due to service charge reductions but generally, it only moves through changes to efficiencies. As a consequence, the areas where oil companies can cut expenditures to counter a significant drop in price is either Capex or G&A.
4. One of the first responses by larger oil companies during extended periods of low commodity price is to reduce G&A. This isn't as effective as reducing Capex but it is expected by the investors and it is a very obvious metric that can drive share price. As an example if at $90/bbl a company is spending X percentage of cash flow on G&A, when that price drops to $45/bbl they almost certainly will be spending 2X percentage of cash flow on G&A, hence layoffs.
5. The biggest impact on spending that can be made is to decrease Capex. Some of that Capex has to be spent because it either is already contracted (eg. a long term commissioning contract for an offshore platform) and/or it results in immediate increased production (and hence cashflow) such as building a pipeline or plant. As a consequence, the most reasonable place to reduce Capex is non-discretional spending which is Exploration spending. If the low price environment is significantly protracted then that will impact future production (as Tanada points out) given existing fields are continuing on whatever decline they might have been on and no new production is coming on stream for a number of years due to an absence of exploration. This is particularly felt for deepwater offshore where delays can be as long as a decade from original discovery to first production.
6. Also as a response to shareholder concerns about share price, if a company has some budget left after cutting as much as possible from Capex the next issue is share buy backs. Contrary to what you read in some of the rabid "gold bug" blogs, the buy backs are not to payoff exec but rather to increase overall share price. All shareholders benefit equally. In all companies I have been involved with exec held a small portion of the total shares given financing was always conducted through various investment banks who end up with the majority of initial shares offered. After a few years of trading it was almost always the case that the majority of shares were widely held by investors.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby M_B_S » Tue 02 Oct 2018, 15:45:10

Tanada wrote:I think the key factor is the near total lack of investment for the three years 2015-2017 during the worst of the glut when world prices were down. Its not like those projects that take a decade to mature will still mature in a decade with a three year pause in the work needed. I am especially thinking of things like the Arctic drilling plan that was started in the North Slope Alaska, then put on hold because it was expensive and money was not pouring in hand over fist. The big Oil-Co's were all using funds to pay dividends and keep stockholders happy rather than paying the exploration and development budgets.


********

Yeah Tanada

The storm is coming:

****************************

https://oilprice.com/Energy/Crude-Oil/T ... -Soon.html

The Oil Industry Needs Large New Discoveries, Very Soon
By Tsvetana Paraskova - Oct 01, 2018, 6:00 PM CDT
Market participants and analysts are all focused on the imminent oil supply gap that is opening with the U.S. sanctions on Iran just five weeks away.

But beyond the shortest term, a larger and more alarming gap in global oil supply is looming—experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s....

The industry basically needs to replace one North Sea each year, as the world needs to replace 3 million bpd of supply decline from mature fields, while global oil demand continues to grow at a robust pace, the International Energy Agency (IEA) said in its Oil 2018 report in March.


Archiv 2017
https://www.scotsman.com/news/north-sea ... -1-4564402
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby pstarr » Tue 02 Oct 2018, 19:00:52

Why The Saudis Can’t Keep A Lid On Oil Prices
OilPrice won't tell you . . . the truth but I will; they have NO SPARE CAPACITY in spite of all the lies. And have peaked
SA has peaked. OPEC has peaked. So goes the world.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby Armageddon » Tue 02 Oct 2018, 20:14:06

The perfect storm is brewing. Buckle up
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby ROCKMAN » Wed 03 Oct 2018, 13:36:05

M.B.S. – “…experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s...”. The consumers of the world have always been short of oil. Oil they could afford, that is. OTOH there has always been enough oil to satisfy consumers WHO COULD AFFORD THE THEN CURRENT PRICE. When oil hit $147/bbl there was a buyer for every bbl sold. And when oil recently hit $28/bbl there were still millions of consumers who couldn’t afford very little oil or any at all.

The only time there could every be a true shortage of oil is when the price dropped so low that every consumer could afford to buy as much as they could use. And that level of demand would be unquenchable IMHO.

When someone says they are worried about “running out of oil” I believe they really mean they are worried about when oil gets too expensive for them to buy. They really don’t give a crap about anyone else. LOL.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby M_B_S » Wed 03 Oct 2018, 15:54:26

ROCKMAN wrote:M.B.S. – “…experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s...”. The consumers of the world have always been short of oil. Oil they could afford, that is. OTOH there has always been enough oil to satisfy consumers WHO COULD AFFORD THE THEN CURRENT PRICE. When oil hit $147/bbl there was a buyer for every bbl sold. And when oil recently hit $28/bbl there were still millions of consumers who couldn’t afford very little oil or any at all.

The only time there could every be a true shortage of oil is when the price dropped so low that every consumer could afford to buy as much as they could use. And that level of demand would be unquenchable IMHO.

When someone says they are worried about “running out of oil” I believe they really mean they are worried about when oil gets too expensive for them to buy. They really don’t give a crap about anyone else. LOL.

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Yes you can print money but no Oil.

There allways money created out of nothing but there is NOT allways Oil because its created out of something.

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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby Armageddon » Wed 03 Oct 2018, 16:12:48

Doesn’t fracking have steep decline rates? How will this effect supply in the next year or two?
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby GASMON » Wed 03 Oct 2018, 17:06:12

Image

Gas
The truth is sometimes incorrect
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby Outcast_Searcher » Wed 03 Oct 2018, 17:24:43

ROCKMAN wrote:When someone says they are worried about “running out of oil” I believe they really mean they are worried about when oil gets too expensive for them to buy. They really don’t give a crap about anyone else. LOL.

+1

Enthusiastic clapping for stating the truth re oil supplies -- at least for a long time to come.

Of course, the entire "your money should be my money, whether I earned it or not" crowd definitely doesn't want to hear that. So telling the truth re economics scores lots of negative political points.

And then we wonder why our elected representatives tend not to tell us the truth. :roll:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby GHung » Wed 03 Oct 2018, 17:29:46

Outcast_Searcher wrote:
ROCKMAN wrote:When someone says they are worried about “running out of oil” I believe they really mean they are worried about when oil gets too expensive for them to buy. They really don’t give a crap about anyone else. LOL.

+1

Enthusiastic clapping for stating the truth re oil supplies -- at least for a long time to come.

Of course, the entire "your money should be my money, whether I earned it or not" crowd definitely doesn't want to hear that. So telling the truth re economics scores lots of negative political points.

And then we wonder why our elected representatives tend not to tell us the truth. :roll:


You guys sort of skipped the part where, when oil gets more expensive (perhaps too expensive for some folks), the price of everything tends to go up. We all tend to feel it, whether or not you are smugly situated to absorb those costs. Discretionary spending tends to go down, and that's a big chunk of the economy.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby Outcast_Searcher » Wed 03 Oct 2018, 17:39:38

GHung wrote:
Outcast_Searcher wrote:
ROCKMAN wrote:When someone says they are worried about “running out of oil” I believe they really mean they are worried about when oil gets too expensive for them to buy. They really don’t give a crap about anyone else. LOL.

+1

Enthusiastic clapping for stating the truth re oil supplies -- at least for a long time to come.

Of course, the entire "your money should be my money, whether I earned it or not" crowd definitely doesn't want to hear that. So telling the truth re economics scores lots of negative political points.

And then we wonder why our elected representatives tend not to tell us the truth. :roll:


You guys sort of skipped the part where, when oil gets more expensive (perhaps too expensive for some folks), the price of everything tends to go up. We all tend to feel it, whether or not you are smugly situated to absorb those costs. Discretionary spending tends to go down, and that's a big chunk of the economy.

I'm sure it's "smug" to point out that the average household income is now over $60,000 in the US now. :roll: If you don't have a decent argument, be sure and result to name calling, as that's so credible. 8)

https://www.cnbc.com/2018/09/12/median- ... 61372.html

So first, let's not pretend like dealing with a little more inflation is going to be economic doom. For the umpteenth time, some inconvenience isn't anything remotely close to economic hardship, much less doom.


Second, if people won't burn less fossil fuels, and thus slow AGW voluntarily -- then bring on the price constraints (that SHOULD have been CO2 taxes) and let them do the job. After all, this board spends considerable "energy" proclaiming AGW doom -- and for once they are barking up a tree with data behind it.

The reality is there. The physics is there. Better we approach it like adults for a change.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby GHung » Wed 03 Oct 2018, 18:00:08

Right O_S... I have a bumper sticker on my truck. Says:

CARBON BOMB
TAX MY CARBON


It has been there for years now. I actually had them made since I couldn't find anything like that. So I guess I'm way ahead on the carbon tax thing. And, since, at least on my end, the power for this discussion is 100% solar powered, and virtually all of my computers are salvaged, I'm doing what I can on that front.. Meanwhile, I'm not constantly paranoid about someone else thinking my money is their money, unlike some folks here. I worry more about massive corporate/bank welfare and rich folks skimming more off the top, at least until they have to fly off to their bunkers in New Zealand or somewhere with their bags of phony money because the pitchfork brigades are after their asses.

You don't seem to understand the concept of buying compliance. Hungry people tend to take what they want and don't give a damn about how hard you worked to purchase your entitlement. I suggest you book a vacation to somewhere like Somalia where there are no social safety nets.

Seems you don't get it at all. It isn't for the poor bums' safety. It's for yours. And they spend virtually every cent back into your economy.
Last edited by GHung on Wed 03 Oct 2018, 19:09:24, edited 1 time in total.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby Subjectivist » Wed 03 Oct 2018, 18:45:54

Armageddon wrote:Doesn’t fracking have steep decline rates? How will this effect supply in the next year or two?


I think it is a matter of perspective. Certainly the decline rates we saw in 2015-2016 were faster than those experienced from conventional formation drainage. On the other hand, they didn't fall off the much predicted cliff by 70% the first year either.
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby M_B_S » Wed 10 Oct 2018, 02:24:30

With GOM out of production and Iran out of order ( US sanctions ) 100 $/b is a 95% possibility to destroy demand.

World demand >100 mb/d

Maybe Trump tap the US pretroleum reserve (5%) (election)
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby StarvingLion » Fri 19 Oct 2018, 20:02:24

2/3rds of Ghawar production will collapse by 2022 due to all the salt buildup from the ocean water used to maintain pressure. KSA will not be able to maintain production in 2023 and will be bankrupt.

That will be the trigger for The Oil Apocalypse.

Ghawar is going to go out like a light!
Total Collapse is Imminent
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Re: +++OIL/ GAS supply/demand WARNING+++

Unread postby rockdoc123 » Sat 20 Oct 2018, 10:28:04

2/3rds of Ghawar production will collapse by 2022 due to all the salt buildup from the ocean water used to maintain pressure. KSA will not be able to maintain production in 2023 and will be bankrupt.


You realize that they have been injecting water of varying salinities for nearly fifty years and that there is a wide range of formation water salinities in the fields ranging all the way from hyper-saline to fresh? And surprise, surprise....no problems so far.
And yet magically everything will go to heck in a handbasket in three years time? :roll:
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