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THE Gulf of Mexico Oil Thread (merged)

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby rockdoc123 » Fri 15 Jul 2016, 16:56:52

I think it is important to remember WoodMac looks at a very large range of projects for which their economic data may not be as constrained as that held by individual companies. That being said they look at the full range of projects and often what is captured in their summary analyses is the weighted mean average which can be skewed by number of projects analyzed or other assumptions. Here is a diagram from and early 2016 WoodMac study looking at the world range of economic breakevens. It is a similar story. Note that for ultradeepwater US there is a wide of range of economic breakevens but the weighted mean average is higher than for most of the onshore shale projects.
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Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby Tanada » Sat 11 Jun 2022, 23:57:28

I came across this interesting graph that claims oil discoveries in the GOM grow larger by depth of field.

While this seems to be based on solid data I was under the impression that small fields in deep water are not economically feasible because the cost of developing and producing very deep fields requires a very large supply of crude oil to justify the investment.

So which is it, are there more large fields in deeper water or are only the largest deep water fields economically viable to develop?

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Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby AdamB » Sun 12 Jun 2022, 08:46:57

Tanada wrote:I came across this interesting graph that claims oil discoveries in the GOM grow larger by depth of field.

While this seems to be based on solid data I was under the impression that small fields in deep water are not economically feasible because the cost of developing and producing very deep fields requires a very large supply of crude oil to justify the investment.


Offshore development, like any other, requires a certain IRR threshold. A company specific IRR threshold. That can be achieved not just with large volumes, but by less expensive CapX requirements because of new technologies, changes in regulations or taxation, or any of a myriad of factors that increases the IRR above the company's internal requirement for new project development. Even a future assumption of price in the calculation can change the answer, where once you might have assumed $40/bbl for the next 10 years, now if you assume $100/bbl for the next 5, presto, the IRR changes for the better without movement in any other factor.

Tanada wrote:So which is it, are there more large fields in deeper water or are only the largest deep water fields economically viable to develop?


More likely that future assumptions of price changed the equation from not or marginally favorable, to favorable. Nothing else needed to change for more expensive projects to begin to come online. It is why the maxim "the cure for high oil prices is high oil prices" works.
What does a science denier look like?

Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby C8 » Sun 12 Jun 2022, 17:48:44

AdamB wrote: Nothing else needed to change for more expensive projects to begin to come online. It is why the maxim "the cure for high oil prices is high oil prices" works.


Not true- if ideologically motivated climate alarmists control the govt. then they can shut down new field development in lands/waters they control. They can also sanction and penalize companies/nations that try to get around this.

This may come as a shock to you but, historically, governments have taken complete control over markets- its called Socialism. Since you have admitted elsewhere that you don't (or can't) read- then find YouTube video about the Great Leap Forward- over 40 million died from Mao's theories. Many of the people who favor shutting down fossil fuels are gaining power everywhere. Motivated by fears of global warming Armageddon they will push every limit. The US has, by far, the biggest military in the world and can easily reduce world trade.

Government > Economics

Always has been true- always will be true

You might actually want to read history some day- longs trends continue- and then totally stop. It happens all the time.
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Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby AdamB » Sun 12 Jun 2022, 18:06:08

C8 wrote:
AdamB wrote: Nothing else needed to change for more expensive projects to begin to come online. It is why the maxim "the cure for high oil prices is high oil prices" works.


Not true- if ideologically motivated climate alarmists control the govt. then they can shut down new field development in lands/waters they control.


This is true. And the resulting high prices then cause two effects rather than one. The first being other projects activating as IRR improves with the new higher prices, and the other is the political backlash against the idiot politicians who get blamed for them. You have an example right here on this forum, and this is exactly the attack profile Vtsnowedin uses against Biden. Biden didn't even do anything that caused high prices other than talk about his enthusiasm for renewables, but gets hammered for it anyway.

So yes, your scenario has its own self leveling function built in, and again, because of the consequences that artificial supply constraints cause.

C8 wrote:This may come as a shock to you but, historically, governments have taken complete control over markets- its called Socialism. Since you have admitted elsewhere that you don't (or can't) read- then find YouTube video about the Great Leap Forward- over 40 million died from Mao's theories.


Oh, I read. I'm not much for bobble heads doing the interpreting for me with BoobTube videos. And yes, I know what socialism is, and while America leans socialist, it sure ain't that yet.

C8 wrote:
Many of the people who favor shutting down fossil fuels are gaining power everywhere. Motivated by fears of global warming Armageddon they will push every limit. The US has, by far, the biggest military in the world and can easily reduce world trade.


True. And none of this changes the market dynamics of how oil prices work. And I've got news for your fantasy land ideas C8, "favoring" something has nothing to do with effective action towards a solution. We've been "favoring" combating climate change for how many decades?

Here is a chart showing how well we've done for all to see.
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C8 wrote:You might actually want to read history some day- longs trends continue- and then totally stop. It happens all the time.


I read history regularly, admittedly not generally social and political commentary. I'm a science type, and feel free to elaborate on the trend I just referenced when it stops. What with artsy fartsy types FAVORING change and all.
What does a science denier look like?

Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby theluckycountry » Tue 14 Jun 2022, 19:17:18

C8 wrote:
AdamB wrote: Many of the people who favor shutting down fossil fuels are gaining power everywhere. Motivated by fears of global warming Armageddon they will push every limit.


Well they'll no doubt get there way because oil prices over a certain limit collapse societies. We simply can't do business at $140 oil, the GFC proved that.
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Re: THE Gulf of Mexico Oil Thread (merged)

Unread postby AdamB » Tue 14 Jun 2022, 23:38:30

theluckycountry wrote:
C8 wrote:
AdamB wrote: Many of the people who favor shutting down fossil fuels are gaining power everywhere. Motivated by fears of global warming Armageddon they will push every limit.


Sorry Lucky, but I don't believe I am the owner of the quote you attribute to me above. It appears to be C8's quote, not mine.
What does a science denier look like?

Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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