A Crude Awakening - The Oil Crash

[MikeB]

If you have time to watch this is pretty interesting. 

 

[robert k]

That was interesting Mike. My earnings come from oil so I try to keep abreast of things. Alot has happened since 2006 when the vid was copyrighted but I think it's still a good piece. One thing that it did not really touch on was how much natural gas the world has, much that is simply being burned off as waste because oil is so much more valuable.

 

Dutch Royal Shell is building a plant to convert dry natural gas to liquid fuel in an area where there is no market and all of the gas would be flared if something was not done. Last I heard the GTL [gas to liquid] fuel would be competitive with diesel and show a profit as long as oil was selling for more than $20 a barrel. GTL fuel would also use the same infrastructure we have now, the familliar filling station, unlike highly compressed or superchilled to liquid natural gas.

 

The oil companies are, I'm sure going to milk the decline of oil for as long as they possibly can to reap ever greater profits and as the price rises deposits that were not economically feasable before will be exploited.

 

One of the big things today is new production from old discoveries in the US. Back when oil was so plentiful there were many wells that were plugged because they were not profitable to produce when oil was less than $30 a barrel, they look pretty good now.

 

The best source of information I have on the Canadian tar sands is that they need a price per barrel of $70-$75 per barrel to break even and no, they don't always have to dig it up, they can pump steam down the well to liquify the tar and pump the tar out.

 

Dry natural gas [methane] may become a renewable resource, I know it's being worked on with bacteria to produce the gas. Methane is collected at many landfills and used to run their incinerators, it does not take millions of years to make methane, eat a bowl of beans if you don't believe me. :)

 

I'm not saying everything is rosy but the death of technological society is not 30 to 50 years away or even 100 years, at least not for lack of fuel, farther than that, I'm not going to predict.

[MikeB]

I realized the documentary was several years old so I didn't know how much, if any, things have changed. I know next to nothing about this but the point they are making over and over is that we (humans) are not spending anything near the amount of research into alternative sources like solar and wind that we need to. Has that changed? The other thing they brought out is how dire China's energy situation is. They don't know for sure but I've read experts saying the oil and natural gas under the South China Sea could be second only to the Middle East. Certainly worth fighting for.  

[MikeB]

I realized the documentary was several years old so I didn't know how much, if any, things have changed. I know next to nothing about this but the point they are making over and over is that we (humans) have not spent anything near the amount of research into alternative sources like solar and wind that we need to. That and how dire China's energy situation is. They don't know for sure but I've read experts saying the oil and natural gas under the contested South China Sea could be second only to the Middle East. Certainly worth fighting for.  

[frosty (chris)]

I realized the documentary was several years old so I didn't know how much, if any, things have changed. I know next to nothing about this but the point they are making over and over is that we (humans) have not spent anything near the amount of research into alternative sources like solar and wind that we need to. That and how dire China's energy situation is. They don't know for sure but I've read experts saying the oil and natural gas under the contested South China Sea could be second only to the Middle East. Certainly worth fighting for.  

I did read that Apache Energy has hit a massive oil strike offshore in West Australia, deep water drilling

[robert k]

Things change all the time. Since 2006 there have been some significant finds, in the south China sea, Australia, off the coast of Brazil, a massive find of natural gas condensates [natural gasoline] in the north Atlantic, but it's not enough to keep up with the demand that will grow. It would be nice to phase GTL in before we absolutely must.

 

There is a massive dry land unconventional strike in West Australia said to be 20 times the size of the Bakken in the US. People who depend on oil for their income were worried that it would drive the price down. I would be worried too except I know it would take 20 years to build the infrastructure to get that oil out and to market, by which time the market will just absorb it.

 

There is also the Monterey shale in California which while not economic today will be highly profitable when the price of oil doubles.

Edited August 20, 2014 by robert k

[frosty (chris)]

Things change all the time. Since 2006 there have been some significant finds, in the south China sea, Australia, off the coast of Brazil, a massive find of natural gas condensates [natural gasoline] in the north Atlantic, but it's not enough to keep up with the demand that will grow. It would be nice to phase GTL in before we absolutely must.

 

There is a massive dry land unconventional strike in West Australia said to be 20 times the size of the Bakken in the US. People who depend on oil for their income were worried that it would drive the price down. I would be worried too except I know it would take 20 years to build the infrastructure to get that oil out and to market, by which time the market will just absorb it.

 

There is also the Monterey shale in California which while not economic today will be highly profitable when the price of oil doubles.

Robert, I worked in exploration deep water drilling and I know for a fact that there where significant finds but the well heads were just capped and we moved onto the next hole, for whatever reason these finds were never reported.

[robert k]

In the US, in the states of Texas and Oklahoma there is a scary amount of "shut in" gas wells. These wells are capable of producing but the language of the lease allows the operator to shut them in for lack of infrastructure or a market and not produce but maintain their lease for $1 per acre per year. It's a good investment for the energy producer. Most mineral owners didn't know what they were letting themselves in for. When the demand and price rises for natural gas, the demand will be met. There have even been two permits granted by the US government to export natural gas this year, something that has not happened for 40 years I think.

 

Chris, I believe you, it may have something to do with having a strategic reserve, the company may have been paid to not produce.

[frosty (chris)]

 

Chris, I believe you, it may have something to do with having a strategic reserve, the company may have been paid to not produce.

You got it in one

[OnMyWay]

In the US, in the states of Texas and Oklahoma there is a scary amount of "shut in" gas wells. These wells are capable of producing but the language of the lease allows the operator to shut them in for lack of infrastructure or a market and not produce but maintain their lease for $1 per acre per year. It's a good investment for the energy producer. Most mineral owners didn't know what they were letting themselves in for. When the demand and price rises for natural gas, the demand will be met. There have even been two permits granted by the US government to export natural gas this year, something that has not happened for 40 years I think.

 

Chris, I believe you, it may have something to do with having a strategic reserve, the company may have been paid to not produce.

 

As mentioned we are burning off gas and capping wells due to lack of infrastructure.  Even though we have thousands of miles of pipelines, a lot more is needed.  That is why I have a lot invested in pipeline companies.  One of them was very nice to me this past week and I am sure Robert knows which one!   :dance: