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Oil Boom Buzz? Again?

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Workbox

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Colorado
Anyone been noticing an Oil Boom Buzz on the media? I heard how students should start or continue with their engineering course or add some. Added pipeline work, more folks moving to Houston for oil jobs? Looking at the CL(Oil Futures) and I can see a trend change (downward) on the daily and getting to overbought on the weekly.

When that kind of Buzz comes around on the media, it becomes the Buffet/Cramer effect.
 

Randolph Kinney

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Oil is a proxy for the US dollar.


China overtakes U.S. again as world's top crude importer

China imported record volumes of crude oil last month, eclipsing the United States as the world's top buyer of foreign oil as Beijing's state reserves shipped in cheap crude to fill new storage tanks.

September's crude imports rose 18 percent from a year earlier to 33.06 million tonnes or 8.04 million barrels per day (bpd) on daily basis, customs data showed.

The buying outpaced the U.S. four-week average assessed by the U.S. Energy Information Administration of 7.98 million bpd at the end of September.

It marked the second time this year - but the third month in the past twelve - that China's imports have overtaken the United States, and reflected contracts signed in July when renewed selling pressure pushed crude below $42 a barrel. Oil has since recovered to around $50 a barrel.
 

Terrel L. Shields

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Demand worldwide is fairly high. Demand in the U. S. is slightly falling. But one issue is the export of propane and other light "oil" as well as the first shipments of liquefied natural gas. This is how we drain off the huge supply of oil that is in storage here. There are only 500 drilling rigs running. There were 1900 two years ago. Many of the wells drilled then were left undeveloped. They are called "DUCs" - drilled uncompleted. The applications in my state are primarily requests to extend the shut in period before the state starts to plug wells.

Drilling has stabilized at about 500 which is a minimum and the deep discounting is over as surviving rigs demand higher day rates. But the price is a hoax. No one can explore, lease, and develop at $65 per barrel except by swindling the royalty owners who leased their minerals. And that is happening and mineral owners are fighting back. So far most companies settle out of court to avoid creating case law. In Pennsylvania it is important to support House bill 1391 which makes royalty owners 12½% safe from "expenses" so high that some companies...well, Chesapeake, are billing royalty owners claiming the cost was more than the oil sold. Imagine renting a dwelling and the renter remodeling then sending you the bill instead of paying the rent....then claiming your home mortgage deduction to boot.

http://www.prnewswire.com/news-rele...ergy-for-royalty-underpayments-300232532.html
http://www.expressnews.com/business...owner-sues-Marathon-Oil-Corp-over-9171590.php
http://fuelfix.com/blog/2016/10/10/...an-energy-over-eagle-ford-production-volumes/
http://www.oilandgasinvestor.com/ro...esapeake-contends-landowners-underpaid-831201
https://stateimpact.npr.org/pennsyl...makes-very-brief-appearance-at-state-capitol/

The pompous claims by many companies around the volume of "Resources" they have are bogus. Resources include future oil that cannot be recovered at any sane price. The actual "reserves" the SEC allows them to claim is a fraction of the "reserves" they tout to investors. In fact, while claiming oil is profitable below $65, they are in fact, hemorrhaging money, buoyed by Korean and other Asian investors. Right now mineral rights in two counties in Oklahoma (Blaine and northern Grady county) are running up to $30,000 PER ACRE...a totally nutso price that is unlikely to ever "payout"...especially with the artful bookkeeping of the likes of Chesapeake Energy.

A friend of mine who owns a small old oil company in OKC told me tongue in cheek the other day, "Well, Chesapeake just needs to make more money and they couldn't figure out how to do it without taking the mineral owners part, too"...

A sane voice in is all is Art Berman and his "petroleum truth" blog... The numbers by the companies are cooked and frankly I hope they are driven to their knees. But the overall picture is one of slow recovery. We've seen the low. Gasoline prices will fluctuate for the next few years but a tipping point will be reached where prices jump. OPEC is not to be trusted. The Saudi's and Iran will still be at each others throat. Russia is producing more oil than anyone and have an interest in claiming cooperation with OPEC but they only are trying to keep prices up.

There is no alternative to a liquid fuel for personal transportation. You are sitting on a potential firebomb in an electric automobile and they are useless for tractors, trucks, and any high output use. Nat gas is an alternative but with exportation of LNG and conversion of all the power plants to NG, we risk the situation of the mid-1970s when Jimmy Carter had to give incentives to the electric companies to build coal plants. We have coal plants because of that energy crisis. Now we are putting them out of business with deliberate federal policy. It is a short sighted policy. We have a lot of natural gas. But all this conversion to "cleaner" natural gas is going to drive the price of natural gas (hence electricity) up up and up. And without a strong petroleum exploration business, the response will be slow...probably pushing natural gas prices to that of Europe (which is roughly 4 to 5 x our cost) and cheap electricity is soon going to be a thing of the past. Solar and Wind are so subsidized (roughly 100 x the subsidies for hydroelectric for instance, in the case of solar) that dam will have to break. The government cannot prop them up forever.
 

Terrel L. Shields

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The U.S. Geological Survey recently discovered the largest continuous oil and gas deposit ever found in the United States, officials said Tuesday."
What an utter crock of crap. The USGS does not "discover" anything. They do not drill. They do not do seismic, nor much of anything else other than accumulate data from the oil companies and their research. And these are estimates of "TRR"s... Technically recoverable resources....what they don't tell you is that 90% or more is technically drillable at some price...not $65/bbl...more like $250/bbl or even $2,500/bbl. And if you ban fracking then zero of that 20 Billion bbl. can be produced.

The Wolfcamp has been a round a long time. It is well understood to have tight formation oil that is not recoverable by conventional drilling and production techniques. The assessment is merely a literature examination and a statistical modeling of projections they make using electric logs and generalized data. The sampling is then extrapolated into a "big picture" for the entire basin. A better assessment is that done by the Texas Dept. of Economic Geology.

These assessments are updated periodically. This is another one and I know the assessment author Dr. David Housekneckt (used to be a professor before joining the USGS) http://pubs.usgs.gov/sir/2012/5146/

One such assessment recently gave millions of barrels of oil potential in the Reelfoot Rift of NE Arkansas and the Ouachita Basin...two areas that has never produced a single gallon of oil or more than a puff of gas. Another such assessment was written down by about 90%. The pdf I attached explains the difference in proven and unproven reserves and reserves and resources.

http://energy.usgs.gov/OilGas/AssessmentsData/NationalOilGasAssessment/AssessmentUpdates.aspx
 

Attachments

  • The Difference in Proven, UnProven.pdf
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Pittsburgh Pete

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Pennsylvania
Odd that the USGS's mission statement includes "the classification of the public lands and examination of the geological structure, mineral resources, and products of the national domain." Might this "discovery" be an example of the blind pig..................................?
 

Terrel L. Shields

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"the classification of the public lands and examination of the geological structure, mineral resources, and products of the national domain."
There are almost no federal lands in W. Texas, but the "assessment of resources" has nothing to do with the extraction of reserves. Companies cannot claim resources or even unproven reserves on their 10-K SEC filings. The USGS reports are little more than a census of favorable conditions for oil production.
 

Fernando

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California
If the new administration allows more oil drilling then that means more supply and wouldn't that mean lower oil prices. If that will happen, I'm for more oil drilling. Low gas prices for next four years. Yeah.
 

Randolph Kinney

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North Carolina
I am in Mississippi this morning on the way back to California. Gas is $1.83 here. It was $2.89 in Califoria when I left. Nothing like save the world from California I think I will move to where everything is cheaper outside of Califoria in North Carolina. You all in California save the world without me.

I suspect the price of oil will get cheaper.
 
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