Oil majors dumping capital expenditures...

[JiggsCasey]

The silence since Kopits spoke at Columbia a few weeks ago is deafening. Will a statement be forthcoming from any of them, showing how this "isn't what it seems?"

Global Oil Market Forecasting: Main Approaches & Key Drivers
Steven Kopits, Managing Director, Douglas-Westwood

Gosh, that seems like a bummer... So, if the oil majors are suddenly cutting investment some 20-30%, because they've finally admitted they can't make a profit with oil at $105, what is the real price of oil right now? What would the "free market" set it at? ... $125? How about $140? ... That is, in order for these guys to keep their heads above water, at least, with a bit of free cash flow ...

Now imagine the world today if oil had been $130-150 this whole time, where it perhaps belonged... Or what the industrial averages would shrink to if oil price spikes to where it "needs to be?"

Obviously the most important question springs to mind: What does this reduction in investment say about global production totals going forward? Still think we'll be maintaining that mind-boggling 91M barrels per day? Are we to believe that smaller companies will ride to the rescue? Will vast US reserves of oil and gas from shale rock under U.S. neighborhoods continue to fill the ever-widening gap left behind by flat conventional production? (9 years years running, now)... Not likely. There is far more evidence unconventional production is already tightening, not expanding as the industry and big media would have you believe.

The developments offered in this presentation only confirm the model talked about for years:

• the easy oil is in terminal decline
• the moderate oil is growing exhausted and near decline
• the tight oil is vast, yet far too expensive

Advanced societies already can not bear triple-digit oil prices. That much is beyond clear. Yet those prices clearly need to be $120-$200 for oil giants to be free cash flow neutral. Otherwise, they dump investment and assets. And it's hard seeing production volume maintaining stasis (let alone meeting growth) under that scenario.

With investment suddenly scaled way back, it won't be long now before conventional production begins decline (1-2 years?). At that point, no amount of desperate hydraulics under U.S. neighborhoods will calm the markets.

Ah well. Heed it, and invest accordingly. Or don't. Your call.

RGR? Tell us how the majors cutting costs so drastically is all just a sign of "greater efficiency" and the public's willingness to bike it to work. Can't wait.

 

[Old Rocks]

The photovoltaics are becoming cheaper and more efficient every year. The EV's are on the verge of at least doubling there range, at the same time that the cost of the batteries is cut in half. An El Nino year is in the offing, and no one is sure what that will bring.

We are very near the point where the cost curve for ICE's and EV's cross, with the favorable line for the EV's.

 

[RGR]

The silence since Kopits spoke at Columbia a few weeks ago is deafening.

Why shouldn't there be silence? If he didn't miss all the same things that other peak oilers miss, he might be worth commenting on. What a surprise that I knew who you were going to discuss even before you did it, eh Jiggsy?

Gosh, that seems like a bummer...

How much CapEx have you ever spent in your LIFE, to even begin to understand what a "bummer" is?

So, if the oil majors are suddenly cutting investment some 20-30%, because they've finally admitted they can't make a profit with oil at $105, what is the real price of oil right now?

Today? $102.58 for WTI. Are you really so ignorant that you don't know how to look this up?

What would the "free market" set it at? ... $125? How about $140? ...

How about you become an oil trader and when you learn something on this topic, let us know? Today...it is $102.58

What Kopits thought a few weeks ago certainly hasn't changed todays price to what you would like it to be.

That is, in order for these guys to keep their heads above water, at least, with a bit of free cash flow ...

Not a chance parrot. I've already calculated the breakeven month for all oil wells within one of the USGS AU's they assessed for the Bakken last year. Breakeven cost to surface, including net WI, taxes and OpEx, undiscounted, is barely $35.

Once CapEx has been covered in <20 months, the only expense left to push against is OpEx, and those wells can do that easy.

Go here if you are interested in the production profiles to calculate your own IRR, then just plug in the costs. How about THINKING parrot, instead of just finding a current mouthpiece, considering how poorly all your other ones have worked out?

I recommend figures 5,6,7 and 8 for parrots who can't find this information for themselves.

http://pubs.usgs.gov/of/2013/1109/OF13-1109.pdf

Still think we'll be maintaining that mind-boggling 91M barrels per day?

Dumbasses claimed peak oil was like YEARS ago. That didn't work out so well for you Parrot, do you have any reason to entertain us with as to why you screwed the pooch that time, and aren't about to do it all over again because...well....you are just really stupid?

There is far more evidence unconventional production is already tightening, not expanding as the industry and big media would have you believe.

Say that again dumbass, and we'll all try and not giggle.

The developments offered in this presentation only confirm the model talked about for years:

• the easy oil is in terminal decline
• the moderate oil is growing exhausted and near decline
• the tight oil is vast, yet far too expensive

A) Easy oil was disappearing by 1901, do try and keep up.
B) Moderate oil was gone by the time horizontal drilling came along and was needed to make areas productive...in the 1920's.
C) Tight oil apparently is so expensive that at $100 the United States has developed two of the largest producing oil fields in the Western Hemisphere....and Continental's stock reflects it.

Jiggsy, please send us someone with a brain from your church.

Advanced societies already can not bear triple-digit oil prices.

Already ARE parrot. Look around, you just filled up your tank on $100 oil, and yet here you are, still around, whining about how unfair it is, peak oil having come and gone and poor Jiggsy, he can't even use TOD anymore as a reference and has to rely on insurance actuaries because he can't find anyone who knows anything.

With investment suddenly scaled way back, it won't be long now before conventional production begins decline (1-2 years?). At that point, no amount of desperate hydraulics under U.S. neighborhoods will calm the markets.

That's what you were claiming last time parrot. Didn't work out then either, because here you are, saying it again, pretending it is different this time.

Ah well. Heed it, and invest accordingly. Or don't. Your call.

Already did half wit. Some of us aren't required to ask our priests for investment advice.

RGR? Tell us how the majors cutting costs so drastically is all just a sign of "greater efficiency" and the public's willingness to bike it to work. Can't wait.

Are you seriously suggesting that YOU would understand ANYTHING related to the how and why major make investments? Your idiot advice would have folks stocking up on bunker supplies years ago, running around scaring folks with the Rapture scenarios from your church.

 

[JiggsCasey]

Why shouldn't there be silence? If he didn't miss all the same things that other peak oilers miss, he might be worth commenting on. What a surprise that I knew who you were going to discuss even before you did it, eh Jiggsy?

Well, I gave you advance warning. It's hardly surprising you scrambled to teh Googlez in order to prepare your obligatory statement. You stepped in it, just like I thought you would.

Tool.

Today? $102.58 for WTI. Are you really so ignorant that you don't know how to look this up?

So funny watching you quibble over $2.42 like you've scored a point, when the core question is about $50 vs. $100 vs. $150... Miss the point much?

Ah well, when you stop hyperventilating: I often list the price as a rough split between Brent and WTI. I'll continue to do so, and you can continue to lose your mind over 242 cents.

How about you become an oil trader and when you learn something on this topic, let us know? Today...it is $102.58

Why would I want to get involved in a world of deceit and unethical corporate business practice? I make a nice healthy living exposing their fraud, and I sleep better at night as a result. If you actually had a soul, you might try the same. I've seen you show cracks lately.

What Kopits thought a few weeks ago certainly hasn't changed todays price to what you would like it to be.

Ah yes, the straw man argument returns to your sorry arsenal. It's not about what "I" would like it to be. It's about what the oil majors NEED it to be. And you're right, it hasn't changed today's price, because the public is past the point of being able to afford marginal cost. That's the whole point of the presentation, dip shit.

Not a chance parrot. I've already calculated the breakeven month for all oil wells within one of the USGS AU's they assessed for the Bakken last year. Breakeven cost to surface, including net WI, taxes and OpEx, undiscounted, is barely $35.

Once CapEx has been covered in <20 months, the only expense left to push against is OpEx, and those wells can do that easy.

When you reveal what company and what source of energy we're talking about, maybe this won't look like so much more unfalsifiable claim on your part.

"I know a guy who told me last week at a conference that... blah blah blah."

Gee convincing!! Especially considering your long slate of dishonesty already. LOL

Go here if you are interested in the production profiles to calculate your own IRR, then just plug in the costs. How about THINKING parrot, instead of just finding a current mouthpiece, considering how poorly all your other ones have worked out?

I recommend figures 5,6,7 and 8 for parrots who can't find this information for themselves.

http://pubs.usgs.gov/of/2013/1109/OF13-1109.pdf

LOL... you mean the figures that all show cliff-like decline rates? Yeah, good job.

I especially love this part:

We assumed that all wells capable of production will continue to produce until some uneconomic rate is reached. No attempt was made to determine what is, or is not, economic production.
​

Fail. You should probably absorb and grasp what your links say before presenting them.

Dumbasses claimed peak oil was like YEARS ago.

Actually, they claimed it was 2005, which it was. They also claimed decline would begin and spare capacity would end in 2015 and 2016. Especially that group full of "dumbasses" at the Pentagon. We appear right on target.

Say that again dumbass, and we'll all try and not giggle.

LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Did you really just trot out an EIA graph that claims 1) almost a doubling (to 5M bpd) of tight oil production by 2017?; 2) U.S. conventional production will remain relatively flat for the next 30 years? I mean, the EIA has a long history of rosie forecasts, but if that's your "proof" that the economics of tight oil production is healthy, you're truly horrible at this. Worse than I thought, actually.

Anyhow, here's the reality:

http://www.resilience.org/stories/20...l-review-jan-6

The large deficits being run by the US shale oil and gas industry are starting to be reported in the financial press. Last week the Wall Street Journal ran a story that large foreign investments in US shale oil and gas leases are drying up rapidly. In 2013, foreign companies spent only $3.4 billion on stakes in US shale formations which was less than half 2012 investments and a tenth of what they spent in 2011.

The reason for this decline is that while some wells may be profitable, overall drilling and producing shale oil and gas is simply not. In 2012, 80 big energy companies in the US spent a combined $50.6 billion more than they brought in from energy operations. This was twice as high as in 2011 and four times as high as 2010. For 2013, the deficit is on track to reach roughly $25 billion.

With losses like these it is no wonder that foreign investors are bailing and staying out of the US shale market. Exxon says it has "lost its shirt" in shale gas, Shell has written down the value of its US shale properties by $2 billion, and BHP has written down its US properties by $2.8 billion.​

Let's repeat that for affect: "Overall drilling and producing shale oil and gas is simply not profitable." Awww... There, there, little loyalist. But don't buckle: Do keep pounding that square peg into that round hole. Surely you can play with numbers that show company X is turning a profit on odd numbered Thursdays each month, while conveniently ignoring the investment trends for the industry as a whole.

 

[JiggsCasey]

A) Easy oil was disappearing by 1901, do try and keep up.

Well, your team has been successful at changing the definition of total liquids today, so it's hardly surprising you'd take a painfully subjective approach to defining what was "easy" and when. We'll agree to disagree, but considering you've shown a rudimentary understanding of the macro-economic aspects of this discussion, at best, your semantics ploy sinks.

B) Moderate oil was gone by the time horizontal drilling came along and was needed to make areas productive...in the 1920's.

In terms of the public's ability to actually afford the commodity comfortably so as to maintain 3%+ growth, the figure has been defined at <$80. But then, you don't recognize the economics side of this discussion at all, so go fuck yourself.

C) Tight oil apparently is so expensive that at $100 the United States has developed two of the largest producing oil fields in the Western Hemisphere....and Continental's stock reflects it.

Fooling foreign investment can do wonders. But that's drying up now, as we've covered. Meanwhile, food price has doubled in 10 years, dozens of nations are rioting, and U.S. wages have been relatively flat for 6-7 years now. See, triple digit oil prices are beyond the consumer's capacity. That's a problem for your unconventional utopia.

Ah well. Don't stop believin. Surely you can show more anomalies, and yell "parrot" and "church" a whole lotta times. LOL

Jiggsy, please send us someone with a brain from your church.

Uh huh. You've been trying this ploy for a couple years now. And this "brainless" contributor keeps taking you behind the woodshed. Awww, poor industry loyalist. Hammered by data, economics, testimony and common sense.

 

[JiggsCasey]

• "Big Oil Companies Struggle to Justify Soaring Project Costs" &#8212; Wall Street Journal
• "Dream of U.S. Oil Independence Slams Against Shale Costs" &#8212; Bloomberg
• "Why America's Shale Boom Could End Sooner Than You Think" &#8212; Forbes
• "What Happens When The Shale Boom Ends?" &#8212; Christian Science Monitor

"Predictions are tough, especially with a still-struggling economy. If I had to say, prices at least need to rise to the marginal cost of production at $115ish. Trouble with that is anything over $110 for a sustained time causes recession, which of course would send prices lower making projects unviable once more. ... It's classic peak oil. It never went away, we've just been able to paper over it with free money for the past half decade." -- Nick Hodge, lead investment analyst, Energy & Capital

Awwww... poor Team "No Problem." Their entire argument is mired in tortured logic and void of any economic rationale.

 

[RGR]

Well, I gave you advance warning. It's hardly surprising you scrambled to teh Googlez in order to prepare your obligatory statement. You stepped in it, just like I thought you would.

Jiggsy you parrot it was already on Gail's website. How about you doing SOMETHING except steal ideas from others who can provide you with the appearance of independent thought?

 

[JiggsCasey]

it's called supporting your argument... you should try it, rather than being a troll and punting to USGS studies that don't say what you think they say.

No one feels sorry that you're losing the peak oil debate badly. You're too much of a dick to feel sorry for. At least be a man and admit good game.

The majors are dumping capex and admitting the public can't afford their product at the price they need it to be. Production can't sustain if investment pluemmets. That IS peak oil. Period, end of story.

 

[westwall]

it's called supporting your argument... you should try it, rather than being a troll and punting to USGS studies that don't say what you think they say.

No one feels sorry that you're losing the peak oil debate badly. You're too much of a dick to feel sorry for. At least be a man and admit good game.

The majors are dumping capex and admitting the public can't afford their product at the price they need it to be. Production can't sustain if investment pluemmets. That IS peak oil. Period, end of story.

Let us know when it comes around again. I'll be sure to recommend you for the Energizer Bunny award.....you sure pound that one note drum loud!

 

[JiggsCasey]

Let us know when it comes around again. I'll be sure to recommend you for the Energizer Bunny award.....you sure pound that one note drum loud!

Oh, hey there sideline lurker... now tell us how it's all wrong, no big deal, or how the free market will rush to the rescue... Or do the discussion a favor and STFU.

 

[GWV5903]

EOG is killing it...

Shell, not so good...

Shell cuts spending in U.S. to lower shale exposure: Thomson Reuters Business News - MSN Money

In fact Enron Oil & Gas has led they way in the Oil Shale plays...

The major's, not so much...

"Oil and natural gas pumped from North American shale have proved a boon for many smaller energy businesses, but the world's biggest oil companies, including BP and Exxon Mobil , have had less success unlocking the prolific rock's full potential."

 

[westwall]

Let us know when it comes around again. I'll be sure to recommend you for the Energizer Bunny award.....you sure pound that one note drum loud!

Oh, hey there sideline lurker... now tell us how it's all wrong, no big deal, or how the free market will rush to the rescue... Or do the discussion a favor and STFU.

I don't need to. Soon you'll slink away and we won't hear from you till the next "big deal" comes along and then you'll re-materialize to spew your one note BS yet again. Just. Like. You've . Always. Done.

 

[RGR]

it's called supporting your argument... you should try it, rather than being a troll and punting to USGS studies that don't say what you think they say.

How the hell would you know? It isn't as though you read anything provided by others, parroting Church dogma is what, and perhaps all, you are capable of.