Oil: Shale, Moving the Goal Posts? Part 2
Summary
- Brief Shut-in or Cash Cost Update.
- Examination of Shale Producer Interest Costs, North Dakota Production.
- Examination of Shale Production Decline Rates and Durations.
- Examination Shale Tight Oil Efficiencies and Rig Counts.Discussion of Historic Crude Oil Prices.
In Part 1, we discussed oil and shale break even and marginal costs, and some industry claims from oil believers and theorists. We examined some statements made in John Mauldin's Aug. 14 missive, Riding the Energy Wave to the Future; and James Kunstler's Aug. 17 missive, True Believers.
It turned out to be quite the spirited discussion in the comments section. Bob commented: "thanks to this report and the Comments I have been educated. Thanks"
Glad to be of service, that's why we do this, learning something new all the time. At the end of Part 1, with their art sometimes imitating life,the score was Believers 2, Theorists 1.
Shut-In Or Cash Costs
In our last missive we examined stripper wells, a brief update.
We conclude that only a Brent price of $40 a barrel or below would see producers shutting-in production at a level where there is a significant reduction in global oil supply. At $40 Brent, 1.5 Mbpd is cash negative with the largest contribution coming from several oil sands projects in Canada, followed by the USA and then Colombia. However, there is no guarantee that these volumes would be shut-in. Operators may prefer to continue producing oil at a loss rather than stopping production altogether, especially for large projects such as the oil sands and mature fields in the North Sea. The production most likely to be halted is from US onshore ultra-low output wells. Many produce only a few barrels per day and operating costs vary between $20 and $50. We believe that once the cost of collecting the oil from these wells becomes marginal, shut-ins are likely. - Wood Mackenzie Jan. 2015
This missive was published as an exclusive to Seeking Alpha. To access the ENTIRE text for FREE on Seeking Alpha, please click here. The Nattering One does not receive remuneration if you register, only satisfaction.
There is no cost involved and it has been our experience that if you exert control (by unchecking a box of two) over your communications settings in your Seeking Alpha profile, your email inbox will not be polluted with one bit of Spam (not even the cured pork shoulder variety. Tasty even.)
As we are now a "contributor" at Seeking Alpha, our published articles, instablog and comments can be found here. Please continue to follow The Nattering Naybob here and at Seeking Alpha. We thank you for your support.
Summary
- Brief Shut-in or Cash Cost Update.
- Examination of Shale Producer Interest Costs, North Dakota Production.
- Examination of Shale Production Decline Rates and Durations.
- Examination Shale Tight Oil Efficiencies and Rig Counts.Discussion of Historic Crude Oil Prices.
In Part 1, we discussed oil and shale break even and marginal costs, and some industry claims from oil believers and theorists. We examined some statements made in John Mauldin's Aug. 14 missive, Riding the Energy Wave to the Future; and James Kunstler's Aug. 17 missive, True Believers.
It turned out to be quite the spirited discussion in the comments section. Bob commented: "thanks to this report and the Comments I have been educated. Thanks"
It turned out to be quite the spirited discussion in the comments section. Bob commented: "thanks to this report and the Comments I have been educated. Thanks"
Glad to be of service, that's why we do this, learning something new all the time. At the end of Part 1, with their art sometimes imitating life,the score was Believers 2, Theorists 1.
Shut-In Or Cash CostsIn our last missive we examined stripper wells, a brief update.
We conclude that only a Brent price of $40 a barrel or below would see producers shutting-in production at a level where there is a significant reduction in global oil supply. At $40 Brent, 1.5 Mbpd is cash negative with the largest contribution coming from several oil sands projects in Canada, followed by the USA and then Colombia. However, there is no guarantee that these volumes would be shut-in. Operators may prefer to continue producing oil at a loss rather than stopping production altogether, especially for large projects such as the oil sands and mature fields in the North Sea. The production most likely to be halted is from US onshore ultra-low output wells. Many produce only a few barrels per day and operating costs vary between $20 and $50. We believe that once the cost of collecting the oil from these wells becomes marginal, shut-ins are likely. - Wood Mackenzie Jan. 2015This missive was published as an exclusive to Seeking Alpha. To access the ENTIRE text for FREE on Seeking Alpha, please click here. The Nattering One does not receive remuneration if you register, only satisfaction.
There is no cost involved and it has been our experience that if you exert control (by unchecking a box of two) over your communications settings in your Seeking Alpha profile, your email inbox will not be polluted with one bit of Spam (not even the cured pork shoulder variety. Tasty even.)
As we are now a "contributor" at Seeking Alpha, our published articles, instablog and comments can be found here. Please continue to follow The Nattering Naybob here and at Seeking Alpha. We thank you for your support.
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