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The Forum > Article Comments > Low oil prices hurting US shale operations > Comments

Low oil prices hurting US shale operations : Comments

By Nicholas Cunningham, published 24/10/2014

Baker Hughes CEO Martin Craighead predicted that US drilling companies could begin to seriously start removing rigs from operation if prices drop to around $75 per barrel.

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If Saudia Arabia is trying to flood the market and bankrupt the frackers then world oil will run out sooner. The fact US oil production is now at 1980s levels seems to be a great morale booster. However some predict US production will nosedive from 2016-2018. Saudi overproduction will only postpone that US decline by a year or two. Then it's back to doom and gloom. There will be great incentives to produce a long range low sticker price electric car but it may never happen.

Therefore I think there will be general acknowledgement of world Peak Oil before 2020 with peak crude already having passed in 2006. It does not automatically follow that oil prices will be high rather they will be less affordable as economic acitivity struggles.
Posted by Taswegian, Friday, 24 October 2014 7:34:50 AM
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Low oil prices!
And if they slip below $75.00 some companies will remove oil rigs? And forfeit extremely valuable leases!? YEAH SURE!
Every western style economy, rests on just two support pillars, energy and capital!
Neither of which is controlled by sovereign Governments anymore, save say the oil producing economies, which now have most of the western economies by the short and curlies; and where most governments resolutely refuse to act to change any of it, or the inevitable economic downturns that result from this endless manipulation, by what is very obviously, an economic weapon!
Just look at the very obvious reluctance of Europe to act against oil and gas supplier Russia, when she covertly invaded neighbor Ukraine, arguably to steal substantial oil and gas provinces in the Crimea!?
All while vastly more powerful if emasculated nations, blustered and muttered darkly, threatening reprisals, that just couldn't or wouldn't be delivered!
Why?
Because patent or brain dead ideologues now believe their own propaganda; namely, that governments have no business in business!
Imagine if the opposite were the case, and Canada just cracked on developing their Edmonton oilfields, that reportedly, are considerably bigger than those of Saudi!
And we cracked on developing Hydrocarbon resources to our immediate north, that some industry experts think could rival the reserves of the entire Middle East!
The Russian oil industry could just bend over and kiss their money train goodbye!
Ditto oil stealing Middle Eastern miscreants!
Ditto a few quisling representatives?
If unpatriotic oil companies follow through, there'd likely be a lot of very cheap rigs coming on to the market, and many oil producers would likely shoot themselves in their own economic foots, I don't think!
If we were but led by true pragmatics, rather than, I believe, mantra muttering fools, that simply couldn't happen!
But no, apart from virtually frothing at the mouth and offering to shirtfront nonconformists, we and virtually all western economies, sit around bemoaning our/their fate!
Socialistic solutions and peoples' oil rigs Comrade!?
NOOOOOOOOOOOOOOOO, NEVER EVER, I'D RATHER DIE/MOTHBALL THE CAR!
Don't just do something, sit there!
Rhrosty.
Posted by Rhrosty, Friday, 24 October 2014 11:31:31 AM
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It will probably be 12 months before there is a reduction in drilling.
Those that have producing wells have spent their main costs so can keep
making a little money for a while.
The tight oil is still more expensive for them because it has to be taken to
a rail head by road tanker and shipped by rail.
Because each well site only lasts for about three years pipeline companies
will not extend their networks.
Some experts are saying that it is all caused by debt levels and that has caused
demand for oil to fall.

The Shells and BHP etc got out of there because they knew something
like this would happen. The majors are looking for revenue as the return
they are getting from search & development expenditure is very poor.
Shell stated clearly that they are selling assets such as Woodside so they
can pay dividends. Bit of a worry that.
Posted by Bazz, Monday, 27 October 2014 3:50:46 PM
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we were told at school in the 70's there would be no oil left by 2000. Green bandits lying to people while filling their pockets. and the alarmist say they don't believe in religion.
Posted by runner, Monday, 27 October 2014 6:46:01 PM
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Well Runner you were told wrong.
We will never "run out of oil".
It is just that we won't be able to get it out fast enough.
Actually 2000 was not far out.
Oil production peaked in December 2005.
It has been on a plateau up to about 2010 but has recently
been declining at close to 4% a day per year.
It has been held up by tight (shale) oil and produced an increase.
This has given us a 10 year breather, but it has been wasted.
We did not use those years to make the transition.
Posted by Bazz, Monday, 27 October 2014 7:35:19 PM
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