Author Topic: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts  (Read 371 times)

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Offline Smokin Joe

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Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #1 on: April 16, 2020, 08:42:41 AM »
In listening to this, it becomes apparent to me that the irony hits me that the only reason that US producers have been successful for the past decade or so in its unconventional development is due to OPEC and Russia's curtailment during that time.

That curtailment caused oil prices to be propped up enough to encourage the risk-takers to flourish in the unconventional basins.  US production quickly grew and the bubble burst on prices when OPEC/Russia decided to stop enabling the pricing.

We will be back as there is no doubt whatsoever that prices will climb back up.  Oil over the long term will become a scarcer commodity and in demand.

Hang in there, @Smokin Joe
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline Smokin Joe

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #2 on: April 16, 2020, 10:20:04 AM »
In listening to this, it becomes apparent to me that the irony hits me that the only reason that US producers have been successful for the past decade or so in its unconventional development is due to OPEC and Russia's curtailment during that time.

That curtailment caused oil prices to be propped up enough to encourage the risk-takers to flourish in the unconventional basins.  US production quickly grew and the bubble burst on prices when OPEC/Russia decided to stop enabling the pricing.

We will be back as there is no doubt whatsoever that prices will climb back up.  Oil over the long term will become a scarcer commodity and in demand.

Hang in there, @Smokin Joe
Oh, I will. But I, too have a use by date. I have been at it since 1979. 

I have no doubt that Russia and the Saudis have been adapting the techniques used to produce unconventional resources here in their own fields to add to or enhance production. 

Watch for the Chinese to do the same thing offshore in the South China Sea as soon as they feel they have established sufficient military hegemony. They will do so for the purpose of having a 'domestic' supply, but more so, to be able to control markets in the future with excess reserve capacity if they can. Price will not matter to them and if Venezuela comes back on line, all bets are off.

Despite all those dire prognostications about "peak oil", we're swimming in the stuff, again. And that does not take into account the nearly 7600 DUC wells out there.

From the looks of that, and the past performance from 1986 to roughly 2000, I'll be well into my 70s by the time the price comes back and the upstream end is at January levels again.  In the meantime, a lot of land rigs are going to end up on the scrap heap.
How God must weep at humans' folly! Stand fast! God knows what he is doing!
Seventeen Techniques for Truth Suppression


There are no "Socialists", no "Progressives", only Communists, with every negative image that totalitarianism might muster, demanding fealty and conformity to their views, with a legacy of 150,000,000 dead and counting.

Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #3 on: April 16, 2020, 12:22:52 PM »
Oh, I will. But I, too have a use by date. I have been at it since 1979. 

I have no doubt that Russia and the Saudis have been adapting the techniques used to produce unconventional resources here in their own fields to add to or enhance production. 

Watch for the Chinese to do the same thing offshore in the South China Sea as soon as they feel they have established sufficient military hegemony. They will do so for the purpose of having a 'domestic' supply, but more so, to be able to control markets in the future with excess reserve capacity if they can. Price will not matter to them and if Venezuela comes back on line, all bets are off.

Despite all those dire prognostications about "peak oil", we're swimming in the stuff, again. And that does not take into account the nearly 7600 DUC wells out there.

From the looks of that, and the past performance from 1986 to roughly 2000, I'll be well into my 70s by the time the price comes back and the upstream end is at January levels again.  In the meantime, a lot of land rigs are going to end up on the scrap heap.
I seriously doubt that.

Prices will once again surge as OPEC throttles things back down again.

And I continue to believe we are reaching technical limits on our abilities to continue the growth of unconventionals.

I worked for years in studying basins for unconventional prospectivity.  I found it few and far between that those geological and fluid characteristics were favorable in most basins to extract liquids via the advances in horizontal and fraccing technology achieved over the past +decade.

A lot of people are deceived that the Permian, for example, is the great concentration of unconventionals.  Not true.  It is a huge liquids-prone basin that was over the years minimally developed with horizontals, and the growth one sees has been much more due to simply redeveloping a conventional basin with horizontals than due to unconventional zones targeting.

Oil simply cannot flow adequately through low perm rock to reach wellbores unless certain characteristics are present.  That is the defining limits of production of unconventional liquids in the broad sense.  Every now and then someone will make a great well in a basin, but it is invariably fairly localized and not readily reproducible.  The big exceptions are the Bakken/3F and the thin liquids-rich band of the Eagleford.

Other than that, we have a natural gas unconventional long term future, not liquids.
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline Smokin Joe

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #4 on: April 16, 2020, 12:27:01 PM »
I seriously doubt that.

Prices will once again surge as OPEC throttles things back down again.

And I continue to believe we are reaching technical limits on our abilities to continue the growth of unconventionals.

I worked for years in studying basins for unconventional prospectivity.  I found it few and far between that those geological and fluid characteristics were favorable in most basins to extract liquids via the advances in horizontal and fraccing technology achieved over the past +decade.

A lot of people are deceived that the Permian, for example, is the great concentration of unconventionals.  Not true.  It is a huge liquids-prone basin that was over the years minimally developed with horizontals, and the growth one sees has been much more due to simply redeveloping a conventional basin with horizontals than due to unconventional zones targeting.

Oil simply cannot flow adequately through low perm rock to reach wellbores unless certain characteristics are present.  That is the defining limits of production of unconventional liquids in the broad sense.  Every now and then someone will make a great well in a basin, but it is invariably fairly localized and not readily reproducible.  The big exceptions are the Bakken/3F and the thin liquids-rich band of the Eagleford.

Other than that, we have a natural gas unconventional long term future, not liquids.
Hmmm. I have a Natural Gas/NGL area in mind, undeveloped AFAIK, one I spotted years ago that the client assured me could not be produced (they'd only tried in a vertical well).
How God must weep at humans' folly! Stand fast! God knows what he is doing!
Seventeen Techniques for Truth Suppression


There are no "Socialists", no "Progressives", only Communists, with every negative image that totalitarianism might muster, demanding fealty and conformity to their views, with a legacy of 150,000,000 dead and counting.

Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #5 on: April 17, 2020, 09:09:17 PM »
Hmmm. I have a Natural Gas/NGL area in mind, undeveloped AFAIK, one I spotted years ago that the client assured me could not be produced (they'd only tried in a vertical well).
And that will at some time be one added to the pile of the ones we have already exposed as prospective.

Am afraid SM that it may take awhile to get to those, especially if my suspicions are correct those reserves are away from markets somewhere in the Rockies.

If the giant Marcellus, the biggest gas basin ever in the US and next to the markets, has trouble developing now, we know natural gas markets are saturated at least for awhile.
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline Smokin Joe

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #6 on: April 17, 2020, 09:10:05 PM »
And that will at some time be one added to the pile of the ones we have already exposed as prospective.

Am afraid SM that it may take awhile to get to those, especially if my suspicions are correct those reserves are away from markets somewhere in the Rockies.

If the giant Marcellus, the biggest gas basin ever in the US and next to the markets, has trouble developing now, we know natural gas markets are saturated at least for awhile.
Understood.
How God must weep at humans' folly! Stand fast! God knows what he is doing!
Seventeen Techniques for Truth Suppression


There are no "Socialists", no "Progressives", only Communists, with every negative image that totalitarianism might muster, demanding fealty and conformity to their views, with a legacy of 150,000,000 dead and counting.

Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #7 on: April 17, 2020, 09:30:43 PM »
Understood.
But my fundamental point is that we will need that natural gas likely by sometime this decade as unconventionals lessen in amounts.

Natural gas is ten times as likely to flow and has tremendous upside, especially if we need liquids, which can be generated using synthetic conversion methods like Fischer Tropsch.

The Eagleford's liquids window is fully developed, so now a number of companies are exploiting the prolific dry gas areas with huge producers.
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline truth_seeker

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #8 on: April 17, 2020, 09:35:52 PM »
What about heavy oil, oil shale, tar sands?

Wyoming, Utaah, Colorado, Alberta, Venezuela?

etc.

"God must love the common man, he made so many of them.�  Abe Lincoln

Offline Smokin Joe

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #9 on: April 17, 2020, 11:13:58 PM »
But my fundamental point is that we will need that natural gas likely by sometime this decade as unconventionals lessen in amounts.

Natural gas is ten times as likely to flow and has tremendous upside, especially if we need liquids, which can be generated using synthetic conversion methods like Fischer Tropsch.

The Eagleford's liquids window is fully developed, so now a number of companies are exploiting the prolific dry gas areas with huge producers.
Judging by the flares and the kicks we took in the well, the condensate at the end of the flare cycle, and the peacock blue fluorescence in the samples, this would be wet gas in a tight sand. Pixler plots of the zone confirmed that conclusion.
How God must weep at humans' folly! Stand fast! God knows what he is doing!
Seventeen Techniques for Truth Suppression


There are no "Socialists", no "Progressives", only Communists, with every negative image that totalitarianism might muster, demanding fealty and conformity to their views, with a legacy of 150,000,000 dead and counting.

Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #10 on: April 19, 2020, 03:18:45 PM »
Judging by the flares and the kicks we took in the well, the condensate at the end of the flare cycle, and the peacock blue fluorescence in the samples, this would be wet gas in a tight sand. Pixler plots of the zone confirmed that conclusion.
that is certainly preferable than dry gas, as long as retrograde doesn't kick in as pressures drop near wellbore.

Best case is that it remain gas at reservoir temperatures and pressures and has lots of liquids that break out as it comes to the surface.

That is actually how some of the best liquid wells in the Eagleford behave.
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #11 on: April 19, 2020, 03:34:52 PM »
What about heavy oil, oil shale, tar sands?

Wyoming, Utaah, Colorado, Alberta, Venezuela?

etc.
They are there for the taking at some future time.

The reason Oil sands in Wyoming, etc got onto the radar as they are extremely large deposits.  The reason they have not been commercialized much is the costs are exhorbitant.  Basically, one must mine them like coal to process the hydrocarbons out of the rock - expensive and environmentally challenging.  Some people like Shell have tested microwaving technology to retort in situ but economics never cut it.

Heavy oil and tar sands far and away are the most successful tertiary recovery mechanism ever found.  In this country, lots of oil production by steamflooding continues in California that is very competitive with conventional oil production economics.  The basins in Athabasca(Alberta) and Orinoco(Venezuela) are the largest on earth in terms of potential yield of heavy oil/tar sand volumes but the API gravity is so low fluid does not flow easily, at times even with steamflood assist.  So economics are suspect.

The paradigm shift in my mind is the abundance in this country of natural gas via unconventional methods.  It is first an environmental-friendlier alternative than the oil shales, heavy oil or tars.  Secondly, there is so much of it that prices are in stagnation mode, making it commercial to even liquify it and export to other countries as we do presently.

The nature of natural gas is that its hydrocarbons can be rearranged to produce synthetic liquids, whether it is gasoline, kerosene or diesel, using proven technologies.  The key is the price of raw feed, which is attractive right now.

One of the beauties of creating synthetic liquids is the end product contains no contaminants whatsoever, it is 100% pure - so no by product pollution in the air or in your engine to mess with.  A very agreeable liquid to burn.

“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington

Offline Fishrrman

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #12 on: April 19, 2020, 11:08:54 PM »
This morning, oil was at 20.40 or so.
Tonight (just checked) 15.53 (may still be dropping).
What happened ??

Offline Smokin Joe

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #13 on: April 20, 2020, 01:05:24 AM »
This morning, oil was at 20.40 or so.
Tonight (just checked) 15.53 (may still be dropping).
What happened ??
Running out of storage space.
How God must weep at humans' folly! Stand fast! God knows what he is doing!
Seventeen Techniques for Truth Suppression


There are no "Socialists", no "Progressives", only Communists, with every negative image that totalitarianism might muster, demanding fealty and conformity to their views, with a legacy of 150,000,000 dead and counting.

Offline Fishrrman

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #14 on: April 20, 2020, 09:57:45 AM »
$12.01 as of Monday morning.
Wake me when it gets to $9.99 ...

Offline Fishrrman

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #15 on: April 20, 2020, 10:59:05 AM »
$10.78 at 11am.
Gettin' closer to that $10 "demarcation point".
Could we see $7.50bbl...?

Addendum at 12.54pm:
YIPES... looks like it's already there...!
« Last Edit: April 20, 2020, 12:55:00 PM by Fishrrman »

Offline IsailedawayfromFR

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Re: DISCUSSION: Tom Petrie’s Take on OPEC+, Oil Prices, Production Cuts
« Reply #16 on: April 20, 2020, 03:05:59 PM »
$10.78 at 11am.
Gettin' closer to that $10 "demarcation point".
Could we see $7.50bbl...?

Addendum at 12.54pm:
YIPES... looks like it's already there...!
How about a Super-contango?
West Texas Crude Price Turns Negative For First Time Ever
https://www.breitbart.com/economy/2020/04/20/oil-breaks-the-buck-and-quickly-plunges-to-1-cent/
“no punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin” ~  George Washington


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