The Next Chapter of the Oil Crisis: The Industry Shuts Down

[Smokin Joe]

The Next Chapter of the Oil Crisis: The Industry Shuts Down

https://energynow.com/2020/04/the-next-chapter-of-the-oil-crisis-the-industry-shuts-down/?source=de&wtv=geology@nemont.net

Negative oil prices, ships dawdling at sea with unwanted cargoes, and traders getting creative about where to stash oil. The next chapter in the oil crisis is now inevitable: great swathes of the petroleum industry are about to start shutting down.

The economic impact of the coronavirus has ripped through the oil industry in dramatic phases. First it destroyed demand as lockdowns shut factories and kept drivers at home. Then storage started filling up and traders resorted to ocean-going tankers to store crude in the hope of better prices ahead.

Now shipping prices are surging to stratospheric levels as the industry runs out of tankers — a sign of just how distorted the market has become.

The specter of production shut-downs — and the impact they will have on jobs, companies, their banks, and local economies — was one of the reasons that spurred world leaders to join forces to cut production in an orderly way. But as the scale of the crisis dwarfed their efforts, failing to stop prices diving below zero last week, shut-downs are now a reality. It’s the worst-case scenario for producers and refiners.

North Dakota has shut in roughly a third of its production, and the pump jacks I have observed are moving so slowly as to be almost imperceptible (Hess wells, slowed way down).

The article notes this has spilled into the refinery operations as well.

FIll 'em up while fuel is cheap.

[IsailedawayfromFR]

The Next Chapter of the Oil Crisis: The Industry Shuts Down

https://energynow.com/2020/04/the-next-chapter-of-the-oil-crisis-the-industry-shuts-down/?source=de&wtv=geology@nemont.net

North Dakota has shut in roughly a third of its production, and the pump jacks I have observed are moving so slowly as to be almost imperceptible (Hess wells, slowed way down).

The article notes this has spilled into the refinery operations as well.

FIll 'em up while fuel is cheap.

The best place to store the oil is in the ground, so shutting in production or reducing it makes sense.  Only exceptions is if well is in midst of flowback after frac.

The oil will still be there when prices return

Opinion: If Moscow and Riyadh think they can put the U.S. shale industry out of business, they’d better think again https://www.marketwatch.com/story/if-moscow-and-riyadh-think-they-can-put-the-us-shale-industry-out-of-business-theyd-better-think-again-2020-04-29?siteid=yhoof2&yptr=yahoo

[EdinVA]

 
 And give up $10 billion per month profit.... not a chance..

[IsailedawayfromFR]

 And give up $10 billion per month profit.... not a chance..

?

[catfish1957]

 And give up $10 billion per month profit.... not a chance..

Large intergrated oils will end up coming up smelling like roses in a few years.  Cheap buyouts, and improved margins? Cha...ching.

In fact most of them like CVX and XOM are up 30-40% in equtiy price since the big dip last month.

[Idiot]

Large intergrated oils will end up coming up smelling like roses in a few years.  Cheap buyouts, and improved margins? Cha...ching.

In fact most of them like CVX and XOM are up 30-40% in equtiy price since the big dip last month.

[catfish1957]

I'm retired from big oil, and if I wasn't retired, I would have went "all in" last month. 

Some of the dip's Market Cap #'s for these companies were ridiculously low, and in fact, well below hard asset value.

[Fishrrman]

Looks like the USA is gonna go back to be a large "oil importer" again -- at least for the near-term future.

Might as well buy it from where it's cheap.

[Smokin Joe]

Looks like the USA is gonna go back to be a large "oil importer" again -- at least for the near-term future...

Currently, storage is full, refineries are cutting back (due to lack of demand). So, with no place for the oil to go, and adequate supplies overseas, wells are being shut in. We have enough, and the only importers will be those refineries which get their supplies from the East because it is as/more convenient, often in the northeast.

There will be some adjustment when things start rolling again (lockdowns are lifted and America goes back to work), but we won't need to import oil, on balance, for a long time. Not only are there plenty of producing wells, the shut in and the Drilled but UnCompleted (DUC) wells represent a significant reserve, and there is still a lot left to develop when the time comes.