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Yeah, consolidation is pretty much the name of the US oil game. That's why ExxonMobile sits with billions upon billions of raw cash. Things get tough and it snaps up the competition at cut rates.
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Dec 14, 2014 19:16
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Killer-of-Lawyers posted:Yeah, consolidation is pretty much the name of the US oil game. That's why ExxonMobile sits with billions upon billions of raw cash. Things get tough and it snaps up the competition at cut rates. Don't forget Chevron! Actually the one I'm watching is BP. They're huge but at the same time they're actually a semi distressed company. They keep offloading assets to pay off the Deepwater Horizon disaster at the same time that most of their major investments over the last decade have been in Russia.
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Dec 14, 2014 19:22
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Isn't consolidation still bad for some of the jobs of people in the acquired companies? Not that it will be some huge economy destroying catastrophe obviously, but it still sucks that some redundant people may be let go.
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Dec 14, 2014 19:26
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sd6 posted:Isn't consolidation still bad for some of the jobs of people in the acquired companies? Not that it will be some huge economy destroying catastrophe obviously, but it still sucks that some redundant people may be let go. Depending on the acquisition there are job losses but they're usually concentrated in management and head office staff. You still need people to operate the site, mechanics, electricians etc. regardless of who owns it.
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Dec 14, 2014 19:31
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^^^^^ Consolidation is generally bad, but it tends to prune the head office down. You still need a lot of workers to run the site. It's an industrial job, so like, if Exxon buys out some small refinery somewhere most of the people who work at the refinery will still be there working. Gorau posted:Don't forget Chevron! Actually the one I'm watching is BP. They're huge but at the same time they're actually a semi distressed company. They keep offloading assets to pay off the Deepwater Horizon disaster at the same time that most of their major investments over the last decade have been in Russia. I would love nothing more than to see BP disappear off the face of the earth. There's a lot of issues with a lot of oil companies, but at least they don't repeatedly kill their employees through gross negligence like BP has for a while.
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Dec 14, 2014 19:43
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Killer-of-Lawyers posted:I would love nothing more than to see BP disappear off the face of the earth. There's a lot of issues with a lot of oil companies, but at least they don't repeatedly kill their employees through gross negligence like BP has for a while. Hell, I've still not forgiven them for the part they played in ruining democracy in Iran in the 50s.
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Dec 14, 2014 20:02
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Gorau posted:Don't forget Chevron! Actually the one I'm watching is BP. They're huge but at the same time they're actually a semi distressed company. They keep offloading assets to pay off the Deepwater Horizon disaster at the same time that most of their major investments over the last decade have been in Russia. I will also be interested to see how their concession in Azerbaijan works out, supposedly their break even price is north of $60. Azerbaijan itself has quite literally nothing else going for it but oil and its currency is on a direct peg with the dollar.
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Dec 14, 2014 21:17
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Ardennes posted:I will also be interested to see how their concession in Azerbaijan works out, supposedly their break even price is north of $60. Azerbaijan itself has quite literally nothing else going for it but oil and its currency is on a direct peg with the dollar. Honestly if the break even price is over 60 BP is going to have to sell it. They're huring for cash right now and I doubt that they'd be able to squeeze a bunch of debt out of the markets right now. So look to see if Exxon, Shell or maybe even one of the Chinese companies like CNOOC buy it.
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Dec 14, 2014 21:28
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Killer-of-Lawyers posted:^^^^^ Until they: 1. decide they have too much capacity, and cut it or idle plants to drive up prices 2. decide they want to cut labour costs by closing unionized sites or laying off senior staff This is what happens in practice. The idea that corporate consolidation leads to "triming management" and not laying workers off or reducing labour costs is a pipedream sold by corporate public relations departments. That's not even touching on the effect of anti-competitive practices in a cartel industry like oil & gas.
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Dec 14, 2014 21:31
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RBC posted:Until they: Generally I agree with you, however in this case the oil and gas industry is a little different. To point one, oil companies (speaking about western oil and gas companies, not state ones) will not idle capacity to try and boost the price, none of them have that sort of capacity in any single site or group of sites, and if any tried to do so their shareholders would crucify them for the wasted capital. What they will do is shut down plants whose production price, even after trying for efficiencies, is above the price they receive for the oil, minus the expected costs to mothball the site and restart it (which can be a huge cost). Western oil companies are price takers. They'll try to maximize production where possible. For your second point. Oil companies fetishize experience. Experienced people are the absolute last people to go. Even though they're far more expensive than new people the benefit they bring to the company is huge. Oil production is not an assembly line. Each well is a little different and requires you to really get to know them. The difference between a green and an experienced operator can be huge: experienced operators will generally have much lower downtime, better well optimization and much lower repair costs. Also experienced operators are less likely to screw up, potentially costing the company millions of dollars. As for the unionized point. Unionized oil companies or locations are very rare. If never heard of one honestly.
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Dec 14, 2014 22:12
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Shoudnt the west be doing classic Age of Empires strategy? Build a big gently caress off wall around a huge area of resources around yourself, then send your guys out to drink the rest of the world dry. Leave the local shale oil till the rest of the world is out.
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Dec 14, 2014 22:13
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urseus posted:Shoudnt the west be doing classic Age of Empires strategy? At this point Peak Oil has pretty much been disproven. Well, maybe not disproven, but basically made irrelevant. With better exploration and technological advances like fracking, the amount of oil reserves that can be accessed have shot up pretty much all over the world. There's so much oil, in fact, that the major issue now is trying to stop ourselves from burning all the oil we can currently get to so that we don't permanently wreck the climate.
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Dec 15, 2014 01:16
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e_angst posted:At this point Peak Oil has pretty much been disproven. Well, maybe not disproven, but basically made irrelevant. With better exploration and technological advances like fracking, the amount of oil reserves that can be accessed have shot up pretty much all over the world. There's so much oil, in fact, that the major issue now is trying to stop ourselves from burning all the oil we can currently get to so that we don't permanently wreck the climate. Yeah watching a climatologist shoot someone down over peak oil really brought the point home to me.
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Dec 15, 2014 01:27
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e_angst posted:At this point Peak Oil has pretty much been disproven. Well, maybe not disproven, but basically made irrelevant. With better exploration and technological advances like fracking, the amount of oil reserves that can be accessed have shot up pretty much all over the world. There's so much oil, in fact, that the major issue now is trying to stop ourselves from burning all the oil we can currently get to so that we don't permanently wreck the climate. Peak oil was also based on continually increasing demand and steadily reduced supply, two factors we are now actually quite skeptical of. When the price of oil increases, if anything so does supply but the price itself isn't strictly attached to a strict demand/supply equilibrium. Obviously there is a finite supply of oil, but this crisis has shown there is enough global supply even with cheap sources of oil and the more expensive sources of oil are effectively being kept in reserve. So for a peak oil to actually happen we would have to have a supply crisis work itself all the way up the chain, which is going to take quite an amount of time. Furthermore, if you want to get really down to it regarding the US, we still have huge reserves of coal and uranium (if anyone was ever worried about "the lights going out"). If anything I would be more worried about climate change and the possibility of increased global economic stagnation rather an energy crunch. Peak oil got a lot of credit around 2004-2007 where a bubble in energy markets seemed to some to be a real supply crisis, it wasn't.
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Dec 15, 2014 01:34
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I only deal with reservoir exploration and not the sales/economics end of the business, but I work at a home office of a small E&P company and get to talk to people who do deal with the macro kind of stuff. One thing that has been brought up that I have not seen here is that dollar strength is driving down oil prices. Another, is that with the amount of money going towards market pipeline and a lot of new natural gas power generation that we are going to start seeing gas prices (in the US) move independently from oil prices. Just want to know what you guys think. I deal with rocks, not dollar signs. Also, should I be looking for a new job?
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Dec 15, 2014 02:19
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JohnGalt posted:I only deal with reservoir exploration and not the sales/economics end of the business, but I work at a home office of a small E&P company and get to talk to people who do deal with the macro kind of stuff. One thing that has been brought up that I have not seen here is that dollar strength is driving down oil prices. Another, is that with the amount of money going towards market pipeline and a lot of new natural gas power generation that we are going to start seeing gas prices (in the US) move independently from oil prices. Just want to know what you guys think. I deal with rocks, not dollar signs. The strength of the dollar hasn't changed so dramatically since July to account for it though, it is a longer range factor than an acute one. As for looking for a new job, it depends on exactly what you do and what your company expects. NG prices are usually fairly regionalized, and they may be going down but overall I have heard them being relatively stable. If you are looking in low margin oil fields, there may be layoffs though that said I expect there is going to be a bottom to current dive in prices then recovery. If you look at 2009, it didn't take very long for a recovery to occur even if prices didn't reach their 2007-2008 highs.
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Dec 15, 2014 02:56
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JohnGalt posted:I only deal with reservoir exploration and not the sales/economics end of the business, but I work at a home office of a small E&P company and get to talk to people who do deal with the macro kind of stuff. One thing that has been brought up that I have not seen here is that dollar strength is driving down oil prices. Another, is that with the amount of money going towards market pipeline and a lot of new natural gas power generation that we are going to start seeing gas prices (in the US) move independently from oil prices. Just want to know what you guys think. I deal with rocks, not dollar signs. In any job it's always good to have a contingency given how searching and landing a new job takes a few weeks. Also helps to tap into the company rumor mill to see what's actually going on regardless all the don't panic speeches you will get from upper management.
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Dec 15, 2014 03:48
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JohnGalt posted:Just want to know what you guys think. I deal with rocks, not dollar signs. Capital is going to get pretty expensive for the more marginal players and I'd expect E&P companies to bunker down if these prices long anywhere longer than a few months. I'm not saying that you should look for a new job, but I wouldn't exactly be making any big purchases either.
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Dec 15, 2014 06:54
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Small companies will get squeezed the most since they have the lowest rainy day reserves to survive the famine cycle.
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Dec 15, 2014 07:11
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Sweet. Drilling schedule for 2015 is absolutely gutted.
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Dec 15, 2014 18:58
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JohnGalt posted:Sweet. Drilling schedule for 2015 is absolutely gutted. And this is a surprise? Out of curiosity what area specifically are you talking about?
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Dec 15, 2014 19:21
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Does anyone know where I can find some information about how this will affect oil-producing states? I'm a social worker in Texas, and it's hard enough to find resources for people in crisis as it is, so I'm really concerned about what the chain reaction of any sort of economic slump will be.
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Dec 15, 2014 19:27
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JohnGalt posted:Sweet. Drilling schedule for 2015 is absolutely gutted. I work in offshore scientific drilling, but we occasionally do off-contract exploration stuff to supplement our normal funding, and yeah there were a few holes in our expedition schedule we were hoping to fill that look like they're just going to remain empty. Can't cram another scientific expedition in even if the funding were there, can't find outside work. Vessel is just going to sit in tie up I guess.
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Dec 15, 2014 19:43
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ReidRansom posted:I work in offshore scientific drilling, but we occasionally do off-contract exploration stuff to supplement our normal funding, and yeah there were a few holes in our expedition schedule we were hoping to fill that look like they're just going to remain empty. Can't cram another scientific expedition in even if the funding were there, can't find outside work. Vessel is just going to sit in tie up I guess. Off topic, but any interesting stories as far as scientific expeditions?
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Dec 15, 2014 19:44
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Is it accurate to say that Keystone XL is dead at this point? If so, in hindsight we did kind of dodge a bullet there. Working in Houston there seems to be a lot of rumblings about spending freezes until the situation stabilizes. Not sure how widespread that will be, but I can foresee a lot more panic once prices drop to $50 or so.
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Dec 15, 2014 20:11
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Emerson Cod posted:Is it accurate to say that Keystone XL is dead at this point? If so, in hindsight we did kind of dodge a bullet there. It's probably dead at this point. Not that it matters much. Last I heard there's still about 1.25 million barrels a day in rail capacity left, and as oil drops so does the cost of shipping. Maybe not enough to offset the decline in prices, but enough to keep rail from strangling production entirely.
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Dec 15, 2014 20:15
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discoukulele posted:I'm a social worker in Texas, and it's hard enough to find resources for people in crisis as it is, so I'm really concerned about what the chain reaction of any sort of economic slump will be. Get out. Now. While you still can. The chain reaction is a ~$12 billion shotfall in the budget due to structural issues with state revenue, and lots of cuts to non-essential services like your job. Gorau posted:It's probably dead at this point. Not that it matters much. Last I heard there's still about 1.25 million barrels a day in rail capacity left, and as oil drops so does the cost of shipping. Maybe not enough to offset the decline in prices, but enough to keep rail from strangling production entirely. We've already hit peak DOT-111 rolling stock purchases, its downward trends from here on out. If you want a decent proxy for activity, I'd highly recommend FAO's reports and keeping an eye on average agricultural delays in the upper midwest. E: DOT, not DT. My Imaginary GF fucked around with this message at 20:50 on Dec 15, 2014 |
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Dec 15, 2014 20:26
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If you replace "Shale oil" with "North sea oil" and "Alberta" with "Great Britain" or "Norway" we have the 80s oil glut. For oil everything has happened before, and it will all happen again.
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Dec 15, 2014 20:28
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CommieGIR posted:Off topic, but any interesting stories as far as scientific expeditions? I only just started here back in September and haven't been out yet, so none personally. Though I'm sure there are quite a few from over the years I just haven't heard yet. We're presently dealing with the maddening Indian bureaucracy though, trying to get a drilling permit for an expedition that was planned probably six years ago and started 3 weeks ago that is for whatever loving dumb reason still stalled waiting for the right people to OK things, which has apparently been sort of granted, contingent on porting in for a naval inspection and allowing an Indian science party to board and participate (and paying a bunch of fees of course), but permission to do all that is a separate thing obviously, and so we've been just doing alternate sites in international waters while we're waiting, but this isn't ideal. My understanding is that we've never had this sort of problem with any other country. Oh, and in the meantime one of my coworkers has had a family emergency come up (her brother has brain cancer and his condition is beginning to worsen rapidly) and she needs to get off and fly back to the states. A flight has been sorted out, but she may not be able to take it because India may not grant her a visa to get off the ship and travel to the airport, if the ship is even allowed in port to begin with. We can arrange a helicopter if the ship isn't allowed in, but again that's all if she can get a visa. We're trying to get things expedited though the US embassy, but it's a small window we can work in. Basically gently caress Indian bureaucracy, get your poo poo together and maybe you can join the developed world. That's kind of interesting, anyhow. Also we sometimes have to dynamite a drill string when they get stuck, and that sounds pretty fun even though it's obviously a lovely thing to have happen.
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Dec 15, 2014 20:28
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Gorau posted:And this is a surprise? Out of curiosity what area specifically are you talking about? I'm surprised that the well count is down 70% from expectations last year. Appalachian basin, specifically liquids rich areas.
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Dec 15, 2014 20:37
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My Imaginary GF posted:We've already hit peak DT-111 rolling stock purchases, its downward trends from here on out. If you want a decent proxy for activity, I'd highly recommend FAO's reports and keeping an eye on average agricultural delays in the upper midwest. I wasnt aware. Are rail companies no longer replacing their older DT-111? Or are they just not growing their fleet any more? Either way, I was under the impression the limiting factor was terminal capacity rather than shipping. I could be wrong, I don't work in the marketing side. JohnGalt posted:I'm surprised that the well count is down 70% from expectations last year. Appalachian basin, specifically liquids rich areas. Ouch that hurts. Wells aren't down that much in Alberta, though I think the new super deep wells in western Alberta are on hold for the foreseeable future.
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Dec 15, 2014 20:45
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Gorau posted:I wasnt aware. Are rail companies no longer replacing their older DT-111? Or are they just not growing their fleet any more? Either way, I was under the impression the limiting factor was terminal capacity rather than shipping. I could be wrong, I don't work in the marketing side. So, in the wake of Lac Magentac, DOT-111 standards were heightened with a regulatory phase-out of old rolling stock by October 2017 in USA and May 2017 in Canada. Of the 50,000 DOT-111 rolling stock in active use, only 15,000 can be retrofitted to comply with the new standards. What does this mean? Due to the decline in oil prices, the planned capital expenditure on replacement of rolling stock is expected to be reduced. Rather than retrofitting 15,000 while replacing 35,000, its more cost-competitive to retrofit 15,000 while replacing 25,000 between now and 2020. What this means is that there's going to be a glut on used DOT-111 cars on the export market, while capacity for rail transport of oil is not expected to be felt by producers until at least 2017. Regulations: Good for the economy, good for safety, good for tanking global oil markets.
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Dec 15, 2014 21:00
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Ardennes posted:Peak oil was also based on continually increasing demand and steadily reduced supply, two factors we are now actually quite skeptical of. When the price of oil increases, if anything so does supply but the price itself isn't strictly attached to a strict demand/supply equilibrium. Obviously there is a finite supply of oil, but this crisis has shown there is enough global supply even with cheap sources of oil and the more expensive sources of oil are effectively being kept in reserve. So for a peak oil to actually happen we would have to have a supply crisis work itself all the way up the chain, which is going to take quite an amount of time. Furthermore, if you want to get really down to it regarding the US, we still have huge reserves of coal and uranium (if anyone was ever worried about "the lights going out"). Peak oil itself is a pretty straightforward theory/rule of any finite resource production and hasn't been proven "wrong" by any means, as you say (although the confusion between "conventional oil" and the unconventional stuff is another matter), the guys thinking it would mean $300 prices and collapse of global civilization within 5 years of the peak (of conventional oil) were wrong though (not a ton of those guys, but I've encountered some). The IEA (not that they are ever correct about these things) recently pegged the peak for the US fracking production come 2016-2017 (down from whatever higher number they used before), before the slump in prices. I guess this means that particular peak will come in 2018-2019 instead, depending on how long low prices last. Of importance is just how much demand will go up with low prices, and how much Chinese demand will rise/go down from possible crisis. I believe Chinese demand is still increasing (even ignoring the huge upsurge with the low prices to fill strategic reserves), just not at quite the pace as expected with the general slowdown in their growth. This is complicated (all over the world) by how connected much of the economy is with the oil price, a lot of countries will see increased growth just by taking advantage of the low prices, which will trigger higher oil prices in an of itself. Get too high and things start creaking in the seams, even if alternatives get a significant boost as well (which may eventually lead to decoupling oil and economic growth, but we're not there yet by a long shot). To note is that while comparing world dollar per barrel prices with fracking costs, the actual price US producers gets is usual in the range of 10-15 dollars lower, due to infrastructure issues. Then there's the balance of "technology makes everything (including physics) cheaper!" vs "well we already got the easy stuff up... " to consider, but while technology improvements can keep a play profitable/producing for longer, it won't ever overcome the basics of needing to drill new spots. Even more so important with fracking, as they tend to rapidly lose production from existing plays.
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Dec 15, 2014 21:28
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Pimpmust posted:Peak oil itself is a pretty straightforward theory/rule of any finite resource production and hasn't been proven "wrong" by any means, as you say (although the confusion between "conventional oil" and the unconventional stuff is another matter), the guys thinking it would mean $300 prices and collapse of global civilization within 5 years of the peak (of conventional oil) were wrong though (not a ton of those guys, but I've encountered some). Is there a citable study I can get for this?
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Dec 15, 2014 22:13
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This movie was the peak of Peak Oil: https://www.youtube.com/watch?v=WAyHIOg5aHk 90 minutes of a guy ranting about the coming end of the world. And the scary thing is there are many who took/take it seriously.
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Dec 15, 2014 22:13
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Pimpmust posted:Of importance is just how much demand will go up with low prices, and how much Chinese demand will rise/go down from possible crisis. I believe Chinese demand is still increasing (even ignoring the huge upsurge with the low prices to fill strategic reserves), just not at quite the pace as expected with the general slowdown in their growth. This is complicated (all over the world) by how connected much of the economy is with the oil price, a lot of countries will see increased growth just by taking advantage of the low prices, which will trigger higher oil prices in an of itself. Get too high and things start creaking in the seams, even if alternatives get a significant boost as well (which may eventually lead to decoupling oil and economic growth, but we're not there yet by a long shot). One thing though is there are other macro-economic factors than oil, Europe economic growth is connected largely to its debt spiral and oil won't effect it very much and Japan's recession won't either and Japan will keep on working on their third lost decade. It may help the Chinese some what, but I don't think the worse has been shown as far as China's economy at this point and I think there is still a lot that has been hidden form us. The thing is I don't see prices going higher than roughly what they were at for a while, especially since demand isn't going to be accelerating and there will be reserve supply. I think it will go up (we aren't going to have cheap gas forever) but if anything it will be more of an issue of a global economic malaise and even worse global warming. quote:To note is that while comparing world dollar per barrel prices with fracking costs, the actual price US producers gets is usual in the range of 10-15 dollars lower, due to infrastructure issues. Then there's the balance of "technology makes everything (including physics) cheaper!" vs "well we already got the easy stuff up... " to consider, but while technology improvements can keep a play profitable/producing for longer, it won't ever overcome the basics of needing to drill new spots. Even more so important with fracking, as they tend to rapidly lose production from existing plays. Fracking eventually will run its course but I could see new drilling slowing down but not stopping. Eventually the fracking boom is going to reach its limits, which means we probably have to be more reliant on the Canadians again. That said, the Canadians will have a bit of a squeeze in the meantime from a housing crisis and slower production.
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Dec 15, 2014 22:29
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Ardennes posted:That said, the Canadians will have a bit of a squeeze in the meantime from a housing crisis and slower production. Great Lakes energy production. Mark my word, you'll see delays in the ramp-up of projects, yet still see production brought online when the prices reach a decent, sub-$106 point. Oil's only hope is African industrialization to supplement reduced growth in Asian demand. I'm hopeful for SSA; I know not to trust that hope.
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Dec 15, 2014 22:39
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Pimpmust posted:Get too high and things start creaking in the seams, even if alternatives get a significant boost as well (which may eventually lead to decoupling oil and economic growth, but we're not there yet by a long shot). Couple points... Alternatives principally compete with coal and natural gas, not oil. Oil only generates 5% of the world's electricity, and far less than that in the United States (around 1%). Economic growth and oil has already decoupled in the United States: 
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Dec 15, 2014 22:45
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etalian posted:BoA analysts see the US brent crude price settling around $50 per barrel: This report seems very optimistic about LNG: quote:Mrs Schels said the global market for (LNG) will “change drastically” in 2015, going into a “bear market” lasting years as a surge of supply from Australia compounds the global effects of the US gas saga. How likely is Europe having a viable alternative to Russia gas in just a few years?
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Dec 15, 2014 23:08
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ReV VAdAUL posted:This report seems very optimistic about LNG: Most of the challenge is despite cheap LNG prices you still need to move it to the marketplace. For Russian oil you already have a built in pipeline system thanks to the Cold War and Warsaw Pact.
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Dec 16, 2014 00:29
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