Oil: how low can it go?
Discussion
According to this some of it is now worthless....or at least you have to pay somebody to take it...
http://www.bloomberg.com/news/articles/2016-01-18/...
http://www.bloomberg.com/news/articles/2016-01-18/...
jshell said:
Axionknight said:
All good fun innit? I like the subsea business, plenty of time to move around though (aged 27), 
Never been offshore though, but I'd love to see it one day.
By 27 I was sick of offshore! Noob! Never been offshore though, but I'd love to see it one day.
t then. So I'd never do it now unless it was that or the brew.bucksmanuk said:
Captain Benzo said:
Axionknight said:
As reserves are extracted from deeper places though, a point may come where extraction costs ramp up or become unviable.
We're qualifying valves to 10,000psi working pressure and 350f/-20f at the moment and hyperbaric testing them to over 3000m depths. So design, production and qualification costs are pretty massive so that may mean some fields remains unviable/too costly to harness for quite some time.
in a similar boat. wellheads are looking at 20,000psi, -50C to 150C and 3,000m depth. really hostile environments. We're qualifying valves to 10,000psi working pressure and 350f/-20f at the moment and hyperbaric testing them to over 3000m depths. So design, production and qualification costs are pretty massive so that may mean some fields remains unviable/too costly to harness for quite some time.
while the price is low, these qualifications are taking a back seat. wait and see i guess.
Just need the oil price to go up and then someone will write out some capex’s and start buying them...
Also doing valves for 700 bar of hydrogen – ooo-er!
Already 20k trees on the table, was building 15k years ago for GoM. Auto Frettage test pressure was 22.5k. We did that in a water tank despite being hydro.
Another one looking over his shoulder here. I'm a contractor offshore for BP Norway, just hoping to avoid the axe and for an upturn in oil prices. Our field has had massive redevelopment in recent years with large cost overuns and in addition, we are part way through a multi billion NOK 30 well P&A program. Hate to think what our break even barrel price is?
Logically wouldn't you expect the low prices to exist as long as the storage glut continues? If there's 3 months in storage at present it's going to be hard to sell more. In the typically efficient way these things work I guess lots of projects will be pulled and wells mothballed until there is under supply and the storage is run down. Then the price will rise again.
So I guess the question is how long these things will take to work through the system. The best indicator of that would seem to be when stores start running down. With the caveat that speculation will probably overshoot, as usual giving a couple of false starts, before the oil companies start investing in new projects again.
What did I miss?
So I guess the question is how long these things will take to work through the system. The best indicator of that would seem to be when stores start running down. With the caveat that speculation will probably overshoot, as usual giving a couple of false starts, before the oil companies start investing in new projects again.
What did I miss?
AJS- said:
Logically wouldn't you expect the low prices to exist as long as the storage glut continues? If there's 3 months in storage at present it's going to be hard to sell more. In the typically efficient way these things work I guess lots of projects will be pulled and wells mothballed until there is under supply and the storage is run down. Then the price will rise again.
So I guess the question is how long these things will take to work through the system. The best indicator of that would seem to be when stores start running down. With the caveat that speculation will probably overshoot, as usual giving a couple of false starts, before the oil companies start investing in new projects again.
What did I miss?
It's not like selling ice cream, where you can park the van up over the winter and start again in the summer, you can't just mothball an offshore platform and start up again in a few years time as if nothing had happened. So I guess the question is how long these things will take to work through the system. The best indicator of that would seem to be when stores start running down. With the caveat that speculation will probably overshoot, as usual giving a couple of false starts, before the oil companies start investing in new projects again.
What did I miss?
Stocks won't begun to run down until demand exceeds supply, and with Iran returning to production supply looks like increasing rather than decreasing. The countries who could cut supply don't want to, the oversupply is a deliberate tactic not a mistake.
High cost producers are going to have some very difficult choices to make, and soon I suspect.
RYH64E said:
AJS- said:
Logically wouldn't you expect the low prices to exist as long as the storage glut continues? If there's 3 months in storage at present it's going to be hard to sell more. In the typically efficient way these things work I guess lots of projects will be pulled and wells mothballed until there is under supply and the storage is run down. Then the price will rise again.
So I guess the question is how long these things will take to work through the system. The best indicator of that would seem to be when stores start running down. With the caveat that speculation will probably overshoot, as usual giving a couple of false starts, before the oil companies start investing in new projects again.
What did I miss?
It's not like selling ice cream, where you can park the van up over the winter and start again in the summer, you can't just mothball an offshore platform and start up again in a few years time as if nothing had happened. So I guess the question is how long these things will take to work through the system. The best indicator of that would seem to be when stores start running down. With the caveat that speculation will probably overshoot, as usual giving a couple of false starts, before the oil companies start investing in new projects again.
What did I miss?
Stocks won't begun to run down until demand exceeds supply, and with Iran returning to production supply looks like increasing rather than decreasing. The countries who could cut supply don't want to, the oversupply is a deliberate tactic not a mistake.
High cost producers are going to have some very difficult choices to make, and soon I suspect.
Also in regards to the efficiency question of projects being postponed and so on. Companies know it will cost them in the long run- The problem is cashflow. They can't just keep investing in projects when their future income is so much lower than they expected based on the old oil price. As an industry billions of pounds are lost per day compared to the old oil price, so they have a lot less cash to spend (or they have to increase their debt).
jshell said:
By 27 I was sick of offshore! Noob!
1st helicopter ride: "OMG, I'm a helicopter! it's taking off! OMG"2nd helicopter ride: "This is a noisy, vibrating pain in the dick."
Worst ever: 6 hour boomerang in the Arctic. 3h out - fog - 3h back. In an insulated survival suit. F**k my life.
NRS said:
Also in regards to the efficiency question of projects being postponed and so on. Companies know it will cost them in the long run- The problem is cashflow. They can't just keep investing in projects when their future income is so much lower than they expected based on the old oil price. As an industry billions of pounds are lost per day compared to the old oil price, so they have a lot less cash to spend (or they have to increase their debt).
Some big FIDs due this year, including a whole bunch of FLNGs. It'll be interesting, for sure...and Shell announce 10,000 job cuts if the BG merger goes ahead! http://www.bbc.co.uk/news/business-35359219http://www.ft.com/fastft/2016/01/20/10000-jobs-to-...
sooperscoop said:
jshell said:
By 27 I was sick of offshore! Noob!
1st helicopter ride: "OMG, I'm a helicopter! it's taking off! OMG"2nd helicopter ride: "This is a noisy, vibrating pain in the dick."
Worst ever: 6 hour boomerang in the Arctic. 3h out - fog - 3h back. In an insulated survival suit. F**k my life.
jshell said:
..and Shell announce 10,000 job cuts if the BG merger goes ahead! http://www.bbc.co.uk/news/business-35359219http://www.ft.com/fastft/2016/01/20/10000-jobs-to-...
Not entirely price related as job cuts would happen anyway where there are inefficiencies in the workforce structure, probably not 10,000 mind. Wouldn't want to be working at BG HQ right now.Edited by Frio3535 on Wednesday 20th January 11:34
Frio3535 said:
jshell said:
..and Shell announce 10,000 job cuts if the BG merger goes ahead! http://www.bbc.co.uk/news/business-35359219http://www.ft.com/fastft/2016/01/20/10000-jobs-to-...
Not entirely price related as job cuts would happen anyway where there are inefficiencies in the workforce structure, probably not 10,000 mind. Wouldn't want to be working at BG HQ right now.Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff