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  • gpd8252 gpd8252 Nov 24, 2012 11:18 AM Flag

    The effect of (just) a 60% decline rate

    The qualifier in this economics equation is price. With a higher rate of depletion, at what price does oil have to trade for the shale industry to be profitable. The free market will set the price and development will continue. Shale oil will just require higher oil prices to be sustainable. And I think we're already there with oil in the $85-$95/barrel range.

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    • GDP,

      If you are trying to reason or just talk with this goofball norris. Forget it. All he wants to do is slander everything that you say because he is always right. He wlli use flat earth people pagens and other assorted verbage to irritate you. Best to ignore this kind of person and mind. he is a bit looney to be nice about it.

      • 2 Replies to opinionsarelike33
      • The cast of the mental shadow puppet show is very full this morning.

        You really imagine there is a mentally free audience that would watch this show and believe it all?

        That is not the American way with our faith in Divine Individualism and the free will acceptance of a citizens' Duties which come with the Gift of Liberty.

        How sad it would be to see more young Americans join your meaningless shadow puppet show as unthinking cast members.

      • Ignore does not make any of the mental shadow puppet show rational or honest.

        All that has happened is a massed show this morning.

        Or in the super urbain and foppish RLP manner - Bah Bah Bah when your mental programming does not have an answer for a rational point.

        Yes I do mean primitive as an accurate descriptor of your choice behavior.

    • NO one actually knows the marginal cost of natural gas production in America. But the highest estimates are around $7mcf or * 5.6 or $40 oil.
      Even if we make the absurd claim oil and gas companies can control the price, all the taxes, royalties and jobs would remain here in America.
      Not to mention the 40% reduction in co2 for every barrel of imported oil eliminated.
      In short there is no rational or ethical reason not to responsibly develop our vast and economic viable energy resources. Inclusive of the Global Warming messianic fade religion which is clearly completely out of control.
      They do not even want natural gas eliminating imported oil for the 40% reduction in co2.
      That is by definition flat earth primitive religion and not science.

      • 1 Reply to norrishappy
      • A Sand pointed out the well economics in the Bakken were just massively extended/improved by the understanding of the natural gas reserves extending expected well life more than 20 years - to nearly 50 years per well. It is also very rich gas which can fire a resurgence of our manufacturing sector.

        It would be rational to expect here on a natural gas board with the simple workable solution the discussion would be about how to get our cleaner and economically accelerating product to fellow Americans so they can benefit from it.

        Instead we have a massed mental shadow puppet show that demands every one join in their show of primitive emotions and the attempt to be the puppet who gets the most attention on the stage.

        American natural gas is clean, cheap and we have 1,000 of years supply. The shadow puppets are aware of this too so spend all day on crafting their shadow shows to obfuscate the simple solution.

        The day has come when the Communist Elite of totalitarian China understand economics 101 better than our President and his legions of Progressive mental shadow puppets.

        America we have a real problem as we are no longer a rational Just common sense people, demanding the same of our government.

    • OIl is not a market price but one set by a cartel.

      Looks like the 10,000 year supply of hydrates can be developed at about $7mfc or $40 oil. In a free market the marginal cost of production determines price of a commodity. Scarcity for natural gas is a political illusion of the flat earth pagan Progressive faith. Hydrates offer thousands of year supply around the world.

      Counter productive efficiency laws like millage standards lower the cost per mile and resulted in ever more miles driven until Obama crashed our living standards.

      Natural gas is a source competition. Between our vast oil and natural gas reserves we could put OPEC out of control in 10 years.

      But we elected President the man who does not want this result for America and Americans.

    • You are correct in that the free market sets the price of oil, but external forces weigh heavily mostly driven by fear mongers. Threats of Iran closing the Straight of Hormuz, Nigerian rebels stopping the flow of oil from there, Middle East tensions, etc. does more to drive the price higher than economics, at least for the time being.

      There was a time when Saudi Arabia had a lot of spare capacity because they weren’t producing all that they’re capable of producing so that they could increase their output, flood the market and that would bring prices down, or alternatively they could shut down some of their production and that would boost prices. But in fact, most countries now with prices as high as they are, including Saudi Arabia, are producing as much as they can to benefit from high prices. So the notion that Saudi Arabia and OPEC can do anything to influence prices is a thing of the past, and act more like a shock absorber, increaing or decreasing supply to maintain pricing rather than controlling it.

      OPEC' latest annual report cut its medium-term and long-term global oil demand forecast. Meanwhile, the organization also lowered its forecast for global oil demand in 2013 in a monthly report last Friday. The global economic weakness, together with the European debt crises and slowdown in China's economy are reducing the world oil demand expectation, OPEC said in its latest report.

      Weaker economics, increasing supply will lead overall to lower prices, as most analysts have forecast for 2013. EIA projects the price of Brent crude oil will average $112 per barrel in 2012 and $103 per barrel in 2013, EIA expects the WTI price to average $89 per barrel in the fourth quarter of 2012, about $4 lower than last month's Outlook and to mostly remain at this level throughout the forecast period averaging $88 per barrel in 2013. After increasing to $22 per barrel in October of this year, the WTI crude oil spot price discount to the Brent crude oil spot price will average $20 per barrel in the fourth quarter of 2012 before falling to $11 per barrel by the end of 2013, according to EIA.

      Last month, Goldman slashed it's forecasts for 2013. Wall Street giant Goldman Sachs , one of the biggest banks in commodity trading, slashed its oil price forecast following years of super-bullish recommendations as it said oil output was soaring in the United States and Canada.

      Goldman, which up until now had the highest oil price prediction among major forecasters, said on Thursday it cut its 2013 Brent crude oil price forecast to $110 a barrel from the previous $130 per barrel.

      Like anything else, supply will be a factor of price. If WTI falls much below $70, production will slow across the US from Bakken and other basins. Producers will be forced to continue production from wells already drilled and fracked, but new wells would be curtailed until the price rises. Wells returning an IRR of 50% at $95 oil don't seen so attractive at $75 oil, but companies with high debt loads (KOG, for instance) will have to continue producing just to pay down the debt, and forecast of returing to positive cash flow in 2013 would be pushed down the road. Again, as long as oil stays where it is, no issue.

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