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Denbury Resources Inc. Message Board

  • upperfeliciana upperfeliciana Aug 28, 2008 10:22 AM Flag

    Gustav

    Looks like Gustav may be at my door step on Tuesday. Hopefully the trees around my house are in good shape.
    Boudreaux

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    • Moosebit et al,

      The MMS reports that as of the 30th, 359,750 barrels of oil and 2.439 Bcf of natural gas remain shut in offshore in the Gulf of Mexico. That follows the pattern of the last report of the return of merely 10 mmcf per day. In a few weeks or perhaps a bit more, we will see at least one largish pipeline repaired and coming back on line. That should allow for a considerable pop in production--perhaps as much as a B per day--whereupon we should see another plateauing of shut-in until the next major pipeline is ready to come back on line.

      Regards,

      Peter

    • Hugh et al,

      As of the 28th the MMS reports that 420,328 barrels of oil and 2.476 Bcf of natural gas remain shut in. For natural gas that is a return of about 10 mmcf per day. We are almost exactly two months into this process and we have probably seen a total of 320 Bcf shut in so far.

      Regards,

      Peter

    • All,

      The MMS reports that 420,328 barrels of oil and 2.553 Bcf of natural gas remain shut in offshore GOM. For natural gas that is a return of about 20 mmcf per day over the last week which is an improvement. Oil also improved substantially which must mean that a pipeline came back.

      Regards,

      Peter

    • Moosebit et al,

      MMS reports essentially no return of either oil or natural gas over the last 5 days. Shut in production amounts to 502,139 barrels of oil and 2.717 Bcf of natural gas. Those are, of course, offshore GOM numbers only.

      Robry's production data points confirm those numbers and suggest that, in toto, about 4 Bcf still remains shut in.

      Regards,

      Peter

    • Yep, sounds like the numbers you used earlier...

    • Birdog,

      It's not the producers that are the problem with shut in production, it's the pipeline companies. They would love to get their hands on product because they charge a tariff on thruput and, for the most part, couldn't really care what the price is. The experience so far with pipeline and other infrastructure damage is reasonably similar to what we've seen with many hurricanes in the past. You might not believe me, but I believe that Moosebit can testify to this, but I developed the round number of 100 Bcf of production shut in by year end per Category of storm as a result of my daily analysis of shut in from Katrina and Rita in '05. The experience with those storms was extraordinarily similar to what we've seen to date with Gustav and Ike.

      The first stage of shut in is total for obvious reasons but that lasts only a week or so per storm. The second phase of shut in is the slow steady dribbling back of production associated with the continual return of electricity, processing plants and pipelines with minimal damage. Then, typically, sometime around a month or two into the process you see a plateau of shut in associated with several or even many significant pipelines with significant and sometimes subsurface damage which take longer periods of time to repair--sometimes as long as half a year but probably not in the case of Gustav and Ike where the damage seems to be to onshore segments largely. The fourth phase of shut in is the return of those large pipelines with significant damage where you get big jumps in production associated with each. The final stage is the remainder--lost platforms and small pipelines that the industry deems not economic to return to production. This last stage is not usually very significant--less than 3% of total production.

      Regards,

      Peter

    • Many folks I know are calling for $45 oil as the next leg down. The real recession is still not even evident in the unemployment figures and this looks to be a longer, drawn out event. There's a clip from Stratfor below:

      A number of geopolitical agendas will need to be revised as oil prices continue falling. But we need to also keep in mind that this drop in oil prices is likely just the beginning.
      An economic recession has just barely begun in the United States, and has yet to hit the wider world. The recession in Europe is also just starting, and since Europe’s monumental economic ailments are entrenched in the banking sector, it will be at least another several months before the Europeans can start to recover. Moreover, the slowdown of exports from Asian markets is only just now starting to come to light. The recovery of the Asian states is first dependent on the Western consumer base recovering. In short, what we’re looking at is a protracted decrease in demand lasting from months to years across the globe.
      To put that into perspective, in 1997-1998 during the Asian financial crisis, the countries hit by recession were Japan, South Korea and the Southeast Asian countries. Though that economic crisis was more localized, it still resulted in a 10 percent drop in global demand and a three-fourths drop in global crude prices to around $8 dollars a barrel.
      Compare that situation to the present day, when the United States, China, all of Europe as well as much as the developing world is getting hit with recession. Oil prices have dropped more than 50 percent in a little more than two months, yet the coming drop in global demand has barely even cut into the price of oil. And to put that into perspective, this drop in price is happening in spite of the “geopolitical heat” already factored into the market price of oil, including threats from Nigerian militants, Israeli war threats against Iran and Russia browbeating the Caucasus. The oil markets are boiling down to the fundamentals, and unfortunately for the big oil-producing states of the world, those fundamentals are acting bearish.

    • Doesn't look like they are in any hurry to get their production back. Who can blame them with these prices.
      Birdog

    • All,

      As of the 16th, MMS reports that 511,977 barrels of oil and 2.705 Bcf of natural gas continue to be shut in offshore GOM. Virtually no change from the report of the 14th.

      Regards,

      Peter

    • All,

      MMS reports as of the 14th that 506,201 barrels of oil and 2.737 Bcf of natural gas remain shut in. Since we only brought back about 100 mmcf since the report of the 10th then we're very nearly at that plateau. We still don't know how long it will last but it could be for a while because we've still got quite a few major pipelines reporting that they will be working on damage for some time.

      As of tomorrow, we will have achieved total shut-in, on shore and off, of about .26 Tcf in the 45 days since Gustav hit.

      Regards,

      Peter

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