Oil Price Watch

[uls]

Plus daming nahanap na Oil sa Canada (170 Billion Barrels) and Central and North USA (800 Billion Barrels). Equal to 100+ years of current US consumption.

Pababa na talaga yung oil price.

but they need the price to stay high to be economically viable

producing oil from shale, tar sands cost a lot more than producing oil from conventional oil fields

if oil price falls too low they'll cut back on production

[hein]

but they need the price to stay high to be economically viable

producing oil from shale, tar sands cost a lot more than producing oil from conventional oil fields

if oil price falls too low they'll cut back on production

Extraction of oil from the tar sands of Alberta, Canada costs only $23 to $26 per barrel.

There is a lot of leeway.

[uls]

btw, i'm the the only one who thinks $100 oil is the right price

article date: May 16, 2012

Saudis, soaring costs may keep oil above $100 | Reuters

(Reuters) - Oil industry executives and bankers are assuming oil prices will stay above $100 a barrel in the year ahead, despite mounting economic worries, as any fall below that level would trigger a cut in Saudi Arabia's output and force closures at high-cost projects around the world.

"The marginal cost of production is the ultimate floor in the oil market. In the North Sea it can be $80 to $100 dollars," said Andrew Moorfield from Scotiabank.

"But the real marginal cost of production also includes social costs that some big oil producers need to pay. When you add social costs in Russia and Saudi Arabia, it means that the effective floor on Brent is around $100 a barrel," he said.

so if Brent falls far below $100 and stays far below $100 for an extended period of time, expect production shutdowns in many oil fields around the world. and expect restlessness in the Middle East

and yeah... i mentioned President Putin won't be happy

[niky]

Whether the cost-profit ratio stays favorable will depend on tax incentives... the current "green" movement is looking to impose more restrictions on tar sand oil extraction.

Used to be non-economical... but given the huge upfront and now social cost of oil in the Middle East, it's becoming an attractive alternative.

[uls]

Extraction of oil from the tar sands of Alberta, Canada costs only $23 to $26 per barrel.

There is a lot of leeway.

With increased difficulty comes higher production costs. This also means that if oil prices fall too low, costs will overwhelm revenues and production will shut down altogether.

The Canadian oil sands are a perfect example. Producing projects in the oil sands need an oil price of at least $60 per barrel to remain economic – and that assumes capital costs have already been repaid. To build a new oil sands project, a producer needs to believe prices will remain high enough to cover not only his basic production costs but also to repay his huge capital outlay. As such, new oil sands projects are uneconomic to develop without an oil price of at least $85 per barrel.

The oil sands are by no means the only important oil region with high production costs. To access most of the world's unconventional oil resources, companies need to drill horizontally, which costs much more than drilling vertically. After drilling horizontally, producers have to frac the well in many stages to achieve commercial production. This means each well costs many million Dollars, an expenditure that is not going to be economic at $40 oil.

What is more, these wells decline much more rapidly than conventional wells. Production from any well falls with each passing year, but with unconventional wells the decline can be dramatic. In fact, shale wells typically decline by more than 50% after their very first year. To maintain production, companies need to be constantly drilling and commissioning wells, a treadmill process that increases the production costs significantly.

In the world of unconventional production, companies are faced with a double whammy: they need to drill more wells than a conventional field would require; and each well is much more expensive. Companies are not going to bother with this challenge if low prices make it a money-losing endeavor. Once production begins to shut down, the world will panic and the price of oil will turn upward once again.

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[andywesteast]

Producing projects in the oil sands need an oil price of at least $60 per barrel to remain economic – and that assumes capital costs have already been repaid.

$60 per Barrel is Great! That's still far from $100. Lots of leeway nga.

[uls]

but what's your profit margin at $60

just enough to pay salaries?

[andywesteast]

but what's your profit margin at $60

just enough to pay salaries?

Canada has been producing oil from the Tar Sands profitably for more than 10 years now.

They are now the USA's biggest oil supplier.

I'm sure they know more about making money from oil than you do.

[uls]

ok sir

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[uls]

oh btw i forgot

oil produced in Canada is not priced based on brent

it's priced is based on WTI. but at a discount

was talking about brent kasi but somebody injected Canada oil into the discussion

BENTEK: Canadian Oil Prices Will Experience Deeper Discounts to WTI over the Next Five Years | Business Wire

BENTEK: Canadian Oil Prices Will Experience Deeper Discounts to WTI over the Next Five Years

Crude oil prices at Western Canadian Select (WCS) will fall to an average of $27 below the West Texas Intermediate (WTI) benchmark in 2014 due to growing Canadian oil supply, flat demand from refining and limited pipeline takeaway capacity.

EVERGREEN, Colo.--(BUSINESS WIRE)--BENTEK Energy, a leading energy markets information and analytics company, reports that the health of Canada’s oil market will largely depend on transportation capacity to the U.S. over the next few years. While Canadian oil supply is expected to grow 31% through 2016, demand from Canadian refineries is expected to remain relatively flat. As a result, almost all incremental supply will be transported to the U.S. for refining. Currently, five of the six major pipeline systems that move crude across the Canadian-U.S. border are full or constrained by downstream markets and export pipeline capacity will be limited until new pipeline expansions come online starting mid-year 2015. Until then, average annual crude prices for WCS could fall to as much as $27 below the WTI benchmark. Light Syncrude prices also will face extreme pressure.

how much is WTI now? $83

$27 below WTI? $56

so if WTI falls to $70?

oh well...

yeah i'm sure they know how to make money from oil