Crude oil is $86 today.... beginning of the end?

Discussion in 'Oilfield Trucking Forum' started by kogaFX, Oct 9, 2014.

  1. Driver5

    Driver5 Light Load Member

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    ...says the guy who, in this very thread, blamed the economic crash of 08 on fuel prices being high,.

    Lol. Guess we'll agree to disagree.

    PS- Another record rise for stocks today, with both crude and Brent oil rising again.

    http://www.msn.com/en-us/money/tops...earnings-triple-digit-rise-for-dow/ar-BB9BImB
     
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  3. kogaFX

    kogaFX Light Load Member

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    So for instance, if oil does keep falling, won't truck driving jobs be secure for a bit? I'm guessing sand and side/belly dump will fall off hard, but won't there still be a demand for oil and brackwish water haulers for a long while until pipeline infrastructure catches up?
     
  4. Skate-Board

    Skate-Board Road Train Member

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    They said on a news program that if oil falls below $70 a barrel the oil boom in the U.S. will go bust. It will no longer be profitable to drill. Salaries will fall and people will leave and Williston will become a ghost town with tons of new housing just crumbling
     
  5. TLeaHeart

    TLeaHeart Road Train Member

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    there will be a need for crude trucks, and production water trucks, but even that will fall off, and there will only be the current producing wells, which are constantly falling off. And with no return on investment from the new wells, companies go bankrupt, and the wells are shut in... no more production.

    Drilling companies are selling off land now to keep current drilling operations afloat.
     
  6. 123456

    123456 Road Train Member

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    In the mid 1980's oil bust,

    it killed our work (hotshot) in Houston.

    And killed everything else with it....housing etc.

    Be prepared for it, it's just a matter of time.
     
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  7. cplmac2

    cplmac2 Heavy Load Member

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    There was a big article in the local paper (Watford City, ND) about the falling oil prices and how they will affect the Bakken. The paper listed the break even price per barrel by county because different counties have different production costs. Watford where I'm at has a break even price of $28/barrel, I think the highest break even price in North Dakota was $78/barrel, most were well under $50/barrel. Saudi Arabia was at $96/barrel. As long as American crude has a lower break even price it will be the more profitable producer and will be in production. The reason the break even prices were different is because some locations produce a lot more oil for the first couple of years a well is active, and some locations produce more water than others. Bottom line for the Bakken is that it's some of the most profitable oil in the world to produce and as such will be some of the last wells to shut in. Nothing to worry about up here, other places will have different circumstances.
     
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  8. Driver5

    Driver5 Light Load Member

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    I found that article and I'm sorry to say, but it's BS because the writer is either confusing two different metrics used to measure crude prices or possibly looking at break even prices on NATURAL GAS and other liquids in the Bakken (which are hovering between $25-30 right now).

    It's this article, right?

    http://www.watfordcitynd.com/?id=10&nid=2925

    Unfortunately, there isn't a single location in the Bakken that has a break-even of $28/barrel for crude (not even close) and again, this fundamental mistake in the article is either because the writer is confusing natural gas and other liquid break evens or she just doesn't know the difference between what crude oil trades for in the US (referred to mostly as "West Texas Intermediate" or "US crude") and internationally (usually referred to as "Brent" crude) and what oil sells for locally (on average) around the world. These are VERY different metrics and when you use the latter, it's incredibly misleading.

    In truth, there is nowhere in the Bakken that crude breaks even at $28/barrel, or even TWICE that, although they're trying to get it below $60 by using methods that require less water and doing more zipper fracs.

    Here are some credible recent sources on the Bakken's break even pricing for crude.

    Note: There are NO analysts who predict a break even price for Bakken crude below $60/barrel just yet, but they're close to getting it into the high $50s:

    http://www.reuters.com/article/2014/04/02/energy-crude-bakken-idUSL1N0MU21Z20140402

    http://www.economist.com/news/unite...r-many-americans-realise-policy-has-yet-catch
     
  9. cplmac2

    cplmac2 Heavy Load Member

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    That's the article, I didn't know this paper was online. I found the article very interesting, I can't account for it's accuracy though. Even at $60/bbl that leaves a lot of wiggle room for the price of oil to fall and more importantly that still stacks up well against other oil producing regions at least according to the article. Really interesting articles you linked to, but the article that spoke about the Bakken break even was from April and I wonder if there has been any change since then. I know one thing from their article that is spot on, the multi-well pads. I regularly pull from pads that have multiple wells, pulled a five well pad yesterday and down in Louisiana one of our best producing pads has north of 30 well heads. The rig has been there for 4 years, it punches a hole moves 30 feet and punches another and so on and so on for years. Still that 30+ head pad produces less oil than at least a dozen pads I pull from in the Bakken with a fraction of the number of well heads. Not sure the lifespan of a Bakken well but it's first couple of years produce incredible amounts of oil. They are also just scratching the surface of the Three Forks, and rumor has it there may actually be a third basin in the same ground. If that's true they will be able to drill down on existing wells as they peter out and hit the next basin which will make costs fall even further. All in all I'm still pretty comfortable with the Bakken position in the declining oil market, and these declines never seem to last. When Obama took office the national average price for a gallon of gas was $1.78, 3 months later it was over $3 and it has never fallen below $3 since, the most sustained spike in energy cost in modern American history. I guess in a very tangible way the Presidents hatred of fossil fuels is actually helping the industry make record profits. I'm curious though, just ten years ago crude was trading at less than $50/bbl, how was that sustainable with breakeven prices so high?
     
  10. Driver5

    Driver5 Light Load Member

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    Definitely. Ignore the worry warts, we aren't going "bust" any time soon. OPEC simply can't deflate their prices enough to harm us without taking themselves down in the process.

    Not much. All of the top analysts, researchers, hedge funds, and private equity firms still have the Bakken's break-even price around $60-70/barrel, slightly less around major transportation lanes and slightly more in the more remote parts of the Bakken.

    For a variety of reasons, including the fact that conventional drilling is significantly cheaper than hydraulic fracturing. Fracking technology existed before 07/08-ish when the boom started (invented in the 1940s and used on a small scale within a few years after that), but it only became economical to use it on a large scale for oil as crude prices skyrocketed.
     
  11. Stukaman

    Stukaman Light Load Member

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    FRAC has existed for 50yrs
     
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