$100 A Barrel Oil is on the Way

#501
#501
hndog609 said:
I'm not sure this makes sense. For this train of thought to work it must be assumed that the oil industry itself has no financial interest in developing the technology to exploit this resource. Frankly, I find that idea dubious at best. Not to mention the fact that there is, in fact, some recovery already underway since there are at least 450 wells in the Bakken already. Look, it's not like we stumbled across across some big fat lake of sweet crude here, which makes the Saudi analogy pretty weak. And while we're discussing weak the snipe at the current administration fits that as well. The USGS has known about the Bakken oil since at least Clinton's first term.

Oh, and before we get any real work done there you better start clubbing tree huggers. They have done and will do nothing but keep this country's oil dependency abroad as much as they can.
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Let me try to restate this simply. What is the motivation of the oil companies to bring a huge oilfield online and flood the market with oil and bring the price down?

Isn't what they are doing, better for them from a business standpoint and worse for the consumer? To bring the oil online slowly and add it the market each year.

The majority of this oil I believe is on federal land and it should be IMO of national interest to free the country from dependence on foreign oil. Is that in these oil companies interest? Probably not.
 
#502
#502
the size of the oilfield doesn't matter if you don't have the refining capacity to meet demand.

the oil companies made just as much on a gallon of gas when it was $1/gallon as they do now that it's nearly $4.
 
#503
#503
oklavol said:
Let me try to restate this simply. What is the motivation of the oil companies to bring a huge oilfield online and flood the market with oil and bring the price down?
.
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I can think of at least one motivation. Having more control over access to your product and not having to deal with a volatile Middle East for it.
 
#504
#504
oklavol said:
Let me try to restate this simply. What is the motivation of the oil companies to bring a huge oilfield online and flood the market with oil and bring the price down?

Isn't what they are doing, better for them from a business standpoint and worse for the consumer? To bring the oil online slowly and add it the market each year.

The majority of this oil I believe is on federal land and it should be IMO of national interest to free the country from dependence on foreign oil. Is that in these oil companies interest? Probably not.
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that's assuming the oil companies can collude to stop others from discovering new oil. there are way too many oil companies out there for that to happen and those that don't have huge current earnings have a huge incentive to find new fields.
 
#506
#506
oklavol said:
Let me try to restate this simply. What is the motivation of the oil companies to bring a huge oilfield online and flood the market with oil and bring the price down?

Isn't what they are doing, better for them from a business standpoint and worse for the consumer? To bring the oil online slowly and add it the market each year.

The majority of this oil I believe is on federal land and it should be IMO of national interest to free the country from dependence on foreign oil. Is that in these oil companies interest? Probably not.
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There's already been several people address your post but let me answer with a question. Do you think the oil companies would be drilling in ANWAR if they could? I do. They have been, to this point, been put off for political reasons. Would they be taking oil out of the Bakken? Bet your butt, and for the same reason. The reason they haven't is because it just hasn't been that financially feasible with the current technology. They've been working on it and it's starting to come around. Last year the Elm Coulee field averaged 53, 000 barrels a day. As I posted earlier there's at least 450 wells in N Dakota alone. ND oil production jumped 329% in '07 over '06.

There are too many people who, and the media doesn't help this at all, hear "gazillion barrels of oil found!" and wonder why the price of gas didn't drop merely because they heard about it. The reality isn't nearly that simple.
 
#508
#508
oklavol said:
Let me try to restate this simply. What is the motivation of the oil companies to bring a huge oilfield online and flood the market with oil and bring the price down?

Isn't what they are doing, better for them from a business standpoint and worse for the consumer? To bring the oil online slowly and add it the market each year.

The majority of this oil I believe is on federal land and it should be IMO of national interest to free the country from dependence on foreign oil. Is that in these oil companies interest? Probably not.
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I'll add my response. Most (about 70+%) of oil reserves are in OPEC nations but those nations (and their national oil companies) account for about 40% of production. Exxon, Shell, Chevron, etc. work in parts of the world with fewer reserves that are frequently harder to get to.

The current reserves that Exxon et al. have access to are being used up. To maintain their production they must seek new reserves. Exxon already buys oil from national oil companies. It is in their interest to help harvest oil from new or more stable finds. They are losing access to the other stuff.
 
#511
#511
If Whitney can kick Bobby to the curb surely we can kick our foreign oil habit.
 
#513
#513
MG1968 said:
the size of the oilfield doesn't matter if you don't have the refining capacity to meet demand.

the oil companies made just as much on a gallon of gas when it was $1/gallon as they do now that it's nearly $4.
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Was one of the CEO's of an oil company getting a bonus of over 400 million/yr when gas was $1/gallon? I don't think so.
 
#514
#514
hndog609 said:
There's already been several people address your post but let me answer with a question. Do you think the oil companies would be drilling in ANWAR if they could? I do. They have been, to this point, been put off for political reasons. Would they be taking oil out of the Bakken? Bet your butt, and for the same reason. The reason they haven't is because it just hasn't been that financially feasible with the current technology. They've been working on it and it's starting to come around. Last year the Elm Coulee field averaged 53, 000 barrels a day. As I posted earlier there's at least 450 wells in N Dakota alone. ND oil production jumped 329% in '07 over '06.
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I haven't read anything where drilling in the Bakken formation has been limited or stopped for environmental reasons. It's been finanically feasible since oil was over $60/barrel I believe. That's been several years now.

IMO the bottom line is this, the oil companies have almost unlimited revenue to throw at developing an oil field like this. Look at their profits the last couple of years. Why haven't they done that? I think the answer is self-evident.
 
#515
#515
volinbham said:
I'll add my response. Most (about 70+%) of oil reserves are in OPEC nations but those nations (and their national oil companies) account for about 40% of production. Exxon, Shell, Chevron, etc. work in parts of the world with fewer reserves that are frequently harder to get to.

The current reserves that Exxon et al. have access to are being used up. To maintain their production they must seek new reserves. Exxon already buys oil from national oil companies. It is in their interest to help harvest oil from new or more stable finds. They are losing access to the other stuff.
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I agree they will develop the resource. But they will do it on their timetable and in a way most profitable to them. Allowing the price of oil to remain high for several years by not having large increases in the supply is in their interest from a busines standpoint. They are having record profits, why would they want to interrupt that by increasing supply enormously?
 
#516
#516
Bill O'Reilly is officially an idiot. He just had an oil industry expert and he kept asking him "Who is the guy that puts the $120 on a barrel of oil?"
 
#517
#517
GAVol said:
Bill O'Reilly is officially an idiot. He just had an oil industry expert and he kept asking him "Who is the guy that puts the $120 on a barrel of oil?"
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I saw that and you are correct. He seemed to be trying very hard to come off as the guy in small town America pumping $4 gas into his 85 Camaro. Not a good look for a man that is supposedly educated.
 
#518
#518
oklavol said:
I haven't read anything where drilling in the Bakken formation has been limited or stopped for environmental reasons. It's been finanically feasible since oil was over $60/barrel I believe. That's been several years now.

IMO the bottom line is this, the oil companies have almost unlimited revenue to throw at developing an oil field like this. Look at their profits the last couple of years. Why haven't they done that? I think the answer is self-evident.
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Interestingly, you didn't read anything about environmental reasons for not drilling the Bakken in what I wrote either. I did make an environmental/technological analogy between ANWAR and the Bakken though.

And apparenlty you also missed where i cited there has been a decided increase in drilling there, in spite of the technology hurdles.

You need to dial back just a little from the idea that Jed shot some bubblin crude out there and everybody is looking the other way. It's just not the case.
 
#519
#519
oklavol said:
I agree they will develop the resource. But they will do it on their timetable and in a way most profitable to them. Allowing the price of oil to remain high for several years by not having large increases in the supply is in their interest from a busines standpoint. They are having record profits, why would they want to interrupt that by increasing supply enormously?
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1. They are not increasing supply enormously, they are replacing supply. The Bakken Play is NOT Saudi Arabia.

2. Big Oil (aka Exxon-Mobil and company) are also buyers of oil. They routinely refine/process much more than they produce. They pay market price for oil every day. They do have an incentive.

3. Big Oil is not an entity. It is separate companies that all face the problem of increasing difficulty in production and all of whom must buy oil on the open market at current market rates. Once again, they do have an incentive. It is in each of these companies best individual interests (and their fiduciary duty to their share holders) to do so.

4. Finally, to an earlier point you made about federal lands. Typically their are royalty arrangements with the owners of the property. The government obviously is not in the oil production business.
 
#520
#520
oklavol said:
Let me try to restate this simply. What is the motivation of the oil companies to bring a huge oilfield online and flood the market with oil and bring the price down?

Isn't what they are doing, better for them from a business standpoint and worse for the consumer? To bring the oil online slowly and add it the market each year.

The majority of this oil I believe is on federal land and it should be IMO of national interest to free the country from dependence on foreign oil. Is that in these oil companies interest? Probably not.
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Let me answer that simply...NOOOOO!!! Our upper management was in just yesterday and stated, "The price of oil is too high, and we (as a company) would like the price to drop significantly below $100/barrel". Remember our cost of doing business has gone way up in the last 2 years. Rig rates have practically doubled, foreign governments want a bigger piece of the pie, and labor shortages are at an all time high as is the cost of that labor. So please stop painting us as the devil. My company, as well as others, contribute more to social works and charities than most equivalent companies outside the oil industry. We are not as evil as most people want to believe. BUT, people are angry about the price and need to throw stones at someone.

However, like any other well founded company, we are trying to make a profit and bring a good value to our share holders. Isn't that what America is about? I believe MacDonald's, Walmart and Dell are trying to do the same thing. At least I would hope so. And yes, before you say it, if the market value of a hamburger was $10 , then that would be the price of a Big Mac......supply and demand......:salute:

That's all from me...I need to find some more oil...Chao!
 
#523
#523
hndog609 said:
Interestingly, you didn't read anything about environmental reasons for not drilling the Bakken in what I wrote either. I did make an environmental/technological analogy between ANWAR and the Bakken though.
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The reason they are not drilling in Anwar has nothing to do with technology. Your comparison to Bakken is poor at best.

hndog609 said:
And apparenlty you also missed where i cited there has been a decided increase in drilling there, in spite of the technology hurdles.
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Where did I say they are not drilling there? Obviously they are, just not at a pace that will break this country's dependence on foreign oil (my point).
 
#525
#525
oklavol said:
The reason they are not drilling in Anwar has nothing to do with technology. Your comparison to Bakken is poor at best.



Where did I say they are not drilling there? Obviously they are, just not at a pace that will break this country's dependence on foreign oil (my point).
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Jesus dude, start over. Your premise was oil companies seemingly turning a blind eye to oil reserves because it suited them to do so. I posited that they have been trying to get into ANWAR (technology NOT the problem) but have been denied. Willingness to do so wasn't the problem, environmenalism was. Now to the Bakken, enviromentalists NOT the problem, technology has been. See, willingness to get to the oil isn't the issue, being hampered in doing so has been.

"Instead of developing the technology to access this oil..."

That's your quote. It's false. It's taken time but they've managed to come up with a means of doing it and are starting to do so. There will be more of it in the future. I don't know why you believe there is just some switch that gets thrown and people just start filling tankers up from spigots stuck in the ground. It just doesn't work that way.

Read this. It explains a lot of what is and has gone down in the Bakken.

The Bakken Trend: Lost Dutchmen Mine of the Oil Patch? - Seeking Alpha
 
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