[JohnnyOnTheFarm]

$this->bbcode_second_pass_quote('kenberthiaume', 'I') said in another thread, that it seems KSA doesn't believe in peak oil. IF they did, they wouldn't be glutting the market when today's surpluses are only temporary due to declining fields in the future.

[MonteQuest]

$this->bbcode_second_pass_quote('kenberthiaume', ' ')I read another cnbc article that said the US could be a net oil exporter by 2020.

[MonteQuest]

I have a question for you guys.

As we all know who follow this, the global decline rate is a matter of genuine debate.

CERA says 4.5%, EIA says 6.7%

The decline rates for unconventional fields are off the charts in the absence of Red Queen drilling.

So, given these numbers for a basis, what will happen to decline rates post peak? Will there be an all-out effort to uptick EOR? Or will the economic downturn cause demand to drop so far that price won't be there to even maintain the 4.5 to 6.7% range?

I would think that too low a price would take out a lot of production especially from marginal plays.

Perhaps this downward trend in price with the short-term glut will give us a preview.

[kenberthiaume]

I read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.

[MonteQuest]

$this->bbcode_second_pass_quote('kenberthiaume', 'I') read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.

[Subjectivist]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kenberthiaume', 'I') read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.

[kenberthiaume]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kenberthiaume', 'I') read those decline rates too. It can't be right though as production overall isn't declining. It seems it's holding steady. Not sure how, if it's new smaller projects or what but it doesn't seem like it's falling.

[MonteQuest]

$this->bbcode_second_pass_quote('kenberthiaume', 'M')aybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.

[JohnnyOnTheFarm]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kenberthiaume', 'M')aybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'S')o maybe we enjoy this price drop for a short period of time (like 2008) or a long period of time (like 1986) or an intermediate period of time (like 1998) but the consumer sure won't mind.

And the difference between now and then is that America is just that much better prepared (some might say inoculated?) from pissing their pants and getting all crazy doomerish the next time. Live closer to work, drive less, bring on the bicycles and scooters, and just stop worrying about it already.

[JohnnyOnTheFarm]

$this->bbcode_second_pass_quote('rockdoc123', ' ')After all they live month to month on credit card debt now, just means they can buy more stuff now they have to pay less for oil.

[MonteQuest]

$this->bbcode_second_pass_quote('JohnnyOnTheFarm', '')$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kenberthiaume', 'M')aybe. But I guess it doesn't much matter. There's so much investment and so much new production that supply is outpacing demand.

[ROCKMAN]

Monte - "In the past, oil companies that spent big, got big results." Lets take a look again at the late 70's boom again. At the height we had over 4500 rigs drilling compared to the 1900 we have running today. You have to figure the oil patch was spending a lot of capes back then. But take a look at the results: virtually no increase in US oil production. Compare that to the increase in production during the current boom.

[shallow sand]

ROCKMAN. I have read your comparison of 4500 rigs in previous boom to 1900 today. I have a couple of questions about that.

What were CAPEX $$ spent in previous boom compared to current boom?
How does total feet drilled in previous boom compare to current boom?

Probably more relevant is feet drilled in pay zone in previous boom to current boom. Doubt we can find that one. I'm going to try to find answers to above on my own.

I agree the increase in production has taken me by surprise. Just trying to figure out at what oil price it needs/how far it will drive down oil prices. Admit it drove natural gas prices in the toilet. Really need to know that about tar sands too. The billion dollar question that won't be answered till it actually happens, I'm afraid.

[ROCKMAN]

Shallow - Here's the best detail I could find:

http://www.ogfj.com/articles/print/volu ... nants.html

In 2004 $'s yearly global E&P capex in the late 70's boom exceeded every year between 1981 and 2005. By 2005 capex finally reached the inflation adjusted level of the 70's boom. Obviously capex has increased over the 2005 level. Regardless the oil patch spent a sh*tload of money in that old boom with virtually no increase in oil production. US oil production peaked in 1971 and after spending hundreds of $billions of the next 10 years we didn't reach that peak again. Compare that to increased oil production in recent years. Folks can argue the oil patch isn't getting the proper bang for its buck today but it's doing much better then it did in the 70's boom when we still had all that "cheap oil" to develop. LOL.

Since I started in the oil patch in 1975 I had a front row seat to the insanity. I've tried to characterize the hype back then to what we have today. And today it's really is low compared to 35 years ago. I worked for one company that spent $550 million to find $60 million in oil/NG. They went under and disappeared forever. I handled one outside operated JV that drilled 18 exploration wells...all dry holes. They went under and were acquired by another pipeline company.

We may get there yet but currently we aren't seeing anything close to the collapse we experienced more then 3 decades ago.

[shallow sand]

ROCKMAN. Thanks for the link. I have tried to look for the info, but it seems like everything is 5 years old or so.

A majority of the wells in current operation in our area were drilled between 1977-1985. There was a tremendous drilling boom then. Wells all under 4000'. All cost under $300,000 in today's $$. My point is that although there are a lot less rigs going in this boom than previous, I suspicion the feet drilled and CAPEX spent is greatly in excess. I may be wrong. Surprising I can't easily find updated info.

I agree that there has been little carnage so far. Massive carnage 86-98. In doing my research trying to find updated info in last hour or so, did find a chart on eia website for wells drilled per month going back to 1971 in US. In 1998 reached a low of around 200 per month. I'm just trying to figure out if these shale dudes are capable of driving us back to the previous post-boom carnage.

Also read US has around one million wells in production for oil and gas, Russia has about 110,000 and Saudi Arabia has 2000+/- US still has less than 3% of estimated world wide reserves. Pretty interesting stats there.

[ROCKMAN]

Shallow - Don't forget the inflation factor. Yes, a foot of hole cost more to drill today then in 1979. But: the average home sold for $69,000 in 1980. In 2013 - $290,000. The average car in 1980...$7,200. In 2013...$31,000. A gallon of gasoline in 1980...$1.19. In 2013...$3.80. A pound of hamburger meat in 1980...$0.99. In 2013...$4.68.

You feeling as old as I do now? LOL. But look at the link again: adjusted for inflation the world was spending as much developing petroleum in 1980 as we were in 2005. Do you feel we weren't spending very much in 2005? And, again, the point wasn't whether we've been spending much more or less during this boom as we were in the 70's boom. It was about the results of these capex expenditures. The original comment I responded to offered that the oil patch has never pissed away money as badly as we have been the last several years. The FACT that we spent so much money with 4,500+ rigs drilling with no increase in domestic oil production shows that statement to be very wrong.

And that's the problem so many newbies to our energy situation have today: they are typically working within a context of 10 to 20 years. For them they think they see a change from a long standing normal to a new normal. But the reality is that the Peak Oil Dynamic began affecting the oil patch and the world about 4 decades ago. As I've said many times we called it the "reserve placement problem" in 1975 and not "PO". But it was the same animal. I understand you work on the stripper end of this dynamic. You've actually benefited from much of those wasted $'s: had companies not drilled and completed so many poor prospects there wouldn't be as many stripper wells today. For instance can you guess how many wells you've been making a decent living on never returned 100% of the cost to drill them originally? And now guess how many future stripper wells in the Bakken, EFS, etc. that won't payout but will provide a good living for stripper operations.

As has been said: if you're good at what you do you can make chicken salad out of chicken sh*t. But if you don't have the chicken sh*t in the first place you can't do nuthin. Here's hoping for a lot of chicken sh*t in your future. LOL.

[MonteQuest]

$this->bbcode_second_pass_quote('rockdoc123', ' ')not sure what planet you were living on these last months Monte but America is America.

[shallow sand]

ROCKMAN: You are absolutely correct about wells that have never paid out being operated profitably now as strippers. Lots of money lost in 1980s bust, price of leases hammered down to nothing, garbage picked up cheap, in 1990s early 2000s, since 2000 has worked out pretty well. Probably same scenario will work out in Bakken if those wells will hang in there at 20-50 per bbl for a long time. Don't know about Eagle Ford, those look like they could go to nothing over the long term.

[ROCKMAN]

Shallow - ". Don't know about Eagle Ford, those look like they could go to nothing over the long term." From what I understand about water disposal and pumping costs for the EFS wells I suspect many won't have any "long term".