The world is currently drowning in a glut of cheap oil.

Someone remind me, please: when's that "peak oil" supposed to happen?

 

Peak oil is built on the notion, 100% true may I add, that we are consuming oil (and other natural resources) faster than they are being "manufactured" by mother nature so that their is naturally a point where we are going to exhaust oil reserves.

I don't think there is any dispute on that basic notion.

What you are observing today about oil is driven by multiple factors, none of which invalidates the peak oil theory:

1) geopolitics: the saudis want to hurt the iranians and the russians, supporters of the assad regime which the saudis want to topple. The Iranians and Russians (more so) are very dependent on oil export so the Saudis pumping out gobs of oil will hurt both countries ability to sustain Assad;

2) economics: the saudis want to squash the US output of oil / gas production, prompted by high oil prices. I think low oil prices have largely achieved their goal there, but over the long term, the US' technology and reserves act as a ceiling for oil prices;

3) supply and demand: slow downs in global economy, particularly in China, severely hurt the oil producers, especially when the elasticity of the supply curve is steep due to Saudis' expenditures on overseas military activities and their domestic welfare programs.

That's particularly painful when China is shifting its energy import to Russia, thus hurting the saudis and the oil prices in the open mkt.

But that may happen soon. everyone in opec is realizing that the saudi strategy has not worked. It is likely they want to coordinate on production. Whether that will have an impact on the market, or whether such a hold will sustain among opec members, is a huge unknown, given that the iranians will soon be able to sell (eagerly) into the international market, and the russians would love to take shares away from opec due to the western sanction.

I suspect that over the long-term, you will see oil prices substantially above the $30 mark, and we can only go higher from there, over the long-term, as oil reserves dwindle and oil demand grows.

 

It sounds like "National Brotherhood Week" out there.

 

what if abiotic theory of oil creation is correct

 

It doesn't fundamentally change the analysis -> it changes the analysis on the margin, but the same analysis applies: if you consume more than it is being produced, you will exhaust it sooner or later.

As to whether oil could come from a non-biological process, I guess it is possible: otherwise, how do you explain those planets with methane? I don't know how likely that's the source of oil on this planet, however.

 

I think that in the future oil will not play the part it does today. There will be electric powered vehicles, better and more efficient batteries and appliances using revolutionary new technology. As a simple example; radio sets were once huge cumbersome things; nowadays they can be minute. Maybe in the near future we will have a technology that will do away with all those horrible pylons carrying high tension electricity across the countryside. We already have nanotechnology - unbelievable fifty years ago.

 

The world is currently drowning in a glut of cheap oil.

Someone remind me, please: when's that "peak oil" supposed to happen?

About the same time all the polar bears die off:
http://www.breitbart.com/london/2015/02/27/more-bad-news-for-alarmists-polar-bears-doing-just-fine/

 

As the article asked, "Why bother with pesky facts?"

http://www.polarbearsinternational....ntists-say/are-polar-bear-populations-booming

 

About the same time all the polar bears die off:

Your example isn't nearly as funny as mine: "Scientists just found an unexpected factor that could be driving Greenland’s ice loss" from Washington Post - https://www.washingtonpost.com/news...or-that-could-be-driving-greenlands-ice-loss/

Given that water vapor (=cloud, itself NOT a greenhouse gas) accounts for ~90% of all greenhouse gas effect on this planet, it is very comforting to know that scientists didn't expect their climate impact, until now.

 

what if abiotic theory of oil creation is correct

Well lets hope I don't win the lottery because that's on theory I will bankroll and test myself.

After spending time in our local oil fields and talking with all the engineers and smart people who do the geo mapping to see whats under our feet I have very strong suspicions that where I live may very well be siting on a abiotic super formation about 8 miles below us.

 

As to whether oil could come from a non-biological process, I guess it is possible:

Having thought about this more, I would say that it is ***definitely*** possible:

1) our planet started its life as inorganic matter. So it must have gone through an abiotic but natural process to turn inorganic matters into organic matters.
2) urea synthesis.

So it is entirely possible to produce oil (an organic mixture) through abiotic processes. Whether it is probable, I have no idea.

 

Well lets hope I don't win the lottery because that's on theory I will bankroll and test myself.

After spending time in our local oil fields and talking with all the engineers and smart people who do the geo mapping to see whats under our feet I have very strong suspicions that where I live may very well be siting on a abiotic super formation about 8 miles below us.

TC,
Could you tell where the price point was that made fracking to expensive?

 

Someone remind me, please: when's that "peak oil" supposed to happen?

It happened in 1970. Fracking changed everything. I'm not sure anyone has reformulated the theory.

 

TC,
Could you tell where the price point was that made fracking to expensive?

Not exactly being there are number of factors in the whats and how of drilling and maintaining a functional oil well.

Around here a properly drilled and good producing well that did not have any major screw up in its drilling followed by a fracc job that also didn't have any major screw ups plus if the whole job was ran by someone who kept a tight leash on the general spending involved start to finish could very well be profitable down under $20 a BBL!

Given that the inside word here is the average on break even for the Bakken is around $25 - $30 per BBL with many well that could still run a profit under $15 a BBL.

The problem is when a well was drilled badly due to sloppy work, in experienced drilling crews, or cheap components having been put in followed by a fracc job that does not go well due to such things it is quite common to have wells that end up with high installation costs and low return rates which pushes their equivalent cost per BBL break even points way higher.

Right now where I am the primary limiting issue is simply that we still do not have an adequate infrastructure to get our cheap oil out to a refinery. The oil at the wellhead is cheap to produce but getting it to a refinery is what's hurting us.

 

Not exactly being there are number of factors in the whats and how of drilling and maintaining a functional oil well.

Around here a properly drilled and good producing well that did not have any major screw up in its drilling followed by a fracc job that also didn't have any major screw ups plus if the whole job was ran by someone who kept a tight leash on the general spending involved start to finish could very well be profitable down under $20 a BBL!

Given that the inside word here is the average on break even for the Bakken is around $25 - $30 per BBL with many well that could still run a profit under $15 a BBL.

The problem is when a well was drilled badly due to sloppy work, in experienced drilling crews, or cheap components having been put in followed by a fracc job that does not go well due to such things it is quite common to have wells that end up with high installation costs and low return rates which pushes their equivalent cost per BBL break even points way higher.

Right now where I am the primary limiting issue is simply that we still do not have an adequate infrastructure to get our cheap oil out to a refinery. The oil at the wellhead is cheap to produce but getting it to a refinery is what's hurting us.

Very interesting.
It may get really ugly before it gets better. The Mid-East has to sell because it is there only source of revenue and they kind of have a warm war going on. Iran coming back into the market. Some of the Arab spring countries getting back in production.
I think the ND fields are still pumping right?
I hear the Saudis have a trillion in the bank, not so sure about the others, but it could go on for some time. What are you hearing?

 

I hear the Saudis have a trillion in the bank, not so sure about the others, but it could go on for some time. What are you hearing?

I'm not sure what to think. What I do know is our infrastructure work in the state has not slowed down one bit so obviously the people at the top don't feel this dip in price is going to last all that long.

As for the saudis I think this little low price standoff is costing them around a Billion dollars in losses per day so even with a Trillion in cash in their bank they cant hold out for too long before they simply run themselves out of money.

Yes we still have wells pumping and yes we still have wells being drilled and fracced too! Just not that many right now.

Right now there are not so many trainloads of oil going out but there are still a steady line of truck and train loads of oil field pipe line and equipment coming in every day.

 

Fracking changed everything

T
Not sure. The future of fracking is largely unknown, aside from it being a regulator on oil prices. Rig count now is about half of what it was a short while ago, capital expenditures almost nill, as is new drilling. Oil field services firms are suffering, layoffs are everywhere, and bankruptcy cases are up and bankruptcy talks are everywhere.

The Saudis for the most part have achieved what they wanted to do to the fracking industry here, at great costs to the producers and great benefits to the consumers.

 

Yea, I think your right. We raised production with fracking thinking they would cut back and they haven't blinked.......... yet.
With Iran coming back on line with $10 $15 break even oil we may see cheap oil for a few years. Going to be real hard on the US oil companies.

 

In a way I don't really feel bad for many of the oil companies going bankrupt.

Most of them put themselves there by continuing to run like they had no end to their money knowing full well things could and likely would change at any time.

One thing I learned while working in the oil fields is by and large financial efficiency is not a commonly practiced concept despite the often times glaring need for it.

I have often looked at what I was seeing in our local oil fields and have thought that if even the most basic financial responsibility was practiced we could produce oil here at well under half our present average costs.

 

In a way I don't really feel bad for many of the oil companies going bankrupt.

Most of them put themselves there by continuing to run like they had no end to their money knowing full well things could and likely would change at any time.

One thing I learned while working in the oil fields is by and large financial efficiency is not a commonly practiced concept despite the often times glaring need for it.

I have often looked at what I was seeing in our local oil fields and have thought that if even the most basic financial responsibility was practiced we could produce oil here at well under half our present average costs.

Wow, well that's nice to know. At least maybe that shows a way out for our oil companies.
This might be the time for someone with deep pockets to build the infrastructure. It pains me to see that night time picture of all the gas burning, not to mention the oil transportation.