Price of Oil

Discussion in 'Financial Cents' started by sdr, Apr 20, 2020.


  1. sdr

    sdr Monkey++

    Was quite a shock seeing how much oil dropped today. Wasn't aware that any commodity could go into the negative. I understand that demand has dropped significantly and there is a huge surplus. So much so that I guess storage is a problem.

    I would like to know how this plays out. Meaning can someone who has a better understanding of the financial market namely commodities explain how they can go into the negative? Who pays for the loss? The investors who hold the contracts? Any guesses as to what the future holds? Lol. I know. Hard to answer that one.
     
    SB21 likes this.
  2. Ura-Ki

    Ura-Ki Grampa Monkey

    $-37 per barrel, basically they pay YOU to take the oil off their hands to make room for more! Basically it's a glut of un sold oil reserves! Doubt OruGun will see the low prices, thanks to 50 years of Democraptastic rule where they tax the shit out of everything, like .70 per gallon or more!
     
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  3. oil pan 4

    oil pan 4 Monkey+++

    I was actually thinking about starting a new topic on this over in "peak oil", going to let it play out for a day or 2 to see what happens.
    Saw a segment on fox businss that basically said "oil energy companies" are going to be reclassified by financial institutions to a higher risk category of loan. So ultimately loans for things like refinery expansions, money for oil exploration and well finishing may not be available or come at a higher cost pretty much immediately.
     
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  4. IceRanger

    IceRanger Intellectus Refuticus

    I talked to someone who works on wells for a living; natural gas, in this case, but the same concepts. Turns out that even when the price of the product becomes too low to sell profitably and they have to "turn the taps off"...they don't turn the taps off. From what I now understand, the wells can be made to pull LESS out than optimal, but they're never truly shut down so no matter what kind of glut the world is facing, there's still product being produced. If storage becomes a problem, as it seems it is (especially since we can't even go to CHURCH in our cars for fear of being fined), it really could be a problem.

    I don't think we've seen the last of this, either.

    On the tin foil hat front, the great American economy of the last few years has been primarily because America began producing enough energy to become both "energy independent" and "the export king of the world". Interesting timing for "lowest prices in history", isn't it? Gee--I wonder if they might be trying to wreck the American economy with the virus/glut of 2020?

    Yeah, I'm just kidding. OF COURSE THEY'RE TRYING TO WRECK THE AMERICAN ECONOMY. That isn't even in question at this point.
     
  5. UncleMorgan

    UncleMorgan I like peeling bananas and (occasionally) people.

    I was thinking of letting them pay me for a few hundred tanker loads of oil and pumping it back into expended wells. The oil could'nt really go anywhere, and I could always pump it back out later when the price rose to $17,000.00 (New Script) a barrel.
     
  6. Merkun

    Merkun furious dreamer

    True, production has to be maintained, even if reduced by throttling at the well head. For one thing, shutting in a well could trigger some clauses in the land leases, for another there can be problems restarting the flow due to "stuff" settling in the laterals.
     
  7. Gator 45/70

    Gator 45/70 Monkey+++

    Yall funny,The term is ''choke'' back the well too minimize production.....
    We have and can shut-in a well for xx amount of days,It only has to flow for 24 hrs in lets say a time frame of 30 to 45 days in order to maintain the lease or contract as a general rule.
    Or in the case of Fedzilla the lease reverts back to the Feds.
    Some of the more ''Crafty'' oil men simply let the lease expire if its a minimal producing location,Shifting the burden of Plugging and abandonment + removal of the structure back too Fedzilla.
    Fedzilla has become somewhat wiser and has made most of the Gulf operated property s put up 5 mil in escrow for just such a procedure.
     
  8. Merkun

    Merkun furious dreamer

    So you don't use throttle valves? You install or change choke plates every time you want to alter the flow, or the well pressure changes? C'mon.
    But you're right in that lease language differs. And, gas well operation differs from that liquid sludge you are used to harvesting ----- :)
     
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  9. oil pan 4

    oil pan 4 Monkey+++

    If you don't like oil you can always drive an electric car.
     
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  10. Gator 45/70

    Gator 45/70 Monkey+++

    It's called an adjustable choke,Some have solid choke's, Normally choke ''plates'' are used in the measurement of gas sales,
    Every time you change plate size then re calibration has to take place by a 3rd party vendor.It has to be certified for the buyer to accept that he is getting what hes paying for.....and then this is where taxes start kicking in,The state wants it's cut first !
     
  11. Merkun

    Merkun furious dreamer

    Yup, sharp edged orifices with calibrated manometers are the gold standard for mass flow (revenue) measuring. Of course the orifice plates need to be watched for wear as dictated by the fluid crudiness. In gas flow, wear is not too critical as long as the velocity is kept reasonable, and moisture and the frack sand (if any) is limited. And yes, no matter who the customer is, those calibrations are always contracted out; usually the gov agency will accept third party cals regardless of who pays for it. "Manometer" in this case just might be a range appropriate Heise Gage with isolation diaphragm.

    SAY IT AIN'T SO!! Dot gov wants to be first in line? CANNOT BE!!

    As far as an "adjustable choke" goes, that's one I'm not familiar with as a hardware item. There are some neat plug/seat arrangements that behave well in variable flow service, nice and linear. Might be the same thing, dunno.
     
  12. Gator 45/70

    Gator 45/70 Monkey+++

    Thinking you may mean ''Dew Point'' which in most contracts has too be at or below a certain percentage like 10 at a certain temperature like 70 degrees....


    They all can sand cut OR even velocity cut out,Both are bad news because you're now loosing control of the well...
     
  13. Merkun

    Merkun furious dreamer

    The only time that dew point matters is when the pressure drop thru the measuring nozzle (or orifice) when condensation may take place from the cooling effect of expansion from the pressure drop thru the nozzle. Moisture will be measured someplace along the way; that (and all other corrections for temp and pressure) will be accounted for in the billing. To a large degree, where in the process the measuring takes place, so far as revenue measurement goes and ALSO how the pricing is structured. Well head is one thing, post processing prior to putting it into the pipeline and how the various agreements are written. In the marcellus here, most of the lease royalties are based on well head measurements. Ghrit has one of those, that's where I got a lot of my practical info. (He and I have similar backgrounds, went to kindergarden together. He went Navy to dodge the draft, I dodged the draft with a defense critical job. OPSEC)
     
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  14. oil pan 4

    oil pan 4 Monkey+++

    As of now the the only entity making money off "oil" right now is the government.
     
    Last edited: Apr 22, 2020
  15. IceRanger

    IceRanger Intellectus Refuticus

    Well clearly y'all know WAY more about this stuff than I do. The gist of my convo with my neighbor (who does work on marcellus wells in SW PA and surrounding areas) was simply that he's still working because even with production severely limited right now, the wells are still operational on a limited-flow type thing, and even at this "limit" they still produce a LOT of gas...not good if there's a glut. He maintains certain types of equipment that must run and cannot fail, so his job is always there even if the "boom" isn't really booming at the moment. So my larger point remains--that gas is still being produced even while this glut is underway, and if storage becomes the issue, it could theoretically REALLY be an issue.

    Back in tin foil hat territory--I read on another forum where someone suggested that given the utter collapse of the fossil fuel market, perhaps now we'll see these supposedly buried "free energy" technologies that could free the world of the need for any of these products? Like, "oil/gas are dead now, so there's no reason to hide the 'free energy' techs that these companies have been burying for years". I can't say there's any real meat to the notion, but I don't have any real beef with it, either. I have no doubt that if any such tech was actually ever discovered, these companies would absolutely do everything in their power to destroy or hide it. Maybe if they've done such a thing, now they'll "re-tool" in some way to profit from this "great new discovery" that they can finally claim...?
     
  16. oil pan 4

    oil pan 4 Monkey+++

    Oh yes bring out the free energy machines that no one has ever been able to reproduce or demonstrate under any kind of scientific scrutiny.
     
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  17. Gator 45/70

    Gator 45/70 Monkey+++

    Ghrit hunh....well that explains a lot right there....lol
    I had dry contracts where I was at,Ran our gas thru a contact tower before gas sales....
    Wet gas,You get paid less for this because the buyer now has to contend with the liquids.
    I never could understand all of that,We stripped the liquids from the nat.gas and sold the oil separate at that time around 45/55 bucks a barrel and nat gas was almost being given away......
    But the buyer of the nat.gas didn't want the liquids ''condensate'' in his pipeline that was worth a hell of a lot more?
    Nice pretty green light oil you could burn in just about any of the older vehicles...
     
  18. oil pan 4

    oil pan 4 Monkey+++

    Natural gas is still almost being given away, it's barely peaked over $5 for 1mm btus.
    We can thank all the dumb ass anti frackers for driving price down and keeping the fracing boom going strong for about 8 years straight.
    Nothing motivates people to do or buy something like the threat of a government ban.
     
    Gator 45/70 likes this.
  19. ghrit

    ghrit Bad company Administrator Founding Member

    NEPA would kill for 5 dollar gas at the well head. Running around 2 bux here for the last few years, depending on the producer's contracts. So far as motivation goes, it would be nice if someone motivated Andy Cuomo to pay attention to the needs and desires of his upstate constituents and get the hell out of the way of the pipelines. Pipes are the best way to get ng to market, and there is a LOT of pent up demand that he's blocking in the hopes that "green" energy can become useful economically. Gonna fail, there.
     
    Last edited: Apr 22, 2020
    Gator 45/70 likes this.
  20. oil pan 4

    oil pan 4 Monkey+++

    He doesn't care about up state, only the big chitty.
     
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