# Is Oil Drilling Technology Outpacing the Glut?



## william the wie (Feb 19, 2016)

If pipeline and refining technology go high tech as well and that is the way to bet drilling technology is set to cause a very long downward trend in the cost of fuel.

Currently the reduction in US output is less than half of what was expected by KSA when KSA started the price war.

Given that many wildcatters overborrowed and will not be able to roll over their debt later this year a huge amount of oil still in the ground will be sold for less than market prices to the survivors and that will drop the price even further.

When the price of oil drops SWFs (Sovereign Wealth Funds) of formerly oil rich countries sell shares to make up the short fall. This is one reason the stock market will mostly decline. Another reason is that the bond market is @ 100 times the size of the stock market and when companies cannot borrow to rollover their debts they go into bankruptcy and their stock certificates become wallpaper. That will lead to much lower debt rations and slower growth

That drilling driven deflation cycle should continue until at least 2030.


----------



## irosie91 (Feb 19, 2016)

I have never understood economics---------oil is going down------so I heard-----but
it is finite   ---so I heard.     It will be depleted.  --------we gotta make more
by regrowing dinosaurs and -----banging an asteroid into the planet------and waiting
around ------for about 100,000 years


----------



## Mac1958 (Feb 19, 2016)

There's expected to be quite a few bankruptcies in the oil space (including distribution) over the next few months because revenues have plummeted and they can't get loans.

No doubt, therefore, some takeovers are on the way, too.

On the other side, drillers have become much more nimble than they used to be, able to to shut down and then re-open operations much more quickly than before.  So once prices move above maybe $40 and stabilize somewhat (whenever the hell that is) they'll be able to get back online pretty quickly and easily.

It would be surprising, therefore, to see oil above $45 or $50 in the foreseeable future.  Exceptions would be outside forces such as Obama's $10/barrel tax or a Middle East war.
.


----------



## william the wie (Feb 19, 2016)

irosie91 said:


> I have never understood economics---------oil is going down------so I heard-----but
> it is finite   ---so I heard.     It will be depleted.  --------we gotta make more
> by regrowing dinosaurs and -----banging an asteroid into the planet------and waiting
> around ------for about 100,000 years


Actually that is a set of feel good assumptions. Oil is or was produced in highly saline water by some highly strange micro-organisms. Beyond that we know nothing about how it was or is produced  except that it tends to be locked in shale and gradually seeps out to form reservoirs.


----------



## irosie91 (Feb 19, 2016)

william the wie said:


> irosie91 said:
> 
> 
> > I have never understood economics---------oil is going down------so I heard-----but
> ...



oh------somehow  I find your explanation questionable        One needs  "strange
micro organisms"  for OIL  to  be made from big amounts of organic material???  

I did not know------and to think-----I got   A's  in organic


----------



## william the wie (Feb 20, 2016)

irosie91 said:


> william the wie said:
> 
> 
> > irosie91 said:
> ...



In saline levels well above where the cell wall/membrane would normally rupture and excreting chemicals with massive potential energy? Yeah I call that strange.


----------



## waltky (Feb 21, 2016)

Oil glut slowing crude rise...

*Oil prices rise on lower U.S. rig count, but glut weighs*
_Sun Feb 21, 2016 - Oil prices recovered on Monday following steep losses in the previous session, supported by a fall in the number of U.S. rigs in use, but analysts said general oversupply was keeping the market weak._


> U.S. West Texas Intermediate (WTI) crude futures CLc1 rose nearly half a dollar from their last settlement to above $30 per barrel, trading at $30.11 at 0413 GMT. International benchmark Brent LCOc1 was up 45 cents at $33.46 per barrel. Both contracts fell almost 4 percent on Friday.  A falling rig count in the United States which is expected to lead to a decline in 2016 production helped support prices, analysts said.  "The U.S. oil rig count continued to decline..., with a total of 26 rigs idled," Goldman Sachs said. "The current rig count implies... annual average U.S. production would decrease by 445,000 barrels per day yoy (year-on-year) on average in 2016," it added.  "We expect drops in U.S. production to be the source of bullishness," Singapore-based brokerage Phillip Futures said.
> 
> 
> 
> ...



See also:

*Asia shares edge ahead with oil, pound slips*
_Sun Feb 21, 2016 - Asian share markets edged cautiously higher on Monday as investors awaited a rush of February industry surveys to take the pulse of the global economy, while sterling suffered on concerns the UK might yet vote to leave the European Union._


> A busy week for data culminates with a Group of 20 meeting that offers leaders a chance to soothe market concerns with talk of coordination, even if it produces nothing concrete.   MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.7 percent, having rebounded more than 4 percent last week.  E-Mini futures for the S&P 500 ESc1 were also up 0.3 percent.  The calmer mood was aided by oil as Brent crude LCOc1 added 31 cents to $33.32 and U.S. crude CLc1 rose 26 cents to $29.90.
> 
> Japan's Nikkei .N225 recouped early losses to rise 0.7 percent, buoyed by a retreat in the yen even as an activity survey showed a drop in new export orders took a heavy toll on manufacturing.  The Markit/Nikkei Flash Japan PMI fell to 50.2 in February, from 52.3 in January, a potentially bleak omen for the rest of the region.  China's major stock indexes firmed as investors welcomed news over the weekend that the head securities regulator was being replaced.  The blue-chip CSI300 index .CSI300 and the Shanghai Composite Index .SSEC both rose 0.9 percent.
> 
> ...


----------



## william the wie (Feb 22, 2016)

oil prices are going up again as the glut weakens.


----------



## HereWeGoAgain (Feb 22, 2016)

I cant wait for the annual summer drive time price hike.
What are they going to do,jack it up a penny?


----------



## william the wie (Feb 22, 2016)

HereWeGoAgain said:


> I cant wait for the annual summer drive time price hike.
> What are they going to do,jack it up a penny?


That depends on the outcome of some bankruptcy cases under going litigation. Speaking for myself I didn't even understand the explanation.


----------



## Moonglow (Feb 22, 2016)

william the wie said:


> oil prices are going up again as the glut weakens.


It's going up because of the freeze on production under negotiation and announced a deal would be made by March...


----------



## Moonglow (Feb 22, 2016)

william the wie said:


> HereWeGoAgain said:
> 
> 
> > I cant wait for the annual summer drive time price hike.
> ...


Buffet is buying up the oil companies going out of business...


----------



## HereWeGoAgain (Feb 22, 2016)

william the wie said:


> HereWeGoAgain said:
> 
> 
> > I cant wait for the annual summer drive time price hike.
> ...




From what I'm hearing it wont be back till mid 2017 and I hope to God they're right.
   I'm taking a beating at this point but as someone who lives in Texas and worked in the oil industry I know it's just a matter of time.


----------



## Moonglow (Feb 22, 2016)

HereWeGoAgain said:


> william the wie said:
> 
> 
> > HereWeGoAgain said:
> ...


The derrick hands will be back to steak and whiskey before you know it..


----------



## HereWeGoAgain (Feb 22, 2016)

Moonglow said:


> HereWeGoAgain said:
> 
> 
> > william the wie said:
> ...



   Yeah thats some rough work but they get paid well.  Hell,the guys on the offshore rigs really make some decent money.
If there's one thing I learned after the eighties was to always keep that cushion so the down turns were a vacation instead of a disaster.


----------



## william the wie (Feb 23, 2016)

HereWeGoAgain said:


> Moonglow said:
> 
> 
> > HereWeGoAgain said:
> ...


Reuters agrees with you but I'm getting highly annoyed that no one has figured out how many increasing returns trends are going on in this industry:

The old Soviet style battlefield pipeline system appears to be being used and getting better.
Seismic interpretation is improving rapidly.
Likewise drilling.
Likewise rig set up and removal

That much I get but there seems to be a lot more going on and that I do not get. Either of you know of something else that needs adding?


----------



## HereWeGoAgain (Feb 23, 2016)

william the wie said:


> HereWeGoAgain said:
> 
> 
> > Moonglow said:
> ...



 Not really.
But then I'm not sure I understand your question.


----------



## william the wie (Feb 23, 2016)

Let me try it another way Reuter's is predicting more than 6MBD in 2020 US production. That would make the US a net exporter of crude. Since Brazil has more and richer Shale deposits than the US that sounds like $10-20/bbl for a price. Unless the cost of refining goes way down I don't see how that is sustainable. I was wondering if you do?


----------



## sfnssie (Mar 2, 2016)

william the wie said:


> Let me try it another way Reuter's is predicting more than 6MBD in 2020 US production. That would make the US a net exporter of crude. Since Brazil has more and richer Shale deposits than the US that sounds like $10-20/bbl for a price. Unless the cost of refining goes way down I don't see how that is sustainable. I was wondering if you do?


----------



## sfnssie (Mar 2, 2016)

U.S. stocks opened lower on Wednesday, as a fresh drop in oil prices weighed on the main benchmarks.


----------



## william the wie (Mar 3, 2016)

sfnssie said:


> U.S. stocks opened lower on Wednesday, as a fresh drop in oil prices weighed on the main benchmarks.


 As more LNG plants/ports come online NG byproduct revenues will rise. That in turn will drop the breakeven point for crude until NG substitution for Crude starts to bite.


----------

