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United States Hydrocarbon Policies Are Off the Rails

Policy Stuff

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Mike

Holy Molly

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My old acquittance, Dan Dicker, is spot on here. Better read this.


I have been deep in the bush for the past 10 days with NO news. As you might expect, I am flabbergasted this morning to find the price of oil $73 and change, down 20% since I started packing flyrods.


For the record, $73 translates to below $70 at the WH and that is BELOW all U.S. tight oil break even estimates on a true, full cycle basis, the only basis for accurate well head economics and an understanding of tight oil finances.


My first course of action to find out WTF is going on was to check on the status of the conflict in Iran. I see NO indication of an agreement whatsoever from a dozen trustworthy news sources around the world. Whatever the US says about a "deal" is refuted within minutes by Iran and others.


67 Views
Mike
Mike
2 hours ago

dckpttndckpttn

Iran War MOU

The MOU is signed, and oil prices are falling like a stone. WTI is down to $75/barrel.


I confess, I do not know what the hell is going on. I guess we'll have to wait and see. In the meantime, oil is underpriced, again. IAE is predicting a ridiculous structural supply surplus of over 5 mmpd by 2o27.


Until the market sees a structural supply deficit and oil stocks going down w/o some artificial cause, like war, the prices oil operators in the US shales will be insufficient to cover costs. Shouldn't the smaller guys be bankrupt by now?

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dckpttn
4 days ago

From what I understand, the IEA tilts toward lower demand and consistently underestimates demand while overestimating supply. This holds the price down, since traders read and believe the IEA. Traders don't need to be right; they just need to be able to predict what other traders will do.


As long as a respected world organization keeps pumping out this stuff, we will see low oil prices. I guess IEA is the inaccurate energy agency, as opposed to the EIA, which is the energy inaccuracy administration.

dckpttndckpttn

$150/barrel oil, here we come.

According to both Chevron's CEO and Exxon's SVR, oil stocks are getting very low. in 2-3 weeks, the cushion will be gone and it will take 4 months to get the oil markets settled down. This will shoot oil up to $150-160 overnight. We are reaching the shortage danger zone. Trump has to shit or get off the pot.

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Mike
Mike
Jun 02

Dick, I agree; they probably should already be $150 given rational, supply/demand fundamentals. What troubles me, deeply now, is that a handful of people in the world, all over the world, can manipulate oil prices so easily.

dckpttndckpttn

Dumb question on Water

I know there must be a good answer, by why not use either salt water or produced water for fracking?

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stephen.bowers
May 27

There are many issues with using either salt (sea water) or produced water for frac fluids. Sea water has a typical level of about 3.5% total dissolved solids TDS (by weight) and produced water 10% or more. Carbonate and sulphate anions can reach their limit of solubility quite easily . Both sea water and produced water are in a chemical equilibrium with these anions. The main cations that in sea water are sodium, potassium, calcium and magnesium. Calcium and Magnesium will be at or very close to their solubility limits ( hence limestone rock and sulphate deposits on coastlines). pH, pressure and temperature changes can also cause precipitation.

High TDS water causes issues with the preparation of frac fluids which vary in composition by include cross linked gels, guar gums and polyelectrolytes which are all impaired by high TDS prep waters. Even more important is the concentration for cations in the formation water which will be at the limit of solubility for Calcium, Magnesium, Barium and Strontium.  Barium and Strontium both have very low solubility with carbonates and sulphates. Any precipitation of salts in the formation will impede the flow rate. pH control is also critical and frac fluids are typically alkaline to help reduce corrosion. 

For this reason fresh water, which is typically less than 0.08 % TDS is preferred.

I have attached a link to a paper from the ASC (American Chemistry Society) which goes into detail on this subject. It is very technical but if there are any questions I will do  my best to explain.


https://pubs.acs.org/doi/pdf/10.1021/acsomega.3c05145?ref=article_openPDF


For about 6 years I was heavily involved with water treatment for 0il production, refineries and petchem plants before moving  into refining and petrochemical plants technology.

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