Keystone Pipeline Vote

[Singlestack Wonder]

News reports state that U.S. Senators are scrambling to get the 60th vote in place to approve the Keystone Pipeline bill. Too bad 51 doesn't work anymore.....

[markm]

Ok... I'm rusty on my Congressional trivia... Is 60 a veto proof vote?... or just to send it to Captain Kenya's desk?

[Big A]

Ok... I'm rusty on my Congressional trivia... Is 60 a veto proof vote?... or just to send it to Captain Kenya's desk?

60 is Veto proof.

[markm]

THAT.... would be good news.

[Watrdawg]

Actually 67 votes in the Senate is Veto proof. It takes a 2/3rds vote to override a Veto so if you have an initial vote of less than that it isnt Veto proof.

[markm]

Actually 67 votes in the Senate is Veto proof. It takes a 2/3rds vote to override a Veto so if you have an initial vote of less than that it isnt Veto proof.

You're BANNED! Well 60 would be nice... then after the lame duck session, I bet 67 votes will be very possible.

[GlockWRX]

I think you need 60 to end floor debate and vote.

[markm]

I think you need 60 to end floor debate and vote.

Ideally they'll go right around the President next session and show exactly what a worthless leader he truly is.

[montanadave]

While the northern leg of the Keystone XL remains a political football and contentious issue for partisans on both sides of the aisle, many energy industry leaders began looking for alternative solutions years ago and view the pipeline as largely irrelevant today. Sure, it's going to create jobs during the construction phase and will provide some additional capacity for U.S. producers to move oil out of the northern plains, primarily Bakken production from North Dakota and Montana. But producers haver long since began utilizing transportation alternatives (rail, expanded capacity of existing pipelines, and tanker).

Read the comments from Harold Hamm, CEO of Continental Resources, here: http://www.politico.com/story/2014/11/harold-hamm-keystone-irrelevant-112905.html

A few excerpts:

Hamm said his company, which had planned to use Keystone to ship some of its North Dakota crude, is already using other pipelines for half of its oil. And the percentage is growing.

“We’re supporting other pipelines out there, we’re not waiting on Keystone. Nobody is,” said Hamm, a former energy adviser to Mitt Romney’s 2012 presidential campaign, who made a vast fortune as an early investor in North Dakota’s booming Bakken oil shale region. “That thing … needed action on it six years ago. I just think it’s too late and we need to move on."

Another factor: Both the U.S. and international markets are awash in oil, he said, which has driven prices down sharply in recent months to their lowest levels in roughly four years.

“If we have an … oil oversupply looking at us, do we need more Canadian oil here? Probably not,” Hamm said.

Instead, he said, Washington should devote its efforts to lifting the 1970s-era U.S. ban on exporting crude oil — a cause that has gained momentum in Congress during the past year, even though Republicans have been divided. “They can lift that ban on exports and level the playing field and untie our hands,” Hamm said. “That’s the number one issue right there. If anybody’s got a doubt, that’s it.”

Hamm isn’t the only person in the oil industry who has taken door No. 2 while Keystone waits in a six-year-old limbo. The CEO of Suncor, Canada’s biggest oil producer, said in September that “an individual project like Keystone XL is not critical to our plans to get our products to market,” and a spokesman for giant independent oil refiner Valero said it has “found other methods” like rail to ensure that its Gulf Coast refineries can get Canadian heavy crude. On Friday, Bloomberg quoted an analyst from a Texas energy consulting company who said that “Keystone is kind of old news.”


As usual, Congress and our political leadership are once again behind the curve and wasting time and energy fighting over issues while the rest of the world has moved on. The military is often accused of always preparing to fight the last war rather than the next one. Congress is just as bad, if not worse. The only issues they have the courage to act upon are those that no longer matter.

[SilverBullet432]

It would provide many excellent jobs. I have many buddies who are pipeline welders, lets just say they are living well. Cars and houses paid for well. Rail transport is a decent alternative too. Trucks get the oil from the tank batteries, and deliver it to either a tank farm (for pipeline) or the rail depot. either way, the oil will get to its destination. I am for the pipeline 100%. the only con I see is getting people to let it run through their land. Here in west texas, ranchers are living well too ;) there are countless pipelines under our feet.

[skijunkie55]

Read the comments from Harold Hamm, CEO of Continental Resources, here: http://www.politico.com/story/2014/11/harold-hamm-keystone-irrelevant-112905.html


Definitely off topic, but didn't this guy just have a one BILLION dollar divorce settlement?! Ouch.

[markm]

As usual, Congress and our political leadership are once again behind the curve and wasting time and energy fighting over issues while the rest of the world has moved on. The military is often accused of always preparing to fight the last war rather than the next one. Congress is just as bad, if not worse. The only issues they have the courage to act upon are those that no longer matter.

All very true. I still applaud the effort. As idiotic as it will be when they pat themselves on the back if they get around the President, it's still a symbolic victory in that it shows that Obama's tyranny doesn't go completely unchecked.

[SilverBullet432]

For your viewing pleasure: Texas light sweet.

http://i59.tinypic.com/2wpi1w5.jpg

[TehLlama]

60 for cloture, effectively denying a lame duck filibuster media circus... 2/3 required to completely bypass the office of the POTUS

[montanadave]

It looks like Angus King, independent Senator from Maine, is going to vote "no" on Keystone and he was considered the critical swing vote to get the sixty votes required for cloture. So it looks like Obama will avoid having to veto Keystone . . . for the time being. One has to wonder what kind of goodies the White House promised King to secure his vote.

http://thehill.com/policy/energy-environment/224526-king-says-hes-no-on-keystone

[Singlestack Wonder]

Actually 67 votes in the Senate is Veto proof. It takes a 2/3rds vote to override a Veto so if you have an initial vote of less than that it isnt Veto proof.

Yep...forgot that the Senate democrats passed a resolution a couple years back mandating that a 60 or more vote killed the filibuster process....

[Caeser25]

It would only provide a temporary job boost during the building phase. Right now its transported via railroad by Northern Santa Fe, owned by none other than Warren Buffet, one of Omaos biggest donors. I'm not for it or against it. Frankly I don't care. What I do care about, is if it needs be built and is approved, it needs to be paid for by the energy companies, not the taxpayer.

[Watrdawg]

You're BANNED! Well 60 would be nice... then after the lame duck session, I bet 67 votes will be very possible.

Made me laugh there for a bit!! I agree though, that after the lame duck session the votes very well could be there. You're going to have a decent number of blue dog democrats positioning themselves for the 2016 elections and wanting to be on the right side of this vote.

[brickboy240]

I love how Mary Landrieu did not give a fig about this pipeline UNTIL it appeared as if she was about to lose her seat!

Listen...we can either build the pipeline and have the oil for ourselves or watch the Canadians build the pipeline to the Pacific and ship it to the Chinese...THEN we can buy it from the Chinese in the future.

....your choice

[montanadave]

I love how Mary Landrieu did not give a fig about this pipeline UNTIL it appeared as if she was about to lose her seat!

Listen...we can either build the pipeline and have the oil for ourselves or watch the Canadians build the pipeline to the Pacific and ship it to the Chinese...THEN we can buy it from the Chinese in the future.

....your choice

The bulk of this Canadian crude is not destined for U.S. markets.

[skydivr]

Whether it's destined for our markets or not, it flows THRU US. The only real source of oil besides our own that comes from a real Ally.

While we are in a glut right now, eventually we won't be again. Look at how much economic gain we got out of the Alaska pipeline. To think we shouldn't do this is nuts...

Just another thing the Republicans will get right as soon as they take over.

[SilverBullet432]

The bulk of this Canadian crude is not destined for U.S. markets.


Whether it's destined for our markets or not, it flows THRU US. The only real source of oil besides our own that comes from a real Ally.

While we are in a glut right now, eventually we won't be again. Look at how much economic gain we got out of the Alaska pipeline. To think we shouldn't do this is nuts...

Just another thing the Republicans will get right as soon as they take over.



We don't need no stinkin' foreign oil! Domestic production is at a high right now. Thanks to directional and frac! Thank your fellow field service workers! America's backbone right here.!

[Averageman]

I dont think it matters if it is going to a market outside the US, the idea that, that oil will be refined and on the World Market reduces the price of oil everywhere.
Also; I have yet to notice any Canadians hacking off American heads. This is all the more reason to use and move their product on to the worlds markets.

[FromMyColdDeadHand]

Dumbest thing I heard was that hey, oil is cheap now so we don't need a pipeline- like that can change in a week.

It's not even price, its supply. With Russia using energy as a weapon on the EU and the Saudi's dropping the price to screw with Russia- it isn't if the price is $65 or $115- it's can you get it and is that supply reliable. The pipeline would definitely let us tell Venezuela to go stuff it if we had to.

The Chinese do the same thing with "rare" earth metals. They aren't that rare, I've hear that it just takes $5billion and 5 years to build the plant. China has the producton now, the prices go up and they get fat and people start to look at re-opening and starting new mines- and then China tanks the prices to take the air out of the room. Long ball versus short ball, and if things truly do go frosty with them, we are 5 years from getting back a reliable supply.

[montanadave]

Just bear in mind that supply is dependent on price. Oil reserves need to be economically viable or they will stay in the ground. And there's a whole lot more oil in the world at $120/bbl than at $60/bbl.

[platoonDaddy]

Just bear in mind that supply is dependent on price. Oil reserves need to be economically viable or they will stay in the ground. And there's a whole lot more oil in the world at $120/bbl than at $60/bbl.

OPEC hasn't cut back, everyone needs the money. Therefore more crude on the market is GREAT for you and I the consumer.

[SeriousStudent]

Is the net transportation cost per barrel lower using railroad tank cars, or a pipeline?

I know the rail infrastructure is already built. How long would it take the pipeline to break even?

How many barrels of proven reserves are there in Canada, that could be tapped by this?

I am all for being as energy independent as we can be. But I also like to look at the actual costs of things, before I sign on the dotted line. And I'm saying this as someone who grew up around the oil fields of West Texas, and still has family out there in the business.

If it makes sense economically, build it. If not, not.

[Belmont31R]

While the northern leg of the Keystone XL remains a political football and contentious issue for partisans on both sides of the aisle, many energy industry leaders began looking for alternative solutions years ago and view the pipeline as largely irrelevant today. Sure, it's going to create jobs during the construction phase and will provide some additional capacity for U.S. producers to move oil out of the northern plains, primarily Bakken production from North Dakota and Montana. But producers haver long since began utilizing transportation alternatives (rail, expanded capacity of existing pipelines, and tanker).

Read the comments from Harold Hamm, CEO of Continental Resources, here: http://www.politico.com/story/2014/11/harold-hamm-keystone-irrelevant-112905.html

A few excerpts:

Hamm said his company, which had planned to use Keystone to ship some of its North Dakota crude, is already using other pipelines for half of its oil. And the percentage is growing.

“We’re supporting other pipelines out there, we’re not waiting on Keystone. Nobody is,” said Hamm, a former energy adviser to Mitt Romney’s 2012 presidential campaign, who made a vast fortune as an early investor in North Dakota’s booming Bakken oil shale region. “That thing … needed action on it six years ago. I just think it’s too late and we need to move on."

Another factor: Both the U.S. and international markets are awash in oil, he said, which has driven prices down sharply in recent months to their lowest levels in roughly four years.

“If we have an … oil oversupply looking at us, do we need more Canadian oil here? Probably not,” Hamm said.

Instead, he said, Washington should devote its efforts to lifting the 1970s-era U.S. ban on exporting crude oil — a cause that has gained momentum in Congress during the past year, even though Republicans have been divided. “They can lift that ban on exports and level the playing field and untie our hands,” Hamm said. “That’s the number one issue right there. If anybody’s got a doubt, that’s it.”

Hamm isn’t the only person in the oil industry who has taken door No. 2 while Keystone waits in a six-year-old limbo. The CEO of Suncor, Canada’s biggest oil producer, said in September that “an individual project like Keystone XL is not critical to our plans to get our products to market,” and a spokesman for giant independent oil refiner Valero said it has “found other methods” like rail to ensure that its Gulf Coast refineries can get Canadian heavy crude. On Friday, Bloomberg quoted an analyst from a Texas energy consulting company who said that “Keystone is kind of old news.”


As usual, Congress and our political leadership are once again behind the curve and wasting time and energy fighting over issues while the rest of the world has moved on. The military is often accused of always preparing to fight the last war rather than the next one. Congress is just as bad, if not worse. The only issues they have the courage to act upon are those that no longer matter.

Of course he wouldn't want more Canadian oil here. It's competition.

[montanadave]

Of course he wouldn't want more Canadian oil here. It's competition.

Competition for transport capacity within the existing infrastructure, yes, but not for refiners, as the high-sulphur low gravity crude coming out of the Canadian tar sands is markedly different from the crude oil produced from the Bakken. The Bakken crude closely resembles the American benchmark WTI (i.e. low-sulphur, higher gravity "sweet" crude).

The rub is many American refineries have made the necessary modifications to process the high-sulphur crude and now are faced with a significantly larger feedstock of sweet crude exceeding their capacity, thus causing American producers to suffer steep discounts. This, in turn, creates large price disparities within the domestic crude market and further complicates competition for both transport and refining capacity.

It's a complex system with a lot of moving parts and developing projects like Keystone XL involve long-term financing and long-term contracts to mitigate at least some factors within what is overall an incredibly volatile market, as witnessed by the decline in crude prices within the last six months.

The Keystone XL was always about getting this Canadian sour crude to the major U.S. refining and port facilities along the U.S. gulf coast and then out to the global market, as the Canadian oil is not subject to the same export restrictions as oil produced domestically.

[RancidSumo]

Is the net transportation cost per barrel lower using railroad tank cars, or a pipeline?

I know the rail infrastructure is already built. How long would it take the pipeline to break even?

How many barrels of proven reserves are there in Canada, that could be tapped by this?

I am all for being as energy independent as we can be. But I also like to look at the actual costs of things, before I sign on the dotted line. And I'm saying this as someone who grew up around the oil fields of West Texas, and still has family out there in the business.

If it makes sense economically, build it. If not, not.

In my experience, it is nearly always significantly more cost effective to transport any considerable volume by pipeline than through any other method. I'd be very surprised if any other transportation option even comes close economically for the total oil transported. Also, operationally speaking, I'd rather go into a pipeline than trucks/trains any day.

The other thing to consider is that pipelines are much safer than any other method with respect to both human safety and environmental concerns.

[RancidSumo]

Of course he wouldn't want more Canadian oil here. It's competition.

Not really. Oil is a global market and having a pipeline from Canadian producers to American refiners doesn't really impact American producers one way or the other except by providing them with another transportation option.

[skydivr]

We don't need no stinkin' foreign oil! Domestic production is at a high right now. Thanks to directional and frac! Thank your fellow field service workers! America's backbone right here.!

To look at today's current situation and not at history would be extremely short-sighted. What happens if fracking is found to harm the environment (as some are already claiming) and the enviromentalists get it banned in the US? We are talking about a LAND-BASED source for oil....Also, a pipeline reduces the transportation cost of this oil which is more expensive to extract. Fracking for oil loses it's luster when the bbl price drops below $80-$100/bbl (as it is right now). We need to forever remove OPEC's hold on the oil supply, and this is a way to do it. I'd rather have the threat of a pipeline forcing them to keep their prices down, so when they run out we can get ALL our money back....

[SilverBullet432]

A vote against frac is a vote against job creation and a good economy. Also, yes a lot of US production is land based, not just offshore. One my my customers is the #1 oil producer in Reeves, co Tx with just 12 wells....

[brickboy240]

OPEC's hold on our oil supply?

Do you know that most of the foreign oil we get in America does NOT come from OPEC countries?

Canada and Mexico are not members of OPEC....hello!

Ok...so Mexico often sends delegates from Pemex to OPEC meetings....technically they are not an OPEC member.

Sure...per barrel prices are low NOW but when it gets warm again or we have some other mid-east incident...up they will go. The more we get domestically and from non mid east sources....the better.

Besides, think about it...the oil business is the only big industry America has left that creates lots of really good paying jobs.

[thopkins22]

Dave, while yes it is irrelevant in the sense that the oil is going to be transported by other means if required, the pipeline is BY FAR the most ecologically friendly option. It is safer for human beings, it is safer for the environment, and is generally a superior option. SeriousStudent, pipelines make economic sense...this is a good thing.

I also think we all need to warp back into our econ classes. Markets(particularly energy markets,) are incredibly intertwined. The fact that this very specific oil isn't going to be consumed in the US is largely irrelevant to the impact it will have on prices of the oil we do consume. Getting this oil to the consumers efficiently and safely is beneficial to every single party involved.

[brickboy240]

Do you have any idea how many pipelines carrying liquids and gasses are currently crossing where YOU live? Thousands.

Do you ever hear about any of them? Probably not. It is rare that there is a problem with one.

Big media and the green mafia have done a great job, trying to scare everyone about not only fracking but....yes...pipelines!

The truth is that right now there are tons of them criss-crossing wherever you live and they very,very rarely cause any troubles.

The media is trying to pull some sort of "China Syndrome" like scare on you about pipelines...don't fall for it.

[montanadave]

Dave, while yes it is irrelevant in the sense that the oil is going to be transported by other means if required, the pipeline is BY FAR the most ecologically friendly option. It is safer for human beings, it is safer for the environment, and is generally a superior option. SeriousStudent, pipelines make economic sense...this is a good thing.

I also think we all need to warp back into our econ classes. Markets(particularly energy markets,) are incredibly intertwined. The fact that this very specific oil isn't going to be consumed in the US is largely irrelevant to the impact it will have on prices of the oil we do consume. Getting this oil to the consumers efficiently and safely is beneficial to every single party involved.

No argument here. I think Hamm's comments were just an illustration of the efficiency of the market in finding alternative means of getting the oil from producer to refiner. Keystone XL would certainly be a positive development. However, it has now become more of a symbolic fight for the anti-growth, global warming faction rather than a critical piece of infrastructure for the energy industry. And now the same groups that opposed Keystone XL are working hard to restrict rail shipments of crude oil, citing public safety concerns this time around. Yeah, right. As you noted, if it were really about public safety, they would be supporting pipelines.

Alas, it's largely a moot point, as Congress lacks the votes to override the veto that Obama has all but announced awaits any legislation reaching his desk, whether from this Congress or the next.

[thopkins22]

To look at today's current situation and not at history would be extremely short-sighted. What happens if fracking is found to harm the environment (as some are already claiming) and the enviromentalists get it banned in the US? We are talking about a LAND-BASED source for oil....Also, a pipeline reduces the transportation cost of this oil which is more expensive to extract. Fracking for oil loses it's luster when the bbl price drops below $80-$100/bbl (as it is right now).

Hydraulic fracturing is what I do...rather it's a big part of what I do as a completions engineer. The project I'm on is one of the most expensive ever undertaken anywhere in the world, and we'll be profitable at the prices you're talking about...we drilled all ten production/injection wells sitting in 5500ft. of water, to depths exceeding 25000ft...we don't have to fracture these wells to get large amounts of oil, but will be doing so as part of our completion.

There's 100mboe of recoverable sitting in Big Foot(which is huge,) but estimates on the Bakken are in the billions. Really think we won't recover that oil when the prices are right? We invested BILLIONS of dollars on my project. With a little bit of education, people will understand that hydraulic fracturing isn't anything to be afraid of as long as it's done properly...or they just won't care because they'll need the energy. Really think that congress will bow to environmentalists with that kind of drive against them? When their constituents can't afford to fill their cars?

As a side note, fracturing is not new, we have done it for decades...when prices were below $30/bbl people were still injecting soapy water and proppant into wells. It was only new to people in the northeast.

[jmp45]

Do you have any idea how many pipelines carrying liquids and gasses are currently crossing where YOU live? Thousands.

Do you ever hear about any of them? Probably not. It is rare that there is a problem with one.

Big media and the green mafia have done a great job, trying to scare everyone about not only fracking but....yes...pipelines!

The truth is that right now there are tons of them criss-crossing wherever you live and they very,very rarely cause any troubles.

The media is trying to pull some sort of "China Syndrome" like scare on you about pipelines...don't fall for it.

True.. I was a level II NDT tech in the late 70s, many pipe lines. One job I was on ran a 24" natural gas transmission line right through the front yards of a residential area. Within 20 to 30 feet of the houses. There were repairs made. If I can recall from one of the inspectors that line was at about 800 - 900psi. I'm kind of fuzzy on that, it's been quite a few years.

[SilverBullet432]

Hydraulic fracturing is what I do...rather it's a big part of what I do as a completions engineer. The project I'm on is one of the most expensive ever undertaken anywhere in the world, and we'll be profitable at the prices you're talking about...we drilled all ten production/injection wells sitting in 5500ft. of water, to depths exceeding 25000ft...we don't have to fracture these wells to get large amounts of oil, but will be doing so as part of our completion.

There's 100mboe of recoverable sitting in Big Foot(which is huge,) but estimates on the Bakken are in the billions. Really think we won't recover that oil when the prices are right? We invested BILLIONS of dollars on my project. With a little bit of education, people will understand that hydraulic fracturing isn't anything to be afraid of as long as it's done properly...or they just won't care because they'll need the energy. Really think that congress will bow to environmentalists with that kind of drive against them? When their constituents can't afford to fill their cars?

As a side note, fracturing is not new, we have done it for decades...when prices were below $30/bbl people were still injecting soapy water and proppant into wells. It was only new to people in the northeast.

Fracturing has been around for a while now. Its just the liberal media has made it like anything explode. Those idiots can't grasp the concept that a wellbore is sealed by several layers of casing and cement........

[Averageman]

To look at today's current situation and not at history would be extremely short-sighted. What happens if fracking is found to harm the environment (as some are already claiming) and the enviromentalists get it banned in the US? We are talking about a LAND-BASED source for oil....Also, a pipeline reduces the transportation cost of this oil which is more expensive to extract. Fracking for oil loses it's luster when the bbl price drops below $80-$100/bbl (as it is right now). We need to forever remove OPEC's hold on the oil supply, and this is a way to do it. I'd rather have the threat of a pipeline forcing them to keep their prices down, so when they run out we can get ALL our money back....

Also this reduces their influence on our Government and a greater likelyhood that they can keep their terrorists busy in house and off our lawn in the future.

[skydivr]

Great to have an expert on the process chime in.

In my mind, just another reason to have the pipeline. I'm looking at the long-term STATEGIC gain of having a huge land source of oil, right next door to us with an ALLY (since I can't really count Mexico as one) and the means to transport it. Even if it's just to keep it from going directly to the Chinese, that's good enough reason for me. After January, both houses will pass it and send it to the President. If he veto's, there may be enough Moderate Dems who fear their future chances at reelection (as the power of Obama fades) or the chance of ANY Democratic Presidential candidate with that hanging over their heads, to break party lines and vote to approve it.

We just secured our own source of oil for the next 50 years, helping to keep gas prices down which is a FREE MARKET method to stimulate the economy, in ways that 'quantitative easing' never can...

[SeriousStudent]

Dave, while yes it is irrelevant in the sense that the oil is going to be transported by other means if required, the pipeline is BY FAR the most ecologically friendly option. It is safer for human beings, it is safer for the environment, and is generally a superior option. SeriousStudent, pipelines make economic sense...this is a good thing.

I also think we all need to warp back into our econ classes. Markets(particularly energy markets,) are incredibly intertwined. The fact that this very specific oil isn't going to be consumed in the US is largely irrelevant to the impact it will have on prices of the oil we do consume. Getting this oil to the consumers efficiently and safely is beneficial to every single party involved.

Yup, I know they are. It was that Socratic method thingie. :cool:

[RancidSumo]

Hydraulic fracturing is what I do...rather it's a big part of what I do as a completions engineer. The project I'm on is one of the most expensive ever undertaken anywhere in the world, and we'll be profitable at the prices you're talking about...we drilled all ten production/injection wells sitting in 5500ft. of water, to depths exceeding 25000ft...we don't have to fracture these wells to get large amounts of oil, but will be doing so as part of our completion.

There's 100mboe of recoverable sitting in Big Foot(which is huge,) but estimates on the Bakken are in the billions. Really think we won't recover that oil when the prices are right? We invested BILLIONS of dollars on my project. With a little bit of education, people will understand that hydraulic fracturing isn't anything to be afraid of as long as it's done properly...or they just won't care because they'll need the energy. Really think that congress will bow to environmentalists with that kind of drive against them? When their constituents can't afford to fill their cars?

As a side note, fracturing is not new, we have done it for decades...when prices were below $30/bbl people were still injecting soapy water and proppant into wells. It was only new to people in the northeast.

It's most likely still economic in tight oil down into the $60s or even possibly $50s but I don't want to push that price floor too much. I think if oil stays in the $70s we are going to start seeing budgets cut across the board for producers in US shale plays. I was at ATCE this year and just wrapped up another conference today and I can tell you for sure that these low prices have people talking and while nobody is too worried yet, it's starting to become a larger concern every day. OPEC's meeting on the 27th will be important to watch.

All that said, even if production slows in the short term, it will pick back up again soon and neglecting the infrastructure would be a huge mistake. This pipeline and other projects like it should be put in to accommodate future production increases, as well as those from the last ten years that we still haven't quite caught up with. The regulators I work with all know that pipelines are safer and actively encourage them; congress just doing their own thing in that regard is stupid but not surprising.

Just searched Big Foot a little bit, 91 m of pay! That's insane! You're playing with a whole different beast than what I'm used to and I'm sure those wells can weather low prices pretty easily compared to a couple hundred bpd Bakken or similar well.

[brickboy240]

Yep...fracking is not new....nor are pipelines.

Big media and the left are trying to pull a "China Syndrome" type scare campaign on fracking and pipelines to scare people and mis-educate everyone.

American does not make anything anymore. The only large industry America has today, that has real paying jobs and a future is the oil/gas/coal industries. That is it.

The price per barrel is low NOW but take a look back....doesn't it ALWAYS go down in winter months? Wait until June...they will rocket back up then everyone will whine about the evil oil companies making obscene profits again! LOL How short-sighted everyone really is! LOL

The few states that HAVE something left that resembles an economy are the ones with a vibrant energy sector. In Texas, if you want a six figure job that has a future...your best bet is one in an oil related field. Texas created a little over 40% of all private sector jobs in the past few years and most were...you guessed it...in the oil patch. The city of Midland boasted an unemployment rate of around 3% some time last year. Ditto for parts of the Dakotas. All because of the oil industry.

By wanting the oil industry to diminish....you are asking for the last "golden goose" in American business to go away. When the oil biz leaves America...that will be the end of us all.

[Caeser25]

Yep...fracking is not new....nor are pipelines.

Big media and the left are trying to pull a "China Syndrome" type scare campaign on fracking and pipelines to scare people and mis-educate everyone.

American does not make anything anymore. The only large industry America has today, that has real paying jobs and a future is the oil/gas/coal industries. That is it.

The price per barrel is low NOW but take a look back....doesn't it ALWAYS go down in winter months? Wait until June...they will rocket back up then everyone will whine about the evil oil companies making obscene profits again! LOL How short-sighted everyone really is! LOL

The few states that HAVE something left that resembles an economy are the ones with a vibrant energy sector. In Texas, if you want a six figure job that has a future...your best bet is one in an oil related field. Texas created a little over 40% of all private sector jobs in the past few years and most were...you guessed it...in the oil patch. The city of Midland boasted an unemployment rate of around 3% some time last year. Ditto for parts of the Dakotas. All because of the oil industry.

By wanting the oil industry to diminish....you are asking for the last "golden goose" in American business to go away. When the oil biz leaves America...that will be the end of us all.

Government make more money in taxes per gallon than oil companies make in profit. It's I best interest of government for gas to be higher anyways.

[SilverBullet432]

Yep...fracking is not new....nor are pipelines.

Big media and the left are trying to pull a "China Syndrome" type scare campaign on fracking and pipelines to scare people and mis-educate everyone.

American does not make anything anymore. The only large industry America has today, that has real paying jobs and a future is the oil/gas/coal industries. That is it.

The price per barrel is low NOW but take a look back....doesn't it ALWAYS go down in winter months? Wait until June...they will rocket back up then everyone will whine about the evil oil companies making obscene profits again! LOL How short-sighted everyone really is! LOL

The few states that HAVE something left that resembles an economy are the ones with a vibrant energy sector. In Texas, if you want a six figure job that has a future...your best bet is one in an oil related field. Texas created a little over 40% of all private sector jobs in the past few years and most were...you guessed it...in the oil patch. The city of Midland boasted an unemployment rate of around 3% some time last year. Ditto for parts of the Dakotas. All because of the oil industry.

By wanting the oil industry to diminish....you are asking for the last "golden goose" in American business to go away. When the oil biz leaves America...that will be the end of us all.

yes yes and YES. 4th quarter always slows down. elections play a factor too. come spring everything will be a ok again.

[RancidSumo]

This price drop is much more than just seasonal fluctuation and it could stay low for a while. I agree that it'll come back up eventually but I think that saying it's all just seasonal is kinda like burying your head in the sand.

[brickboy240]

Yes...there ARE other factors but would you bet against gas prices NOT going back up when the warmer months get here? I would never do that.

I also believe that the price drop proves that the "drill baby drill" mantra was a correct one. That increasing domestic oil activity alone will drop the prices of crude.

People love to blame the oil speculators but can you blame the speculators for being edgy lately? They see the largest user of oil (USA) elect an administration full of anti-oil, anti-energy industry people and talk about all sorts of green initiatives....what the hell do you expect? The speculators see talk about a carbon tax, unrealistic CAFE standards and no-go on the Keystone pipeline and whammo...you get high crude prices. Should not surprise anyone...really.

With just the signing of the deal to build the pipeline without even a shovel hitting dirt...Obama could have dropped crude prices like a rock but he would never do that. The left wants high energy prices so they can keep control over people's lives and activities. Cheaper energy means freedom and more independence and they don't want that.

So these recent low crude prices are not the end of the world. they say this EVERY TIME there is a price drop....just like they have said since the 70s that we are running out of oil.

-brickboy240

[RancidSumo]

I'm not saying we are running out of oil, I'm saying if the Saudis want to **** with the price they can and that's exactly what's happening. If OPEC doesn't cut production after their Vienna meeting on the 27th, I think prices could slide as much as another $10. Low prices may not impact the average consumer much in the short term but looking at it from an industry perspective, a big price slump that continues for several months or longer isn't good.

[TXBK]

There are many factors to consider when it comes to whether or not the oil industry will slow down with the price of oil dropping. It is different for every producer. It depends on which play is being utilized, contracts with service companies, amount of money tied up in leases, how much debt the producer has, and so on. The break-even price is different for all of them.

[AKDoug]

Alaska's highest oil production years were during sub $15/barrel oil prices.

[brickboy240]

It won't stay down for long....

[RancidSumo]

Alaska's highest oil production years were during sub $15/barrel oil prices.

That isn't really relevant to any of the modern tight oil plays being developed in the continental US. None of them would be economic at those prices.

[RancidSumo]

I'm not saying we are running out of oil, I'm saying if the Saudis want to **** with the price they can and that's exactly what's happening. If OPEC doesn't cut production after their Vienna meeting on the 27th, I think prices could slide as much as another $10. Low prices may not impact the average consumer much in the short term but looking at it from an industry perspective, a big price slump that continues for several months or longer isn't good.

So now that this has happened, does anyone still think this is going to be nothing more than a short term seasonal decline?

[montanadave]

So now that this has happened, does anyone still think this is going to be nothing more than a short term seasonal decline?

Don't I wish. I fear we may see crude prices trading in the $65-75/bbl range for the next year or two until the world economy revs up sufficiently to take up the current surplus.

[brickboy240]

It might be low NOW but when it starts warming up again about Memorial Day weekend and prices on gas start going up...everyone will be whining about OPEC, the evil oil company's profits and the gas prices.

Hello! This happens every year.

It WILL go back up.

[montanadave]

Hello! This happens every year.



A forty percent drop in crude oil?

Not hardly.

[sadmin]

A forty percent drop in crude oil?

Not hardly.

Agree- this isn't your run of the mill drop. Not to mention the inverse correlation between the dollar and the price of oil resulting in less than great expectations of foreign trade picking the price up since the dollar is worth less and less.


Sent from my iPhone using Tapatalk

[brickboy240]

It has dropped fast before.

Are you saying you don't think it will go way up again?

Some of you must be younger than I thought! LOL

[montanadave]

It has dropped fast before.

Are you saying you don't think it will go way up again?

Some of you must be younger than I thought! LOL

Not young by any means, been around the oil business all my life, and this ain't my first rodeo.

I fully expect crude prices to recover in the mid to long term. The point I was taking issue with was your assertion that this most recent reversal was a seasonal or regular price fluctuation, as it most clearly is not.

[thopkins22]

The Sauds dropped it hard in 85-86. About a 2x drop. It came back in short order. They can do it again...it'll leave them more profitable for a small while by crushing smaller operations that need the higher price...but it won't last.

But let's not forget that in July of 2008 it was at 128, and by January of 2009 it was at 35. The world isn't ending. Some people may wind up temporarily laid off, but such is life when your industry is based on a commodity.

The world is using more oil than at any point in history. Millions of Chinese and Indians are finally able to afford vehicles. The demand for oil is rising and will continue to rise almost without regard to price.

The other OPEC nations aren't capable of producing 120 million barrels a year...but for that matter neither are the Sauds for very long. They're pumping huge quantities of water into their reservoirs in an attempt to keep production insanely high. There is a distinct possibility that they've overstated their reserves significantly and see this as their chance to kill the weaker competition off for a while before their production starts dropping on it's own.

They have dramatically overstated their reserves and want to keep their top spot for a while longer before Venezuela and others start nipping at their heels. Mostly we need to remember that as soon as the world doesn't need Saudi oil...Saudi's will remember that they don't need the House of Saud and might go back to being various arabian nations. They don't have much to worry about until the Venezuelans start welcoming Americans and Brits back...but that's my guess.

[SilverBullet432]

Screw OPEC. There's enough under our feet to meet our demands here.

[jpmuscle]

Where's the downside? I like paying less than 3$ a gallon.

[SilverBullet432]

It affects us industry workers who bust ass to extract the black gold. The average consumer doesn't realize the struggle it is to get a well from bare land to producing.

[jpmuscle]

It affects us industry workers who bust ass to extract the black gold. The average consumer doesn't realize the struggle it is to get a well from bare land to producing.
Ok I get that... Nature of beast and/or market though.

[brickboy240]

Lets see..

The states with the lowest unemployment rates and the most vibrant economies are the oil producing states.

We don't really make anything in America anymore....so the only large, profitable industry we have left is....yes you guessed it...the oil industry.

Now...with that said...can you NOW see how plunging prices and possible lay offs in that field MIGHT have a larger impact on the country in general?

Sure...you're enjoying a lower pump price but what if it killed off our last large profitable sector of our economy?

Now...I tend to believe that this price drop IS temporary and it will go back up but yes...a long term downturn in oil prices would not be good for America's overall economy.

-brickboy240

[SilverBullet432]

Heard from some of my customers that starting in the year we might have to drop our rates, but it wont be anything drastic.

[brickboy240]

Then again in the spring/summer when gas prices creep back up you will hear everyone whine about "oil company's obscene profits" and other nonsense.

Our local talk radio had John Hoffmeister, former CEO of Shell on the air the other day ago and he also said this price dip is going to be temporary. Others in our industry are also saying the same thing.

We are here on the Houston Ship Channel...pretty much ground zero for oil importation and refining in America....we ought to know.

[thopkins22]

Then again in the spring/summer when gas prices creep back up you will hear everyone whine about "oil company's obscene profits" and other nonsense.

Oil company profits are actually incredibly low when viewed as a percentage instead of a number surrounding a product that enriches every single person on the planet's life. This won't hurt the big boys, this is designed to kill small operations. My project is still going to be profitable, but it would definitely take a lot longer to be cash flow positive if the prices don't rebound. Things like this are completely manageable for Exxon, Chevron, GE, Schlumberger, Baker, Halliburton, and so forth...but smaller companies will have a harder time the longer it goes.

We'll see...

[FromMyColdDeadHand]

China does the same thing with rare earths. They are the major supplier, even more than the Saudis with oil. With prices high and supply tight, other people look at starting the $5billion/5 year program to start-up or re-open old operations. China than tanks the market and makes it un-economical. Prices slowly rise back up and you repeat the cycle.

This isn't a free market. I'm surprised that no one on the right or left hasn't offered up import tariffs on foreign oil to keep the price around 90 or so. Take the tariff money and say that you'll plow it into renewable energy or polar bear lifejackets. You get money for the lefties and the oil states keep their production and we keep the capability.

As bad as this hurts us, it has to have Russia, Iran and Venezuela between a rock and a hard place.

There are a lot of advantages to having domestic production, but if we can use up the Saudi oil now and have our reserves for when (sometimes it seem like if) when supply actually gets tight- there is some security in that too.

[brickboy240]

True...big oil company profits are actually very slim. Especially when you consider the profit margins. Usually clock in at around 7-8%.

Odd..because the left will cry on and on about the "obscene profits" of Exxon when the profit margins of companies like Apple and Microsoft hover in the mid 40% range!

Another truth many do not know is that the govt makes MUCH more profit from a gallon of gas than does the oil company or the gas station owner.

The REAL culprit in why our gas prices are so high and why the market yo-yos around like it does is NOT Exxon or Chevron...but the US government!

[SilverBullet432]

Oil companies make cash, but not as much compared to the govt. which takes a good chunk on taxes. They still have to pay their vendors like me, for helping to get the goods out of the ground and their employees and costs. The only "real" effect these low prices will have around here is on horizontal drilling. you could drill & complete 4 vertical wells on the same tract for WAAYY less (millions) than 1 horizontal well. For example down in pecos, they could spend 8 million on 4 vertical wells rather than spending 12-15 million on 1 directional.. the main advantage directional has is surface impact. less infrastructure and surface equipment.

a rather good video on directional:

http://youtu.be/vvRCYLnVWG8

[RancidSumo]

Oil companies make cash, but not as much compared to the govt. which takes a good chunk on taxes. They still have to pay their vendors like me, for helping to get the goods out of the ground and their employees and costs. The only "real" effect these low prices will have around here is on horizontal drilling. you could drill & complete 4 vertical wells on the same tract for WAAYY less (millions) than 1 horizontal well. For example down in pecos, they could spend 8 million on 4 vertical wells rather than spending 12-15 million on 1 directional.. the main advantage directional has is surface impact. less infrastructure and surface equipment.

a rather good video on directional:

http://youtu.be/vvRCYLnVWG8

I don't think poking a bunch of vertical holes is a viable alternative to horizontal wellbores in most, if not all, plays. One well out here will have 30-50 stages each with 2-5 perf clusters. That's hundreds of vertical wells worth of entry points. I know that isn't a direct correlation to production but it helps to illustrate the idea. Same story for the Bakken. If it isn't going to be directionally drilled, it isn't going to be drilled at all.

[SilverBullet432]

Yes all plays vary, these for example are all wolfbone trend. True, to be 100% effective the shale has to be horizontally drilled and frac'ed. The vertical story was passed down the pipeline from the foremen to the engineers, but of course, the engineers know it wont be as effective. These wells are currently producing from 6-800 barrels a day.