High Gas Prices, Oil Production is Ramping Up

[Hank77]

At least in Colorado, it is. There are some real factors affecting production that I hadn't heard about.

The number of active oil wells in Colorado has nearly doubled in the last year, a sign that high prices are bringing the industry back to life.
...
But this year, the war in Ukraine has disrupted energy markets and demand is rising as the pandemic eases, sending prices over $100 a barrel in recent weeks, well beyond what's needed to profitably drill wells in Colorado.
...
A survey by the Federal Reserve’s Dallas office of oil and gas companies across the U.S. found that, “slightly over half — 59 percent — of executives believe investor pressure to maintain capital discipline is the primary reason that publicly traded oil producers are restraining growth despite high oil prices.”


The next closest issue limiting growth was, “Environmental, social and governance issues,” at only 11 percent.

With gas prices high, Colorado oil production is ramping up

 

[Yahudim]

Put another way, every time a politician give a reason for a policy, somehow it accomplishes the opposite effect and greatly benefits the industry or oligarch the policy is supposedly intended to curtail. Whoda thunk?

Politics
Poli; From the Greek meaning many.
Tics, 1.) A symptom of a neurological disorder that manifests as facial spasms or 2.) Small bloodsucking creatures that spread disease.

 

[Halbhh]

At least in Colorado, it is. There are some real factors affecting production that I hadn't heard about.

The number of active oil wells in Colorado has nearly doubled in the last year, a sign that high prices are bringing the industry back to life.
...
But this year, the war in Ukraine has disrupted energy markets and demand is rising as the pandemic eases, sending prices over $100 a barrel in recent weeks, well beyond what's needed to profitably drill wells in Colorado.
...
A survey by the Federal Reserve’s Dallas office of oil and gas companies across the U.S. found that, “slightly over half — 59 percent — of executives believe investor pressure to maintain capital discipline is the primary reason that publicly traded oil producers are restraining growth despite high oil prices.”


The next closest issue limiting growth was, “Environmental, social and governance issues,” at only 11 percent.

With gas prices high, Colorado oil production is ramping up

Good article, and since this has been an interesting question to me for a while, I searched for some more, and thought you might like this.

"...lag between drilling and oil production. The drilling count may have risen by 60% over the past year, but U.S. oil production is only up by about 8%. Thus, the conclusion is that U.S oil companies aren’t drilling. As the chart shows, they certainly are, but it takes time for that drilling to produce results. At the same time, depletion of existing wells is also a factor working against the attempts to increase production.

The second element is one that has the kernel of truth. The rig count is steadily rising, but it is still significantly below the drilling levels prior to the Covid-19 pandemic. A three-year look at drilling activity shows the dramatic impact of the pandemic, as well as the steady recovery since the rig count began to climb in the fall of 2020.

...
It is certainly a fair question to ask why oil companies aren’t increasing drilling at a faster pace. There are several reasons for that. One is that the industry is suffering from manpower and material shortages.

For example, when oil demand fell in 2020, many people permanently left the oil industry, frustrated by years of up and down cycles. The oil industry continues to suffer from a manpower shortage that is affecting many industries.
...
U.S. Oil Companies Have Increased Drilling By 60% In One Year

Also, this local to Houston article (the oil industry is major in the Houston area) had a lot of key things, with some big picture stuff:
Boosting U.S. oil production more complicated than many realize | khou.com

 

[Halbhh]

Here's more on the big picture:
U.S. oil exports surge, drawing crude away from storage hub

 

[Yahudim]

Btw, I always believe the News (read: Entertainment Industry), O&G industry rags and government agencies (*wink). My parents met while working at the Texas Company, later to become Texaco. I have been on the periphery of the oil & gas industry all my life. Family and friends tend to tell the truth to their own. Oil execs and politicians, not so much.

(Remind me to tell you about the time my father-in-law was whisked away to the airport by the State Department to meet his good friend, the newly deposed Shah of Iran. He was in charge of Esso Libya at the time.)

It is my experience that oil producers ALWAYS have a plan in place to bring producing wells online. Unless they are drilling test wells, they are drilling in a 'field' and an oil field always have a pipeline ready. And yes, this includes fracking. It is not usually a time consuming task to connect a new producing well.

When assessing the machinations of any major industry, it helps to remember that there is just as much money and influence to be made manipulating markets as there is in producing product and often more so the former rather than the latter. Perception is everything in both politics and industry. Everything you see, hear and read is very closely vetted. Just sayin'...

 

[Blade]

Its like Trump said...but where I am in Colorado when president Trump was in office it was around $2.50 not its $3.84. It was $3.99 for awhile. But hey theres what over 2 years left of Biden so.. I don't see this going down but WAY up

 

[Halbhh]

Btw, I always believe the News (read: Entertainment Industry), O&G industry rags and government agencies (*wink). My parents met while working at the Texas Company, later to become Texaco. I have been on the periphery of the oil & gas industry all my life. Family and friends tend to tell the truth to their own. Oil execs and politicians, not so much.

(Remind me to tell you about the time my father-in-law was whisked away to the airport by the State Department to meet his good friend, the newly deposed Shah of Iran. He was in charge of Esso Libya at the time.)

It is my experience that oil producers ALWAYS have a plan in place to bring producing wells online. Unless they are drilling test wells, they are drilling in a 'field' and an oil field always have a pipeline ready. And yes, this includes fracking. It is not usually a time consuming task to connect a new producing well.

When assessing the machinations of any major industry, it helps to remember that there is just as much money and influence to be made manipulating markets as there is in producing product and often more so the former rather than the latter. Perception is everything in both politics and industry. Everything you see, hear and read is very closely vetted. Just sayin'...

Well, if you want to avoid what you are thinking would be just "entertainment Industry, O&G industry rags and government agencies" then try my posts. If you are serious at all.

Greater Houston is a population of about 7 million, and oil industry is a long time focus in the Houston area with a lot of industry and companies, so it won't be surprising to see a lot of info (easy to get in person interview sources) in the Houston News like KHOU.

My dad has lived in the Houston area for 40 years, and I spent plenty of time there also. He worked in a related industry, dependent on oil production and refining, and the trends in the industry always affected his company planning.

So....depending on how much real factual stuff you want, I suggest check out my links and posts also along with the OP.

 

[Yahudim]

Well, if you want to avoid what you are thinking would be just "entertainment Industry, O&G industry rags and government agencies" then try my posts. If you are serious at all.

Greater Houston is a population of about 7 million, and oil industry is a long time focus in the Houston area with a lot of industry and companies, so it won't be surprising to see a lot of info (easy to get in person interview sources) in the Houston News like KHOU.

My dad has lived in the Houston area for 40 years, and I spent plenty of time there also. He worked in a related industry, dependent on oil production and refining, and the trends in the industry always affected his company planning.

So....depending on how much real factual stuff you want, I suggest check out my links and posts also along with the OP.

Thank you brother. You would then know then, that the Texas Company was established in Houston, right? My family was here when Houston was called Harrisburg. I was born In St. Joe's and my dad started his career in oilfield construction in the '40s before moving to residential and commercial construction in the '60s. My mom retired from Transco after a long career in O&G management. Our whole family were regulars at the Petroleum Club. So yes, I know Houston and yes, I know O&G and yes, I am serious.

Did you know that as of a couple of years ago, less than 12 people own controlling interest in over 96% of all media? That would include entertainment media, news media, print media, broadcast media, social media, et al. Don't kid yourself. You know what they want you to know.

I know this too. That there are no more 'independent' news outlets and a very small, wealthy and powerful group of individuals have taken over editorial control of this nation's 'narrative'. It's not that I don't trust you, your work or your morals and ethics. It's just that I do not believe you are able to investigate anything that they don't already want you to know.

Blessings brother. I'm out.

 

[miamited]

Hi @Hank77

Yes, there has been some uptick in crude production, but it's just not as easy as flipping a light switch. It will take some time, but oil will come back down as we to begin to put more oil into the market. I believe that recently some of the OPEC+ nations agreed to increase output. All of these increases will begin to meet the demand and the 'supply/demand' position will change the price per barrel. Give it 6 months.

As with most crisis issues, they don't go away overnight. The '08-'09 financial crisis took about 3 years to get back to strong growth. The pandemic, so far, about 2 years. Those are just the more recent ones. The great depression of the '30s lasted about 4 years before things began to turn around.

God bless,
Ted

 

[Halbhh]

Hi @Hank77

Yes, there has been some uptick in crude production, but it's just not as easy as flipping a light switch. It will take some time, but oil will come back down as we to begin to put more oil into the market. I believe that recently some of the OPEC+ nations agreed to increase output. All of these increases will begin to meet the demand and the 'supply/demand' position will change the price per barrel. Give it 6 months.

As with most crisis issues, they don't go away overnight. The '08-'09 financial crisis took about 3 years to get back to strong growth. The pandemic, so far, about 2 years. Those are just the more recent ones. The great depression of the '30s lasted about 4 years before things began to turn around.

God bless,
Ted

Yes, but Russia exported about 10.5% of all world oil exports.... so, it's hard to guess the future, but we may stay up here at prices like $100+ oil (like today), could be for a while. Or if Russia reverses course then you get a price reduction.

 

[miamited]

Hi @Halbhh

Yes, but Russia exported about 10.5% of all world oil exports.... so, it's hard to guess the future, but we may stay up here at prices like $100+ oil (like today), could be for a while. Or if Russia reverses course then you get a price reduction.

Well, it's not all about Russia reversing course to reinstate their production. Russia hasn't stopped us from getting their oil. Most of the nations have refused to 'take' Russian oil. So Russia can reverse course all it wants, but it's going to take those other nations reversing course that's going to put Russian crude back into the market.

10.5% of the world's crude supply is quite a lot of oil! BTW, according to the U.S. Energy Information Administration, I quote:

In 2021, Russia was the largest natural gas-exporting country in the world, the second-largest crude oil and condensates-exporting country after Saudi Arabia, and the third-largest coal-exporting country behind Indonesia and Australia. Although OECD Europe received most of Russia’s crude oil and natural gas exports last year, countries in Asia and the Oceania region received most of Russia’s coal exports.

Consider that Russia is the third largest oil producer of all the oil producing nations in the world. The above quote is discussing oil exporting, but this quote is regarding total crude oil production. The U.S. is the largest crude oil producer at 18 million bpd. Saudi Arabia and Russia run neck and neck at just over 10 million bpd. So, losing Russian oil exports has about the same effect on the oil markets as Saudi Arabia dropping out of the crude oil markets. That's a lot of crude that has to be made up. Somewhere we've got to find, among all of the crude producing nations, another 10 million bpd. Consider that the last OPEC+ meeting only discussed increasing daily crude production by a mere 400,000 bpd.

So, to get prices back to near where they were a year ago, the U.S., unless it can convince other crude producing nations to join in, must increase crude production by still 9.6 million bpd. Crude oil is sold on a world market and so we can't just up production enough to meet America's shortfall to resolve this issue. Unless, of course, we'd like to move to a more socialist/communistic government and start having the government take over the means of production and set the prices for American crude apart from the world market price.

God bless,
Ted

 

[Halbhh]

Day to day.

At least today is one of those days where all the calculation changes.

We toss old numbers and estimations in the trash.

So, today is one of those days. And there will be more, of course.

Biden Plan Would Release a Million Barrels of Oil a Day From Reserve
If fully enacted, the president’s plan would release 180 million barrels from the reserve, which is intended to help the United States weather spikes in demand or drops in supply. About 550 million barrels are in the reserve, which has a reported total capacity of about 714 million barrels.

Hi @Halbhh



Well, it's not all about Russia reversing course to reinstate their production. Russia hasn't stopped us from getting their oil. Most of the nations have refused to 'take' Russian oil. So Russia can reverse course all it wants, but it's going to take those other nations reversing course that's going to put Russian crude back into the market.

10.5% of the world's crude supply is quite a lot of oil! BTW, according to the U.S. Energy Information Administration, I quote:

In 2021, Russia was the largest natural gas-exporting country in the world, the second-largest crude oil and condensates-exporting country after Saudi Arabia, and the third-largest coal-exporting country behind Indonesia and Australia. Although OECD Europe received most of Russia’s crude oil and natural gas exports last year, countries in Asia and the Oceania region received most of Russia’s coal exports.

Consider that Russia is the third largest oil producer of all the oil producing nations in the world. The above quote is discussing oil exporting, but this quote is regarding total crude oil production. The U.S. is the largest crude oil producer at 18 million bpd. Saudi Arabia and Russia run neck and neck at just over 10 million bpd. So, losing Russian oil exports has about the same effect on the oil markets as Saudi Arabia dropping out of the crude oil markets. That's a lot of crude that has to be made up. Somewhere we've got to find, among all of the crude producing nations, another 10 million bpd. Consider that the last OPEC+ meeting only discussed increasing daily crude production by a mere 400,000 bpd.

So, to get prices back to near where they were a year ago, the U.S., unless it can convince other crude producing nations to join in, must increase crude production by still 9.6 million bpd. Crude oil is sold on a world market and so we can't just up production enough to meet America's shortfall to resolve this issue. Unless, of course, we'd like to move to a more socialist/communistic government and start having the government take over the means of production and set the prices for American crude apart from the world market price.

God bless,
Ted

 

[miamited]

Hi @Halbhh

If fully enacted, the president’s plan would release 180 million barrels from the reserve, which is intended to help the United States weather spikes in demand or drops in supply.

Right, and of course every little bit helps. But consider that in November of last year:

The Biden administration has tapped into the reserves before. On Nov. 23, they released 50 million barrels from the strategic reserve. According to the U.S. Energy Information Administration, the average price of gas dropped by 2 cents in the following days. By Dec. 6, it only dropped another 3 cents. (WCNC Charlotte NBC affiliate)

So, I don't really think this releasing reserves is really much help to the price of gas. Consider also that the 50 million barrel release in November was pretty much a one shot deal and done. Now you're talking about releasing in literally a dribble, one million bpd over 6 months, and it may not even drop the price at the pump 2¢.

No, I believe the best long term answer is that we do our best to up production by that 10 million bpd which will bring down the per barrel cost across the world, and thus American gas. We'll see how it plays out. I believe that Americans are really looking to see gas retail in the low $2 range and that's just not going to happen for awhile yet.

God bless,
Ted

 

[miamited]

Hey everybody, good news!!!

Today gas at my local Sam's club is $3.64/gal. That's down from the high, about a month ago, of just over $4/gal. I think at it's highest it was $4.04 or so. Hopefully this downward trend will continue and by the time the 180 million gallon giveaway is over, our crude producers will have upped their game.

God bless,
Ted