6 ms·

U.S. oil production booms as new year begins

32 points by kimsk112 9y ago

Fronzie 9y ago
Does anyone know how the extraction cost of shale compare to the declining cost of solar? Are we at the point already where some oil fields become non-profitable?
- OscarCunningham 9y ago
  There are all sorts of subsidies and taxes everywhere, so it's hard to determine the true cost of either.
  - melling 9y ago
    Can you please list some of them? The raging debate on renewables is that people intensely dislike subsidies for renewable energy. Other people respond that fossil fuels are also subsidized, without references. This “conversation” goes on endlessly with two sides basically talking at each other. Most people understand that coal is dirty, but with oil and natural gas it’s more difficult, for example, to convince people that moving to electric vehicles is a win.
    - ZeroGravitas 9y ago
      Here's a grumpy economist disagreeing with a famous IMF report on subsidies. I think he's wrong and the IMF is right. I'm really not sure why he's taking the tone he does, but it gives you both sides of the argument at least: https://www.forbes.com/sites/timworstall/2015/08/04/the-imfs-absurd-calculations-of-fossil-fuel-subsidies-its-really-not-2200-for-every-american/#54861b1222b6 https://www.forbes.com/sites/timworstall/2015/08/04/the-imfs...
    - marshray 9y ago
      This looks interesting: United States ‒ Progress Report on Fossil Fuel Subsidies https://www.treasury.gov/open/Documents/USA%20FFSR%20progress%20report%20to%20G20%202014%20Final.pdf https://www.treasury.gov/open/Documents/USA%20FFSR%20progres... There are a number of tax preferences, described below, available in the United States to producers of fossil fuels. The preferences below are all permanent provisions in the tax code.
    - diafygi 9y ago
      The largest fossil subsidy is the lack of a tax or regulation on greenhouse gas pollution. I used to work in emissions and most other types of air pollution (NOx, SOx, mercury, etc.) had either a permitting or cap-and-trade process that source emitters had to follow. These regulations were put in place to offset the cost of the externalities of those types of air pollution. For greenhouse gasses, it's only been recently that we even considered greenhouse gasses as pollution, and the EPA was actually starting to implement similar regulations (called Clean Power Plan). However, that is being rolled back by the Trump administration. So it looks like externalities subsidies will continue for the time being, at least on the federal level.
- deleted 9y ago
  [deleted]
- robv 9y ago
  That would be the levelized cost of energy (LCOE). One thing to consider which is not reflected in LCOE is baseload power needs or scaling power needs. The thing that really holds back solar is storage cost, not production. If solar could spread out it's power over 24 hours at the same cost. It would be game over in solar rich areas. https://en.m.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.m.wikipedia.org/wiki/Cost_of_electricity_by_sourc...
- nimos 9y ago
  Oil and solar don't really compete that much. Oil - even at $40 a barrel - is substantively more expensive than pretty much everything else for generating electricity and is rarely used for anything beyond small scale generation. Oil is valuable because of gasoline/diesel which about 3/4 of the barrel goes to. It's all about the ease of transportation that ICE/gasoline/diesel offer that no other fuel can really compete on. The more relevant factor is the price of batteries which might make solar and other electricity sources viable competitors to oil.
  - peterbecich 9y ago
    Very interesting. Incidentally, about 70% of Hawaii's electricity is generated with oil: https://en.wikipedia.org/wiki/Energy_in_Hawaii?wprov=sfla1 https://en.wikipedia.org/wiki/Energy_in_Hawaii?wprov=sfla1
    - petre 9y ago
      Doesn't geothermal work for Hawaii? It works just fine for the Azores.
      - peterbecich 9y ago
        You are correct; I didn't know about this for Hawaii: https://www.hawaiianelectric.com/clean-energy-hawaii/clean-energy-facts/renewable-energy-sources/geothermal https://www.hawaiianelectric.com/clean-energy-hawaii/clean-e...
- yakitori 9y ago
  > Does anyone know how the extraction cost of shale compare to the declining cost of solar? The solar market is so tiny it doesn't matter in the energy discussion. Despite what you read from the cheerleaders ( paid or unpaid ) on social media and the news. The two important changes in energy markets the last decade are fracking/shale oil and natural gas. That's it. > Are we at the point already where some oil fields become non-profitable? Solar doesn't determine profitability of oil field. Oil prices determine profitability of oil fields. And it's all variable depending on location/quality/etc of the oil fields and the oil. Yes, as oil prices drop, there are oil fields that became unprofitable and many oil fields were shuttered. As oil prices rise, they will become profitable and the activity will increase on those fields. Low oil prices and the rise of natural gas along with regulation has absolutely crushed coal markets in the last 10 years. It has also crushed the solar markets as well ( see all the solar companies going bankrupt ). Whether oil and gas can keep this trend going, your guess is good as mine. I think Trump is very pro-energy and he will support low oil prices, low LNG prices and even push for more coal investments. That won't bode well for solar. But what do I know.
  - woodandsteel 9y ago
    >I think Trump is very pro-energy Trump is very pro-fossil fuel energy. He is doing everything he can to crush solar, wind, and EV's.
- dragonwriter 9y ago
  While solar is starting to represent a significant share of new generating capacity, it's not really material to the oil market, because they don't much directly compete for the same uses over the short term.
giggidygig 9y ago
https://www.eia.gov/analysis/studies/drilling/pdf/upstream.pdf https://www.eia.gov/analysis/studies/drilling/pdf/upstream.p...
lithos 9y ago
For the past few years when the cost of oil was low, oil companies needed to keep some amount of trained workers in work. So what they've been doing is "starting" wells and then stopping the drill a safe distance, to leave everything in a state where they can tap the well in a short period of time to respond to prices. (Though I don't really have any knowledge of the actual scale, since it's just from talking to people where they're going/gone after leaving the Nuke program) Which is where some of that boom is from, since right now OPEC is struggling to control production to raise prices.
- rbcgerard 9y ago
  https://www.eia.gov/petroleum/drilling/#tabs-summary-3 https://www.eia.gov/petroleum/drilling/#tabs-summary-3 See the “DUC” section
  - provost 9y ago
    128 fresh drilled-but-uncompleted wells in a month seems impressive (they show 94 as the change, but are subtracting 34 that were completed). Drilling roughly four a day.
- thematt 9y ago
  Completion of DUC wells doesn't have much if anything to do with predicting or waiting for a particular price, as most E&P companies are all hedged on a yearly basis. It's more about the manpower/equipment needed to frack, which is currently in short supply.
metaphor 9y ago
> The tax bill recently signed by President Trump allows oil drilling in the Arctic National Wildlife Refuge in Alaska... In case anyone else was wondering, this is in reference to Title II § 20001 of the Tax Cuts and Jobs Act[1], which sets up to lease at least 800,000 acres in the Artic National Wildlife Refuge[2] no later than 10 years from now, all strings pulled by Interior Secretary Zinke[3]. [1] https://www.congress.gov/bill/115th-congress/house-bill/1/text https://www.congress.gov/bill/115th-congress/house-bill/1/te... down at the waaay bottom [2] https://www.energy.senate.gov/public/index.cfm/files/serve?File_id=0C7062D9-1F8C-41D8-8E30-70F1A598F5FA https://www.energy.senate.gov/public/index.cfm/files/serve?F... [3] https://www.doi.gov/whoweare/secretary-ryan-zinke https://www.doi.gov/whoweare/secretary-ryan-zinke
- votepaunchy 9y ago
  The ANWR was sold out to buy Senator Collins (R-ME) vote. Maine has been fighting for this for decades.
woodandsteel 9y ago
This is really bad news for Russia. Fracking is now profitable at $60 a barrel, so the price of oil can never go above that. And fracking technology is new, so we can expect to improve further and make production profitable at a lower cost, so prices will gradually get even lower still. It is also bad news for Saudi Arabia. But that country realizes it and is working hard to expand its economy into other areas, whereas Russia remains focused on oil. Any Putin fans out there who want to argue that he really knows what he is doing on energy?

32 points by kimsk112 9y ago

Does anyone know how the extraction cost of shale compare to the declining cost of solar? Are we at the point already where some oil fields become non-profitable?

OscarCunningham 9y ago
There are all sorts of subsidies and taxes everywhere, so it's hard to determine the true cost of either.
- melling 9y ago
  Can you please list some of them? The raging debate on renewables is that people intensely dislike subsidies for renewable energy. Other people respond that fossil fuels are also subsidized, without references. This “conversation” goes on endlessly with two sides basically talking at each other. Most people understand that coal is dirty, but with oil and natural gas it’s more difficult, for example, to convince people that moving to electric vehicles is a win.
  - ZeroGravitas 9y ago
    Here's a grumpy economist disagreeing with a famous IMF report on subsidies. I think he's wrong and the IMF is right. I'm really not sure why he's taking the tone he does, but it gives you both sides of the argument at least: https://www.forbes.com/sites/timworstall/2015/08/04/the-imfs-absurd-calculations-of-fossil-fuel-subsidies-its-really-not-2200-for-every-american/#54861b1222b6 https://www.forbes.com/sites/timworstall/2015/08/04/the-imfs...
  - marshray 9y ago
    This looks interesting: United States ‒ Progress Report on Fossil Fuel Subsidies https://www.treasury.gov/open/Documents/USA%20FFSR%20progress%20report%20to%20G20%202014%20Final.pdf https://www.treasury.gov/open/Documents/USA%20FFSR%20progres... There are a number of tax preferences, described below, available in the United States to producers of fossil fuels. The preferences below are all permanent provisions in the tax code.
  - diafygi 9y ago
    The largest fossil subsidy is the lack of a tax or regulation on greenhouse gas pollution. I used to work in emissions and most other types of air pollution (NOx, SOx, mercury, etc.) had either a permitting or cap-and-trade process that source emitters had to follow. These regulations were put in place to offset the cost of the externalities of those types of air pollution. For greenhouse gasses, it's only been recently that we even considered greenhouse gasses as pollution, and the EPA was actually starting to implement similar regulations (called Clean Power Plan). However, that is being rolled back by the Trump administration. So it looks like externalities subsidies will continue for the time being, at least on the federal level.
deleted 9y ago
[deleted]
robv 9y ago
That would be the levelized cost of energy (LCOE). One thing to consider which is not reflected in LCOE is baseload power needs or scaling power needs. The thing that really holds back solar is storage cost, not production. If solar could spread out it's power over 24 hours at the same cost. It would be game over in solar rich areas. https://en.m.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.m.wikipedia.org/wiki/Cost_of_electricity_by_sourc...
nimos 9y ago
Oil and solar don't really compete that much. Oil - even at $40 a barrel - is substantively more expensive than pretty much everything else for generating electricity and is rarely used for anything beyond small scale generation. Oil is valuable because of gasoline/diesel which about 3/4 of the barrel goes to. It's all about the ease of transportation that ICE/gasoline/diesel offer that no other fuel can really compete on. The more relevant factor is the price of batteries which might make solar and other electricity sources viable competitors to oil.
- peterbecich 9y ago
  Very interesting. Incidentally, about 70% of Hawaii's electricity is generated with oil: https://en.wikipedia.org/wiki/Energy_in_Hawaii?wprov=sfla1 https://en.wikipedia.org/wiki/Energy_in_Hawaii?wprov=sfla1
  - petre 9y ago
    Doesn't geothermal work for Hawaii? It works just fine for the Azores.
    - peterbecich 9y ago
      You are correct; I didn't know about this for Hawaii: https://www.hawaiianelectric.com/clean-energy-hawaii/clean-energy-facts/renewable-energy-sources/geothermal https://www.hawaiianelectric.com/clean-energy-hawaii/clean-e...
yakitori 9y ago
> Does anyone know how the extraction cost of shale compare to the declining cost of solar? The solar market is so tiny it doesn't matter in the energy discussion. Despite what you read from the cheerleaders ( paid or unpaid ) on social media and the news. The two important changes in energy markets the last decade are fracking/shale oil and natural gas. That's it. > Are we at the point already where some oil fields become non-profitable? Solar doesn't determine profitability of oil field. Oil prices determine profitability of oil fields. And it's all variable depending on location/quality/etc of the oil fields and the oil. Yes, as oil prices drop, there are oil fields that became unprofitable and many oil fields were shuttered. As oil prices rise, they will become profitable and the activity will increase on those fields. Low oil prices and the rise of natural gas along with regulation has absolutely crushed coal markets in the last 10 years. It has also crushed the solar markets as well ( see all the solar companies going bankrupt ). Whether oil and gas can keep this trend going, your guess is good as mine. I think Trump is very pro-energy and he will support low oil prices, low LNG prices and even push for more coal investments. That won't bode well for solar. But what do I know.
- woodandsteel 9y ago
  >I think Trump is very pro-energy Trump is very pro-fossil fuel energy. He is doing everything he can to crush solar, wind, and EV's.
dragonwriter 9y ago
While solar is starting to represent a significant share of new generating capacity, it's not really material to the oil market, because they don't much directly compete for the same uses over the short term.

giggidygig 9y ago

https://www.eia.gov/analysis/studies/drilling/pdf/upstream.pdf https://www.eia.gov/analysis/studies/drilling/pdf/upstream.p...

lithos 9y ago

For the past few years when the cost of oil was low, oil companies needed to keep some amount of trained workers in work. So what they've been doing is "starting" wells and then stopping the drill a safe distance, to leave everything in a state where they can tap the well in a short period of time to respond to prices. (Though I don't really have any knowledge of the actual scale, since it's just from talking to people where they're going/gone after leaving the Nuke program) Which is where some of that boom is from, since right now OPEC is struggling to control production to raise prices.

rbcgerard 9y ago
https://www.eia.gov/petroleum/drilling/#tabs-summary-3 https://www.eia.gov/petroleum/drilling/#tabs-summary-3 See the “DUC” section
- provost 9y ago
  128 fresh drilled-but-uncompleted wells in a month seems impressive (they show 94 as the change, but are subtracting 34 that were completed). Drilling roughly four a day.
thematt 9y ago
Completion of DUC wells doesn't have much if anything to do with predicting or waiting for a particular price, as most E&P companies are all hedged on a yearly basis. It's more about the manpower/equipment needed to frack, which is currently in short supply.

metaphor 9y ago

> The tax bill recently signed by President Trump allows oil drilling in the Arctic National Wildlife Refuge in Alaska... In case anyone else was wondering, this is in reference to Title II § 20001 of the Tax Cuts and Jobs Act[1], which sets up to lease at least 800,000 acres in the Artic National Wildlife Refuge[2] no later than 10 years from now, all strings pulled by Interior Secretary Zinke[3]. [1] https://www.congress.gov/bill/115th-congress/house-bill/1/text https://www.congress.gov/bill/115th-congress/house-bill/1/te... down at the waaay bottom [2] https://www.energy.senate.gov/public/index.cfm/files/serve?File_id=0C7062D9-1F8C-41D8-8E30-70F1A598F5FA https://www.energy.senate.gov/public/index.cfm/files/serve?F... [3] https://www.doi.gov/whoweare/secretary-ryan-zinke https://www.doi.gov/whoweare/secretary-ryan-zinke

votepaunchy 9y ago
The ANWR was sold out to buy Senator Collins (R-ME) vote. Maine has been fighting for this for decades.

woodandsteel 9y ago

This is really bad news for Russia. Fracking is now profitable at $60 a barrel, so the price of oil can never go above that. And fracking technology is new, so we can expect to improve further and make production profitable at a lower cost, so prices will gradually get even lower still. It is also bad news for Saudi Arabia. But that country realizes it and is working hard to expand its economy into other areas, whereas Russia remains focused on oil. Any Putin fans out there who want to argue that he really knows what he is doing on energy?