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As Oil and Gas Prices Plunge, Drilling Frenzy Ends
Clifford Krauss, New York Times
The great American drilling boom is over. Drilling in Free Fall
Lower prices have ended the frantic push to find and exploit new sources of natural gas.
The number of oil and gas rigs deployed to tap new energy supplies across the country has plunged to less than 1,200 from 2,400 last summer, and energy executives say the drop is accelerating further.
Lower prices are bringing to an end an ambitious effort to squeeze more oil from aging fields and to tap new sources of natural gas. For the last four years, companies here drilled below airports, golf courses, churches and playgrounds in a frantic search for energy. They scoured the Rocky Mountains, the Great Plains, the Gulf of Mexico and Appalachia.
But the economic downturn has cut into demand. Global oil prices and American natural gas prices have plummeted two-thirds since last summer. Not even an unseasonably cold winter drove down unusually high inventories of natural gas.
The drop has been good news for American consumers, with gasoline now selling for $1.92 a gallon, on average, down from a high of $4.11 in July. But the result for companies is that it is becoming unprofitable to drill.
The reversal of fortune could have important implications for the future health of the nation’s energy companies, for consumer wallets and for national aspirations to rely less on foreign energy sources.
(14 March 2009)
Oil Prices: Supply Siders, Start Getting Nervous
Keith Johnson, Envrionmental Capital, Wall Street Journal
All eyes are on OPEC ahead of Sunday’s meeting, and the question of whether the oil cartel will or won’t further slash production to prop up crude oil prices.
But what OPEC does might matter less than what the rest of the world doesn’t do—namely, produce more oil.
That was then (AP)
On Friday, the Paris-based International Energy Agency, the energy-adviser to the world’s rich industrialized economies, radically revised its outlook for non-OPEC oil production this year from growth of about 380,000 barrels a day to zero growth. That’s only a fraction of the size of the output cuts that OPEC has voluntarily committed to already. But unlike OPEC’s deliberations, production declines in non-OPEC countries are generally due to naturally declining fields, not decisions made in Vienna. (Yes, OPEC usually meets in Vienna. Go figure. Perhaps the ministers like sachertorte?)
As crude futures retreated in New York to about $46 a barrel, OPEC also revised its own estimates of how much non-OPEC countries will produce this year. While still more bullish than the IEA—OPEC expects a 370,000 barrel-per-day increase—the oil cartel has gotten a lot gloomier over the past month: It slashed non-OPEC supply forecasts by almost 200,000 barrels.
The interesting thing about OPEC’s outlook is that the bad news is so evenly spread: Estimates for Canada, Mexico, Norway, Russia, Kazakhstan, and Azerbaijan were all revised downward since last month. In the case of Canada, that’s due to lousy economics: Oil sands aren’t attractive with oil below $50. In other cases, especially Mexico, the revisions are due to rapidly-increasing declines at big fields that just can’t be offset elsewhere.
All this suggests two takeaways. First, oil bulls who’ve long warned that the world will see an oil supply crunch and rising prices in coming months just got more ammunition.
And second, when the oil-market experts at the IEA and OPEC can barely get within 1 million barrels on their estimates of oil production, reading the crude-oil tea leaves is still more art than science.
(13 March 2009)
Reader SJ writes:
More bad data from the supply side. Specifically reduction in the supply forecast for non-OPEC oil producers.
Shocking Demographics of The Oil Drum Revealed!!
Sharon Astyk, Casaubon’s Book
Ok, I know you are going to be stunned and shaken by this news.
Apparently, readers of The Oil Drum are overwhelmingly men. Even more shockingly, they are overwhelming white, middle aged and middle-to-upper middle class. Lots of them are engineers. Lots more are scientists.
Woah. Let’s take a minute to recover from this news. You mean the guys with all the graphs are actually talking mostly to other guys with graphs? Gee, I’d never have guessed.
Now don’t get me wrong, I actually think that TOD is one of the best sites on the net. I don’t write for a lot of other sites – I don’t have time and energy for it. I have written for TOD, because I think what they do is truly important. I am enormously grateful to those guys with graphs and penises for the work they do in sorting through an enormous amount of difficult data.
That said, however, I think that while there are an enormous number of talented women now writing and working on Peak Oil and Depletion issues in one form or another, with a few exceptions (thanks to Leanan, Gail the Actuary and TOD alum Stoneleigh) they simply aren’t doing their work over at TOD.
Some of this is the fact that women study engineering and the sciences at much lower rates than men, and that the material on TOD tends towards the technical. Some of it is that the level of TOD discussion favors the initiated and one with some experience in the area – and while the number of PO aware women has boomed recently, a lot of them may not have been around long enough to feel comfortable on such a highly technical site. Some of it is that a lot of us women (and plenty of men) are much more interested in what to do next, once we’re convinced, than in stacking up data that reinforces our older conclusions.
But some of it is the culture of TOD.
(13 March 2009)