The Central Scrutinizer
Penultimate Amazing
- Joined
- Dec 17, 2001
- Messages
- 53,097
I buy stock in great companies at a discount.
I buy stock in great companies at a discount.
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As a professional petroleum reservoir engineer involved directly in exactly such depletion planning decisions and designs, I admit nothing of the sort. In fact, I assert that implementation of appropriate subsurface energy augmentation and/or displacement mechanisms is in fact a very good sign of active efforts to increase recovery of a fixed resource. From the perspective of ultimate recovery, implementing such a pressure maintenance program -- waterflooding or otherwise -- earlier is almost always better than later. A good bet is that water injection into an oil field today is a better sign than putting it off until tomorrow.
Selection of waterflooding over other pressure maintenance and improved recovery technologies, and the economic and operational optimizations involved, are left as case-specific exercises for the reader.
Puppycow
Penultimate Amazing
A reason you can never be too sure that a product like oil will always go up, is the possibility of a "black swan," such as the invention of a new alternative fuel.
If this turns out to work, or some other new-fangled thing, it could replace oil and then people who overpaid for oil on the assumption that it would go up a lot higher will lose their shirts.
I'm not saying this will pan out. But it, or something else, might.
If this turns out to work, or some other new-fangled thing, it could replace oil and then people who overpaid for oil on the assumption that it would go up a lot higher will lose their shirts.
I'm not saying this will pan out. But it, or something else, might.
JoeEllison
Cuddly Like a Koala Bear
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- Jul 7, 2007
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- 7,270
You wish... or you're just lying. Speculators are driving the prices, not politics, supply, or demand.
Francesca R
Girl
"Speculative" demand is still demand. Unless you pass a law that says nobody is allowed to buy oil unless they burn it themselves.
rjh01
Gentleman of leisure
Where is all this oil the speculators are buying? If they were responsible for the price there would be a huge stockpile.
Francesca R
Girl
I don't know whether to read that question as serious or not, but it is not the physical amount of oil available that matters, just how many people want to own it. If their number increases (pure speculators or commercial end-users or anything in between--it doesn't matter), then the price goes up until the commitments to own oil balance the obligations to provide it.
rjh01
Gentleman of leisure
A speculator may buy oil but where do they store it? You would need very large special purpose containers for oil. A speculator would therefor want to get rid of the oil quickly. So any price increase due to speculators will be short lived. The price has been going up for several years.
No the reason for the rise in price of oil is that China is buying heaps more than what it used to. It must do because it is rapidly developing. Many Chinese are now buying their first car, which of course needs oil and lots of it.
No the reason for the rise in price of oil is that China is buying heaps more than what it used to. It must do because it is rapidly developing. Many Chinese are now buying their first car, which of course needs oil and lots of it.
I've not seen anything that indicates the price has risen in line with either a decrease of supply or the increase in demand.
To me that indicates that a lot of the price increase is simply "what the market will bear".
To me that indicates that a lot of the price increase is simply "what the market will bear".
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That's pretty cool.
I think the primary (only) reason that alternative fuels haven't taken off yet is that they still aren't, despite all the bitching about gas prices, cheaper than simply continuing to use gas. Eventually we're going to hit a tipping point where either the alternatives get cheap enough, or the current solution gets expensive enough that more and more people will want to switch.
So maybe now, with oil under $150 a barrel, it wouldn't make sense to use some crazy algae oil that costs, I don't know, $300 a barrel to produce. But hey, if oil gets to $500 a barrel suddenly that crazy algae oil starts looking mighty good.
I'm not sure how to interpret this. Does "in line with" mean that you expect a 15% increase in demand to correspond to a 15% increase in price?
Because that's not how supply/demand curves work. The key concept is "elasticity" of demand; the idea that demand is more price-sensitive for some goods than for others. If apples get more expensive, I can always eat oranges instead. If beef gets more expensive, I can switch to chicken or pork. If wine gets more expensive, I can drink beer or cider. If printer paper gets more expensive, however, I can't really find a substitute; I just have to print fewer documents. If airline flights get more expensive, I really don't have an alternate way to get from Toronto to Amsterdam. So there is less "elasticity" in demand for paper than for wine.
I don't even really have the option (short-term) of using less gasoline. My house is where it is, my job is where it is, and I need to get from point A to point B. I suppose I could move (either closer or somewhere better served by public transit), or change jobs (ditto), or buy a new and cheaper car, but those are all major lifestyle changes that aren't going to happen overnight, the way I could decide (overnight) not to fly to Amsterdam this month.
Oil has one of the most inelastic demands there is. Therefore, a minor increase in demand will result in a huge price increase (and the other way around, of course). This is one reason that oil has always been a very volitile good compared to, say, pork futures.
No - and I do understand the inelastic argument however from the data I've seen (and that is limited to graphs and reports from the likes of the BBC) oil supply has been keeping up with oil demand. Of course there is the issue of refining capacity which adds a layer of complication (and results in weird blips like Iran increasing production but then having to store a lot of its high-sulphur content crude oil since not as many refiners can deal with it) but again as far as I have seen refining capacity is also keeping up with demand.
Francesca R
Girl
This is a bit tangential but the volatility of pork belly futures is persistently significantly above that of crude oil.
I'd always wondered about the soaring price of pork scratchings.
Not really. It's more like squeezing the bottle, but that's a poor analogy unless you're willing to accept a pretty abstract generalization of "bottle". A better analogy is not sealing the bottle around the straw, so air flows in to replace the milk you suck out. Even better is pushing one fluid into a sponge to displace whatever was there before, and/or to keep it full while you drain fluid out.
"Putting a bigger straw in" is more analogous to drilling more producing wells, which will still only recover whatever oil has the energy and mobility to flow through the rock to get to them. However many wells you've got, you're done when the pressure differential from the reservoir to the bottom of the well is too small or the "oil" saturation is too disconnected to produce at paying rates. (I quote "oil" because the same concept applies to both reservoir liquid and vapor, either or both of which contribute to the surface separator's output where we call the liquid "oil" and the vapor "gas").
Injecting water can reduce the amount of oil left behind when that time comes. With enough injection (or influx from an aquifer, or expansion of a gascap or gas evolved below bubblepoint pressure, or compression/compaction of the reservoir rock itself), the pressure might never decline so far you can't produce something at reasonable rates. However, when the local hydrocarbon phase ("oil" [reservoir liquid HC] or "gas" [reservoir vapor HC]) saturation drops, so does the permeability of that phase.
Injecting water (or gas, or aquifer influx) can displace oil toward wells to keep it flowing longer. Even if the trapped residual saturation is the same number of barrels in the reservoir, trapping reservoir oil at near-bubblepoint pressure leaves what would be fewer "stock tank" barrels behind. (smart guys will notice that trapping reservoir gas at high pressure leaves more hydrocarbon behind than would be trapped at low pressure)
Like my grandfather's haberdasher advised: Depends. How long is a piece of string?
The answer depends strongly on many details of each particular field. How permeable is the reservoir rock? Is it well-connected like one big slab of sand, or is it shattered into discontinuous faultblocks, separated into non-communicating layers, or a collection of more-or-less disconnected blobs? Is it a nice uniform porous medium through which water will flow uniformly, or does the permeability vary manyfold from place to place? Is the porosity more or less evenly distributed, or is most of the volume tied up in tombstone-tight blocks around which most of the flow capacity exists in thin fractures? Is the reservoir more or less level, or is it tipped at severe angles? Is the oil thick and viscous, or light and fluid? Is it oil in the reservoir? Gas? Neither and both (e.g. supercritical fluid)? How does that change when pressure declines? Is there a lot of dissolved gas to slow pressure decline as it bubbles out of the oil, or will it take its compression energy with it by squirting quickly out of the wells, or is the oil just too "dead" for gas to matter much? How squishy is the rock? Will it fail mechanically and pinch off the wells if we let pressure fall too far? Is there a large aquifer that will contribute water as we remove oil? A big gas cap that will expand as pressure declines?
Considering that you've only "seen" the reservoir through a few goop-filled boreholes inches wide and miles long, or by the functional equivalent of farting in the ocean and listening to the bubbles echo, how confident are you that you're right about these things? As one UT professor said about core analyses: "Congratulations! You now know all there is to know about a part of the reservoir that isn't part of it anymore."
And a big question... How much more money are you willing to invest *today* to have another barrel to produce in the distant future? You won't see those "extra" barrels for a long time, typically decades. Your contractors and suppliers cling to that old-fashioned business model and expect to be paid promptly after drilling your well or delivering your pipe. Wimpy customers seem reluctant to pay today for oil you'll be giving them in April 2019.
Working that stuff out is what's been buying my beans for a long time. Evicting old ladies and drowning kittens are just hobbies
Sure, maintaining pressure might allow for more reservoir->wellbore pressure differential to drive higher production rates, and can also keep reservoir liquid viscosities low by keeping "gas" in solution with the "oil". The displacement effects can greatly increase ultimate recovery, too.
Alas, I'm not sufficiently competent and informed to pick a date (and I suspect the same is true of most people claiming otherwise). It's hard enough to estimate the ultimate recovery and producing lifetime of a specific field with specific data; guessing at recovery from other fields, including those that haven't yet been discovered, is a really dirty business.
How close we are depends strongly on how much you're willing to pay. Seriously -- nobody's going to spend several billiion dollars to develop an oilfield under a mile and a half of ocean a hundred miles from land unless they're fairly confident the oil it will produce can be sold for enough money to make it worth doing. Don't forget that all that income will be spread out over decades, but nearly all the investment has to be made up front -- including a fair chunk of change that has to be spent before you can really decide whether it's worth doing.
Besides, does it really matter whether production truly hits a peak or simply gets outrun by demand? Either way, somebody who wants grease ain't gonna get enough.
1 billion barrels oil every 10 days are used.. .. how much longer can this last???
The US uses 25% of that 10 day supply. Not only that oil supply something like 80 to 85 % of the world energy... and there is no alternative to replace 80%... lucky of we could replace 20%..
The US uses 25% of that 10 day supply. Not only that oil supply something like 80 to 85 % of the world energy... and there is no alternative to replace 80%... lucky of we could replace 20%..
You are right, cause I never owned oil till it was like 50 bucks/barrel..But im still buying at 125, so i guess im the speculator..or fundamentalist
Here is the problem oil is demand is high and will go higher. Oil is the blood of modern life. supply and demand is why the price is so high, I'll give 15 to 20% to speculators. But thats why you have market corrections. to shake then off and see what the real price is!!
The Central Scrutinizer
Penultimate Amazing
- Joined
- Dec 17, 2001
- Messages
- 53,097
Or the one left holding the bag.