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rickgthf
Senior Advisor

Re: Rig count vs pipeline

The rule of thumb is that it takes 16% of the crude extracted to drill, extract, transport, and refine a gallon of gasoline.  With fracking, a well will produce for about two years before it needs to be re-fracked, and then it's only good for maybe another two years.  In order to maintain production, new wells need to be constantly drilled.  Before Covid, about 660 drill rigs were drilling for crude (already down from 880 a year earlier due to low prices).  At the low in Aug 2020, the rig count was 178, down 70%. 

  The fact is, in order to maintain any reasonable production they need to be constantly moving to a new field, and they've already exploited the best of the Bakken & Barnett basins.  Quite frankly,  at the current rate, they won't last much longer, and then our energy independence is gone again.

  At the same time, it takes a barrel of crude to extract a barrel of crude from tar sands, a 100% cost just to get it to the pipeline, that's unbelievably inefficient to say nothing of wasteful, climate change or not.

  As a nation & society, we need to move on to more sustainable energy sources anyways, and one of the best ways to encourage it is to tax a declining resource and encourage that transition. 

  Like it or not, we need to stretch out our supplies and ramp up alternatives.

sdholloway56
Senior Advisor

Re: Rig count vs pipeline

Like the last time, if oil goes high enough it will mobilize enough capital to find and extract some high cost resources- even if it is ultimately a money losing proposition, as this past cycle was.

Hopefully we have oil caught in a doom loop this time- we can keep it from going that high while demand is slowly drained away.

Nothing ever goes as smotthly as hoped (it certainly didn't for the oil industry) and you can expect a lot of squealing along the way as there are bumps.

BTW, fracking is marginal production. The real key is Saudi Arabia, which has a finite resource, whatever that might be. That finally tips over and it is a new game.

rickgthf
Senior Advisor

Re: And rely on Saudi Arabia again?

The geopolitical implications are frightening.  By the way, the best way to deal with Iran is to make it irrelevant and not need its oil.

sdholloway56
Senior Advisor

Re: And rely on Saudi Arabia again?

Russia is the primary beneficiary of climate change- their agriculture included.

And they're chomping at the bit as the arctic melts and they can go drill more oil.

But yes, the geopolitical calculus is already moving past the tragic neocon obsession with oil.

sam1wiseone
Senior Contributor

you're just stupid


@sdholloway56 wrote:

Russia is the primary beneficiary of climate change- their agriculture included.

And they're chomping at the bit as the arctic melts and they can go drill more oil.

But yes, the geopolitical calculus is already moving past the tragic neocon obsession with oil.


Arctic melt makes it more difficult to drill.

sdholloway56
Senior Advisor

Re: you're just stupid

Yes, and no.

Not offshore.

cmilligan1958g
Senior Contributor

Re: Rig count vs pipeline


@sdholloway56 wrote:

Like the last time, if oil goes high enough it will mobilize enough capital to find and extract some high cost resources- even if it is ultimately a money losing proposition, as this past cycle was.

Hopefully we have oil caught in a doom loop this time- we can keep it from going that high while demand is slowly drained away.

Nothing ever goes as smotthly as hoped (it certainly didn't for the oil industry) and you can expect a lot of squealing along the way as there are bumps.

BTW, fracking is marginal production. The real key is Saudi Arabia, which has a finite resource, whatever that might be. That finally tips over and it is a new game.


Communist plans never go the way the Bolsheviks think that it will go.