Linda. In other words they will drill, and have well ready, but will not pump until price goes up (and it will ).
What Linda is talking about is called a “DUC” well – drilled but uncomplicated. The operator chooses to defer the cost of completion to a time when market conditions improve.
Don’t think that is correct.
Oops, spellcheck changed uncompleted to uncomplicated.
Well, I didn’t use the word “pump” because most if not all of these new horizontal wells don’t have to have a pumping unit on them as they make enough gas that it pushes the oil and other product out. I believe after they drill the well they won’t frac and other things they have to do to complete the well and open it up to flow. I’m not sure on all this as all the times my hubby came home and told me what they were doing in the oil field it didn’t really soak in until we started getting paid for royalty and then I tried to soak up everything I heard. There are certainly many more people on here who know so much more about all this probably including you.
Thank you all. I know very little about oil production, but this forum helps.
I’m seeing a real spike in oil prices today! WTI and Brent up well over 4 dollars. Wondering if the Saudi’s and Russian’s might have agreed to limit the amount of output. I heard a little something on the news about our president planning a talk with them about it but then didn’t hear anything else. Any one know?
Found this on Yahoo this morning. WASHINGTON (Reuters) - U.S. President Donald Trump will meet with oil company executives at the White House on Friday to discuss a historic oil-price slump threatening their businesses, brought on by the coronavirus outbreak and a Saudi-Russia price war.
The administration may offer ways to help the industry weather the crisis, including waiving royalty payments drillers must pay for oil produced on federal lands, or imposing an import tariff on foreign crude oil, according to sources familiar with the matter.
Trump is also likely to highlight his efforts to push Moscow and Riyadh to end their price war and tighten the taps to bring prices back up, the main hope for an ailing U.S. drilling industry that supported his presidential campaign.
Trump said on Thursday Saudi Arabia and Russia had agreed to cut output by an unprecedented 10 million to 15 million barrels per day (bpd), representing 10% to 15% of global supply, after he discussed the issue with their leaders.
The countries did not confirm the plan, but said they were willing to discuss ways to stabilize the market with other major world oil producers.
Trump said in a press conference that he made no concessions to Saudi Arabia or Russia and did not agree to a U.S. production cut. A U.S. official told Reuters on Thursday that the slide in prices had already forced drillers to reduce production.
The United States has grown in recent years into the world’s biggest oil producer which has at times put it in competition with Russia and countries in the Organization of the Petroleum Exporting Countries, even as it imposes sanctions on cartel members Venezuela and Iran.
Global oil prices have fallen by roughly two-thirds this year, raising the specter of a wave of U.S. oil drilling bankruptcies and layoffs.
The American Petroleum Institute, which represents the U.S. oil and gas industry, had asked Trump for regulatory relief to ensure steady supplies during the coronavirus pandemic. The administration has since announced a temporary easing of environmental enforcement.
The API, many of whose members operate globally, has strongly opposed the idea of an oil import tariff, which could hurt domestic refiners and complicate projects and business relationships across borders.
Companies expected to participate in the Friday meeting include Exxon Mobil Corp <XOM.N>, Chevron Corp <CVX.N>, Occidental Petroleum Corp <OXY.N> and Continental Resources <CRL.N>. Oil refiners and small producers will also be represented, either there or in subsequent meetings, sources familiar with the matter said.
(Reporting by Timothy Gardner and Jeff Mason; Writing by Richard Valdmanis; Editing by Richard Chang)
About the only thing that would impact prices that much would be a cut in supply. And that is exactly what is happening at the present time. I think Trump twisted the Saudi’s arm to the breaking point, since this is exactly what Russia wanted to happen- a supply cut.
We now owe the Saudi’s a big future favor, which I suspect will be called by them before the November election just in case he does not get re-elected.
What can we do to check the Saudi’s?
The Saudi’s have the ultimate check on the world. They can sell oil @ $10/bbl and make a profit. No one else can do that, although they would be selling a lot more oil for a lot less of the cash needed to balance their internal budget.
I think the way to handle them short of an invasion, is to do what Trump already does. Trade them something they want for something we want. It’s called negotiation…
Didn’t we send the people and equipment to put out their fires at their oil wells after the war? I think they might owe our country more than we owe them.
Linda, you may be thinking of Kuwait & Iraq.
Yelp, guess you are right. Sorry
In addition to investor sentiment ( which can have a significant short term impact on price), there are the speculators and hedge contracts that make up an additional 15% of the price of oil beyond mere supply and demand.
Thus, the price of oil at any specific point in time is supply and demand , investor sentiment, hedging contracts and speculation. About 85% of the total price is made up of the 1st two determinants.
For the first time in the last 10-15 years, I have actually seen horizontal wells in Grady County being shut in. The only way to get the prices higher is for the US operators to shut in new production & slow the drilling of new wells. It will be painful, but the US has to be part of the solution.
Does anyone know if there’s a way for royalty owners to find out if a well is being shut in? Or do we just have to wait for the check (or no check?) Dealing with CLR, specifically. Will the companies likely be shutting in the lower producers to save operating expenses?
Not really. The devil will be in the checks. From experience, vertical wells are easier to bring back online after being shut in. The horizontal wells would be more difficult due to lower pressures because they are in predominantly “tight” reservoirs and water encroachment in the wellbore. I was specifically speaking of recently completed wells that still have good pressures.
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